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How Will Automotive Address the Employment Challenge?

Some automotive suppliers offer this advice on dealing with the current environment: treat current employees well to keep a stable workforce. That is certainly a good foundation for long-term success, and something that smart companies figured out a long time ago.

Employment in the automotive industry is on its way back up, after a 10-year slide between 1999 and 2009. Analysis from the Center for Automotive Research (CAR; cargroup.org) has quantified the change in direction and projects the addition of 167,000 jobs to U.S. automotive manufacturing between 2011 and 2015. CAR sees 15% of these jobs being added by the Detroit Three, 80% occurring at supplier companies, and the remainder at foreign-owned automakers. Automotive manufacturing employment has already increased 13% from the July 2009 trough, to 592,100 people, but that is down from a level of 1.1 million at the start of the 21st century.

CAR’s projections make sense, given the outlook for growth in U.S. vehicle sales and production. CAR’s sales forecast calls for vehicle purchases to rise from 12.6-million in 2011 to 15.5-million in five years, stabilizing at the 15.6- to 15.7-million unit level for another five years. IRN’s North American light-duty vehicle forecast follows a similar trajectory, rising from 13.0-million units in 2011 to 15.8-million in 2016. CAR expects the rate of employment growth to outpace that of vehicle production as automakers stop relying on overtime and temporary workers and actually hire permanent employees to meet market demand on a sustained basis.

That all sounds good in theory, but human resource professionals are probably scratching their heads right now wondering where all the people to fill those slots are going to come from. The challenge is evidenced by data from the Original Equipment Suppliers Association (OESA; oesa.org) survey of automotive suppliers. In its January 2012 Automotive Supplier Barometer, OESA reported that 59% of survey respondents were facing shortages of skilled labor, as compared to only 18% of respondents two years earlier. Hourly labor shortages were present but less acute, with only 25% of respondents expressing concern about finding enough workers for the production line.

In the association’s November 2011 survey, fully 80% of suppliers said they planned to add corporate engineering and technical staff and 70% of those indicated that they were having trouble finding qualified, available candidates. For skilled trades, the corresponding figures were 53% adding personnel and more than half (57%) having trouble. Fifty-seven percent were adding hourly production workers and 30% of those were unable to find the desired number and/or caliber of candidates, so we can see that there has been a disconnect between the industry’s needs and available resources.

To a large extent, the problem is bigger than all of us. We face a triple whammy on a national scale: an aging population, rising requirements for skills and knowledge throughout companies, and, not to sound too curmudgeonly, declining cultural support for manufacturing, education, and hard work. So what can be done, both on a large scale and closer to home? The long-term solution hinges on doing a better job of filling a pipeline of capable employees. We often hear politicians sing the praises of quality K-12 and higher education. It remains to be seen whether state and federal budgeting backs up the premise that a highly skilled and educated workforce is critical to the country’s success. The Manufacturing Institute of the National Association of Manufacturers is working on a number of projects to upgrade the skills of current and transitioning workers, prepare workers for jobs requiring postsecondary education, and close the widening “middle-skills” gap.

On a more immediate level, some companies (e.g., Ricardo) have actually put up billboards designed to attract candidates (see RicardoCareers.com). Others are focusing on the basics, such as setting up a strong temp-to-hire process that enables them to pace their investment in training while vetting job candidates. We are also hearing that more companies are turning to the use of recruiters to supplement the activities of their human resource departments. It seems likely that the results of this measure will be uneven, depending on how well the individual recruiting firm is positioned to deal with what appears to be an underlying shortage of qualified candidates.

Many companies are setting up co-op or internship programs with local universities and technical schools as a way to take someone with a basic aptitude and provide specific training and experience leading to full-time employment. True apprenticeship programs that entail more elaborate requirements in coursework and on-the-job training are also under consideration, although it is a struggle for some manufacturers who are trying to handle growth but also control their headcount to set aside positions for trainees.

Lastly, some automotive suppliers offer this advice on dealing with the current environment: treat current employees well to keep a stable workforce. That is certainly a good foundation for long-term success, and something that smart companies figured out a long time ago.

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