Addressing scarce resources in the skilled labor pool

The recovery of the automotive market has been a bright spot in the economy, but industry participants are learning a lesson about the difficulty of flexing employment levels up and down. Many of the employees who were affected by downsizing found new jobs in different industries, moved to new geographic locations, entered new fields, or retired. What companies have been learning during the past couple years is that very few of the highly skilled workers were sitting around waiting to be invited back.

The automotive trade press has reported numerous instances throughout the past year of companies expanding and adding new jobs. Some of the activity has been by foreign-owned companies moving into the heart of the North American market in southeast Michigan, including the French injection molder AdduXi Group, and the Chinese company Shanghai SIIC Transportation Electric Co. In many other cases, it is well-known firms that are expanding to accommodate new contracts on programs such as Ford’s F-150 pickup that was ramping up production at the turn of the year.

Announcements that a company intends to add 388 jobs in skilled operator and technician positions, 70 welding positions, or 87 engineers, are heralded as evidence that the economy is moving in the right direction, and auto-producing regions are strong. For human resources departments, the reaction might be to wonder, “How are we going to do that?”
 

Immediate skills shortages

In an Original Equipment Suppliers Association’s (OESA) survey of automotive suppliers in January, 69% said they anticipated difficulty in the next 12 months with engineering talent availability. For skilled trades, the corresponding figure was 58%. Hourly labor shortages were anticipated by 31% of respondents, and production overtime premiums were labeled a problem by 48% of respondents.

Many of IRN’s clients have told of lengthy searches, being turned down by candidates when offers are made, having newly-hired workers quit almost immediately, and taxing their organizations as they are too short-staffed to handle the increasing program workloads. One IRN client is at a point where it needs more revenue and, fortunately, its key customer has signaled that it is almost ready to award some new contracts. Now the problem is that this supplier cannot find enough skilled machinists to fill out a second shift, so it is faced with the prospect of turning away new business.
 

Making manufacturing work attractive

There is no quick solution to the shortage of available manufacturing and technical talent. One positive note that needs to be strongly supported is the return to an appreciation of vocational education. Encouraging more young people to consider a career in the skilled trades is crucial for a pipeline of new technical talent.

But that is a longer-term solution. In the near term, companies are cobbling together a variety of initiatives including making themselves attractive employers, developing apprenticeships to grow their own employees, turning recruitment into a continuous process, and drawing new hires from nontraditional sources.

What may be the fastest solution is one that many companies have been slow to embrace – raising wages and salaries. This will increase the supply of good talent, and when companies do the math, they may find it is the most cost-effective option.

IRN Inc.
www.think-irn.com

About the author: Melissa Anderson is vice president of automotive research group IRN Inc. Anderson has consulted with automakers and suppliers extensively since 1986. She can be reached at melissa@think-irn.com.