Toyota's apprenticeship program is known for getting better results than sending workers back to school - and now it's going nationwide. Here's what makes it so effective.

National Association of Manufacturers

Toyota's Dennis Dio Parker (left), who founded the apprenticeship program, meets with White House advisor Ivanka Trump (right).

• Companies are increasingly turning to apprenticeship programs to help solve a skilled-worker shortage in the US, and Toyota's is a standout example that has run for 31 years.
• The carmaker just ceded control of the career pathway program to the workforce arm of the National Association of Manufacturers. The industry trade group plans to increase promotion in a bid to bring in more companies and find more prospective students.
• The program uses a mix of real-life work experience, technical education, and so-called "soft skill" development to produce "phenomenally ready" graduates, according to its founder Dennis Dio Parker.

• Click here for more BI Prime content.

Toyota's two-year apprenticeship program is not just rivaling community colleges, it's blowing them out of the water. And now it's going nationwide.

In an increasingly digital environment, companies are fearful they'll be unable to find or retain the talent they need amid a drought in skilled workers. Toyota's 31-year-old program is a standout example of a progressively more common solution to the problem - and now, with the help of a top manufacturing trade group, many more businesses and students will be able to participate.

"Our new technical talent in the US is not as work-ready… as the talent is in some of the nations of our chief competitors," Dennis Dio Parker, a talent development consultant at Toyota Motor North America and the program's founder, told Business Insider. "We are developing the whole person. We are developing the ideal American worker who is a critical thinker, who gets along well with others and leads others, and has incredible technology skills."

Since joining the carmaker in 1987, Dio Parker has scaled the career pathway through four iterations, gradually expanding it outside of Toyota and across the US. It is currently being operated in 11 states.

The nuts and bolts of the program

Completion of the rigorous two-year program run by the carmaker's Federation for Advanced Manufacturing Education (FAME) institute results in an associate's degree, and likely a job at Toyota or another manufacturer.

Conducted over five semesters with no break during the summer months, students take educational courses on topics such as programmable logic control systems, which are computers used specifically in manufacturing, as well as lean manufacturing, a process that tries to improve efficiency by minimizing waste like excess inventory.

Enrollees must work three days a week and are also trained on professional behaviors like interpersonal relationships and teamwork, a curriculum aimed at addressing what Dio Parker calls a "soft skills" crisis in the US.

While many graduates are armed with the technical skills to do their job, increasingly companies and colleges are raising concerns over the lack of knowledge among entry-level employees of how to manage working within an organization. In Toyota's program, for example, the professors teach skills like teamwork and initiative.

Toyota and a top manufacturing trade group partner to take the program nationwide

At community colleges, the average graduation rate for two-year programs in that timeframe is less than 15 percent. The median rate within three years rises to just 22 percent. Enter Toyota, whose own two-year apprenticeship program boasts an average completion rate above 80 percent and successfully places graduates in jobs at an equal rate.

Soon, significantly more manufacturers across any sector will be able to join.

The program had historically resided within Toyota, but since 2010 nearly 400 companies have partnered with the carmaker to sponsor participating students. Those firms must pay a wage that includes the cost of tuition, books, housing, and some living expenses, so the students graduate from the program debt-free.

But earlier this month, Toyota handed control of the program over to the Manufacturing Institute, the workforce partner for the National Association of Manufacturers, a top trade group that counts companies like Caterpillar as members. At the time of the announcement, the White House applauded the move. Senior advisor Ivanka Trump - who traveled to Alabama to help announced the shift - said the expansion would help "build upon the economic successes we've had in the manufacturing industry."

The transition - which is expected to take between one and three years - means greater promotion of the program and stronger support for the local chapters that run it. With the additional backing from the manufacturing group, the hope is to bring in more participating companies and reach more prospective enrollees. There's also the potential for other career pathways beside the current advanced technician curriculum.

It's the latest attempt by the industry writ-large to tackle the workforce shortage. The National Association of Manufacturers, for example, previously committed to training nearly 1.2 million workers in the next five years to address the skills gap that is leading to hundreds of thousands of vacant positions across the US.

Recruiting from Toyota's program doesn't just mean skilled workers - it also means cost-savings for companies

Prior to ceding control over to the Manufacturing Institute, Toyota relied heavily on regional chapters across 13 states to run the area pathway programs. The structure will remain post-transition.

The firms that make up those chapters meet once a month throughout the year, but in late spring they begin analyzing their staffing needs for the next three years. Using the information on the exact roles that will need to be filled, the group determines the size of that year's class.

Companies then wade through the applicants and determine which prospective enrollees they wish to sponsor. Those who make it into the program have the choice of whether to accept a sponsorship offer from a firm, though historically every participant is backed by a firm at the end of the process. Once the year's class is established, orientation begins in the summer. The cycle then repeats yearly.

Even students who aren't accepted into FAME can make it into other programs at partner colleges that provide teachers and other resources. Toyota also began experimenting with allowing qualified students to enroll with no corporate sponsorship.

"It's in its infancy. One of the issues that we've seen so far is that almost all of those unsponsored students are snapped up into sponsorships within the first few weeks," said Dio Parker.

While the firms are required to cover tuition, housing, and other costs for their sponsored student, the benefits can end up saving companies significantly. It costs Toyota up to 67 percent more to train a new recruit that did not come from FAME, according to Dio Parker.

Graduates are 'phenomenally ready' for the workforce, though achieving that goal required changes to the program

A key theme for Toyota is producing graduates that are "work ready," meaning those who can seamlessly transition to a job at the carmaker or another manufacturer. It's why the company included classes on soft skills like written and verbal communication, coupled with technical courses and on-site job experience.

The program also has rigid standards that employers must adhere to. While Dio Parker says companies enjoy knowing their specific roles and responsibilities before joining as sponsoring firms, it's ultimately the success of the program that lures them in.

"Employer ownership is very attractive to employers so they are ready to invest their time, their resources, and their support. It lends itself to a lot of standardization," he said. "I don't think any of it would matter if it weren't for the fact that we're turning out phenomenally ready graduates."