To remain competitive and profitable, manufacturing and distribution companies require a highly skilled and reliable workforce. Companies in this sector face unique challenges, from maintaining high productivity levels to adhering to stringent and constantly evolving industry standards. According to our 2024 Manufacturing and Distribution Pulse Survey Report, 29% of respondents noted that a key to future success for companies in this industry is stabilizing their workforce.

While internships have traditionally been a popular option for engaging with emerging talent, apprenticeship programs offer compelling advantages that align more closely with the long-term needs of qualified skilled workers for manufacturing and distribution companies.

Key differences between internships and apprenticeships

Benefits for employers who build an apprenticeship program

Apprenticeships offer a significant cost advantage over directly hiring employees. Apprenticeship Connections & Consulting, Corp. estimates that, on average, hiring a direct employee incurs an additional $5,700 in personnel expenses compared to bringing on an apprentice. This extra cost arises from recruitment, annual wages, and management expenses. While $5,700 might not seem substantial on its own, the real financial benefits of apprenticeships become evident through available grants.

Companies can tap into various grants to offset apprenticeship costs, including on-the-job training/individual training account (OJT/ITA) savings, tax credits, and local apprenticeship funding. Companies can realize significant overall savings in the first year by opting to hire an apprentice instead of a direct hire employee. Lastly, companies may also increase certain clean energy federal tax incentives available under the Inflation Reduction Act of 2022 by hiring from registered apprenticeship programs and satisfying requirements for eligible projects.

After the apprenticeship ends and the company has benefitted from several years of cost savings, there is also the opportunity to transition the apprentice to a training employee who will work with and teach future apprentices. By hiring an internally trained, highly skilled worker, the company helps to fill both its labor and skill gaps with employees who have demonstrated reliability, competence, and a deep understanding of operational processes.

State tax incentives for apprenticeships represent an effort to bolster workforce development and address skill gaps in various industries. By offering tax breaks and credits to businesses that invest in training and developing apprentices, states aim to encourage employers to participate in apprenticeship programs, thereby enhancing the skills of the state’s workforce and fostering economic growth.

For more information on what your state may offer in regard to tax credits for apprenticeship programs, you can visit Apprenticeship.gov.

Benefits for the apprentice

Apprenticeships offer a range of benefits for individuals starting their careers. Apprentices have the unique opportunity to train alongside industry leaders who possess decades of experience, gaining firsthand knowledge and expertise. Unlike traditional educational paths, apprentices earn a salary while they train, providing financial support as they build their careers. As apprentices acquire new skills and advance in their roles, they experience salary growth, reflecting their development and competence within the role.

Companies that hire apprentices not only offer competitive wages, but they often provide comprehensive benefits, including the coverage of college expenses, as well. This blend of practical experience, financial stability, career advancement, and valuable benefits makes apprenticeships an attractive option for those seeking to jumpstart their professional journey.

Creating future value

Apprenticeship programs present manufacturing and distribution businesses with a unique opportunity to train and build their labor pools to help them achieve their strategic objectives. Unlike internships, apprenticeships provide structured, long-term training with guaranteed salary increases and financial support through various grants and tax incentives. The range of financial assistance available demonstrates a support system for companies committed to building effective apprenticeship programs. Benefits of a strong apprenticeship program extend beyond just the employer, offering apprentices valuable hands-on experience, financial stability, and career growth opportunities.

As manufacturing and distribution companies adopt apprenticeship programs, they can cultivate a skilled workforce ready to meet industry demands, ensuring long-term success and a competitive advantage. For more information, please reach out to Marcy Greenfield or Citrin Cooperman's Manufacturing and Distribution Industry Practice.