Is it better to put this in a resume or in a cover letter?
My parents owned a sheet metal fabrication shop and I worked in it since I was 12 part time (Kids of owners can work – some sort of farmer law) and was running machines at the same time I was learning to drive. I ended up staying in the industry when I went to college.
My resume starts when I became an engineer but it only shows 13 years of experience whereas I really have been in the industry for over 23 years and have tons more hands-on experience that other manager in the industry. What is the best way to get this accross without getting dumped by word matching review systems that recruiters use?

Put it in your cover letter.