Survey says skilled worker shortage to cost millions


Nov 17, 2005

According to a new survey released today, senior automotive executives say their industry will be particularly hard hit by the looming skilled labor shortage, costing individual companies an average $50 million dollars over the next five years. The research was commissioned by Advanced Technology Services, Inc. (ATS) and conducted by ACNielsen, a leading consulting and custom research firm.

Where will the costs come from? Most respondents say that it's going to be the cost of training and recruiting new employees. Other areas that will tap company resources are (in relative order) missed production, paid overtime and lost customer satisfaction.

Moreover, auto executives find the responsibility of searching for and recruiting skilled workers has become so difficult that 70 percent said they would outsource an entire department or job function to avoid doing it in-house. A majority, 53 percent, said that outsourcing production machine maintenance would provide the most productivity gains. This is because, respondents say, just one minute of downtime - when machines break or aren't working - costs their plants thousands of dollars. Over one-quarter of automakers surveyed disclose the cost to be as high as $25,000 - $50,000 per minute.

"The looming skilled labor shortage is the single most important issue the US. automobile industry will be facing in the next five to ten years," said Kim Hill, Automotive Communities Program Director for the Center for Automotive Research (CAR) in Ann Arbor, MI. "Due to anticipated retirements at existing plants, the expansion of U.S. production facilities by foreign-based manufacturers, and the general perception of manufacturing as an "old technology" industry, manufacturers will be hard-pressed to staff their facilities with qualified workers."

ATS surveyed over 100 automotive industry executives with titles of CEO, CIO, CFO, CTO and Executive Vice President on a far ranging list of topics relating to the skilled worker shortage, which the U.S. Bureau of Labor Statistics says will reach 5.3 million people by 2010, increasing to 14 million by 2015. The shortage is caused by a combination of factors, including the imminent retirement of baby boomers, fewer apprenticeship programs and fewer high school graduates pursuing manufacturing skills.

Yet among respondents there is no single silver bullet solution to making their factories run better. The two most popular answers are to eliminate waste, and hire more skilled labor.

"Automotive manufacturing today has become very specialized, requiring skilled people on the job," said ATS President Jeffrey Owens. "Computerized factory automation has led today's manufacturers to rely more on brains than brawn. Those in the plant are challenged with bottom-line business goals: improving productivity, decreasing downtime, eliminating cost and increasing quality."

ATS pioneered the factory asset service business two decades ago, and today is the leading company providing managed services for production equipment maintenance, industrial parts repair and IT infrastructure support for manufacturers. Key to ATS' success is a recruitment and training program that fulfills the need for a skilled workforce. ATS' white paper, Workforce Trends: Tools for taking control of today's skilled labor shortage, provides guidance on what companies can do to avert the skilled workforce crisis. 

ATS customers who have benefited from significantly increased factory productivity, skilled labor fulfillment and improved competitiveness include Nissan Motor Co. (NASDAQ: NSANY), Textron (NYSE: TXT), Caterpillar Inc. (NYSE: CAT), Eaton (NYSE: ETN ), Fortune Brands (NYSE:FO), Honeywell (NYSE: HON), Honda Motor Company (NYSE: HMC), Magneti Marelli and other manufacturing leaders.