IMT Apprenticeship Provides Positive Return on Investment for Employers

A new study from JFF shows that U.S. advanced manufacturers that implemented the Industrial Manufacturing Technician (IMT) Registered Apprenticeship program had an impressive return on investment (ROI) of 48 percent for employers during the terms of their apprenticeships. Additionally, the program had positive effects on worker productivity—even in the short term. The data in this limited study reinforces the findings of previous research.

For every $1.00 a business spent on its IMT apprenticeship program, it saw a return of $1.48.

The IMT Registered Apprenticeship is an 18-month, 3,000-hour program in which entry-level production workers acquire important advanced manufacturing skills. Participants earn $18.50 an hour on average when they enter the program, and they learn how to do the following:

• Set up, operate, monitor, and control production equipment
• Improve manufacturing processes and schedules to meet customer requirements
• Understand manufacturing as an integrated business system made up of multiple disciplines, processes, and stakeholders
• Efficiently and safely manage time and materials.

JFF’s study is one of only a handful that have ever looked at the monetary benefits and costs of Registered Apprenticeship in the United States. The findings in The Next-Gen IMT Apprenticeship: A Return on Investment Study are based on six case studies of separate IMT apprenticeship programs, each with different sponsors. The mixed-methodology study generated a combination of qualitative and quantitative data, weaving together insights and feedback from employer interviews with hard data from a cost-benefit analysis. The data collected includes apprentices’ wages and benefits, wages that apprentices’ supervisors earned during the training period, costs of related technical instruction, and the value of the productive work of apprentices did on the job. The research was conducted between September and December 2019.

Researchers were able to analyze only three of the case study sites in depth. At the other three sites, organizational policies, privacy concerns, and a lack of information allowed for only partial analysis. These difficulties are consistent with challenges researchers have encountered in previous ROI studies in the United States, with the biggest issue often being a lack of the financial records needed to calculate ROI. To gain a better understanding of the direct financial benefits of Registered Apprenticeship programs, the field needs to address and improve the collection of financial data across organizations. With improved collection of financial data, future studies will be able to add to the existing body of knowledge pertaining to the ROI of Registered Apprenticeships.

Despite the data collection challenges, the results of JFF’s study of the ROI of Registered Apprenticeship programs are encouraging, and are in line with the findings of international studies that have suggested that for every $1.00 spent on apprenticeship, employers may get an average ROI of $1.47 in the form increased productivity, reduced waste, and increased innovation. In fact, JFF’s findings were slightly better, showing that every $1.00 a business spent on an IMT apprenticeship program yielded an average of $1.48 in revenue as a result of the apprentice’s work.

In addition, the businesspeople we interviewed reported that the IMT yielded additional benefits such as these:

• Comprehensive training for workers (a type of training that includes a combination of knowledge, skills, and capabilities)
• Upskilling of incumbent workers
• Improved retention and recruitment
• Increased productivity
• Improved product quality

What’s more, businesses were seeing these positive returns throughout the course of the apprenticeship programs, not just when the apprentice had become a journeyworker. This suggests that apprenticeship can be effective as both a long-term strategy for workforce growth and development and a short-term solution for meeting current labor supply needs. This is good news for manufacturers because it indicates that a new apprentice can very quickly create a positive return.

The research for this study was conducted before the COVID-19 global pandemic necessitated the scaling back or shuttering of manufacturing plants across the United States. However, JFF believes that apprenticeship will be vital to manufacturing’s post-COVID recovery. Apprenticeship programs such as the IMT can efficiently and effectively train and develop new, more flexible talent; transfer knowledge from older employees to younger employees; and renew an emphasis on safety in the workplace.

Pre-COVID, data from September 2019 showed that there were more than 500,000 unfilled manufacturing jobs in the United States. Those vacancies are due in part to a lack of talent, and apprenticeship could help manufacturers fill them.

According to Deloitte analyst Craig A. Giffi in a 2012 article in the consulting firm’s Manufacturing Opportunity series, 74 percent of manufacturers responding to a 2011 survey by Deloitte and the Manufacturing Institute reported that employee shortages or inadequate talent in skilled production roles were limiting their ability to expand and increase productivity. Deloitte estimated that overall U.S. unemployment could be reduced by a total of 3.75 million workers if the skills gap were closed, because filling those 500,000 jobs could lead to the creation of 500,000 additional jobs through manufacturing growth plus an additional 2.75 million jobs in related industries.

JFF’s new study suggests that the time and money that businesses invest in apprenticeship programs are well worth it. Not only do these programs improve a company’s bottom line, they are also effective as a long-term strategy for the growth and development of a company’s workforce and could also be effective as a short-term solution for meeting urgent labor supply needs.