Detroit seen facing a skilled labor shortage

Roland Jones Business news editor • Profile • E-mail

With automobile icon General Motors, the world’s largest automaker, announcing 30,000 layoffs and nine plant closures to reduce costs in the face of slumping demand, it’s safe to say that Motown has a serious case of the blues. But a new survey suggests more employment gloom lies ahead for the American automobile business.

It’s not the sort of trouble you’d expect. According to research conducted by Advanced Technology Services, a manufacturing services company, and AC Nielsen, a consulting and custom market research firm, automotive manufacturers are likely to find it hard to find good workers over the next decade as they are hit hard by a looming shortage of skilled labor in the U.S. manufacturing industry.

The survey findings seem counterintuitive.

After all, a spate of downsizing would seem to be just what the doctor ordered for the Big Three automakers, now struggling to cope with crippling costs associated with their workers’ massive healthcare bills and pensions while at the same time warding off competition from nimbler and more efficient foreign car manufacturers like Toyota, whose workers pay much more toward their benefits like health insurance than U.S. employees of GM, Ford and Chrysler.

The big problem for Detroit is an aging workforce. The average age of an automotive worker is 55, and so as the Baby Boom generation nears the traditional retirement age of 60 and these experienced workers retire, automakers and suppliers are going to be left with an inexperienced and less proficient workforce. Fewer apprenticeship programs and fewer high school graduates pursuing manufacturing skills are likely to exacerbate the problem.

“There was a time when Detroit families would pass down their manufacturing job to a relative, but all that has really stopped because there has been so much instability and uncertainty in the business,” said Jeff Owens, president of Advanced Technology Services. “Young people no longer want to pursue a career in manufacturing.”

ATS surveyed some 100 automotive industry executives for its survey, asking then about their views on the coming 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 decline in skilled workers, which is projected to hit in the next five to 10 years, is expected to cost manufacturers an average of $50 million each.

Most auto executives who participated in the survey said most of their costs would come from having to train and recruit new skilled workers, while missed production, paid overtime and lost customer satisfaction are also expected to crimp company profits. Seventy percent of the executives polled said they would be prepared to outsource an entire department or job to avoid doing it in-house.

That’s an opportunity ATS hopes to grasp. The firm is actively recruiting young people and training them for jobs in skilled manufacturing jobs Owens said, particularly in maintenance roles, hoping to provide trained workers to fill the skilled worker gap.

“These companies won’t have to worry about recruitment and training — we will handle that,” Owens said. “We have competitive wages and full benefit packages, and the benefit to companies is the flexibility — they can raise our service and then lower it depending on when demand is high, or low, and that keeps a company’s workforce flexible.”

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