Companies need to master the talent portion of the equation, not just technology
In a recent study, over 80 percent of survey respondents listed workforce issues as one of their top three challenges to adopting new technology at their plants. New technologies are coming not only to cars, utility vehicles and trucks but also to the manufacturing plants that produce parts, components and vehicles.
The merger of cyber-physical systems known as “Industry 4.0,” artificial intelligence (AI), and more advanced robotics are changing the automotive landscape. Companies that master the talent side of the technology equation will have an advantage over those that do not.
This article draws on recent research conducted by Case Western Reserve, New York University, and Boston University, with assistance from the Center for Automotive Research (CAR) and the Precision Metalforming Association (PMA). Researchers conducted more than two dozen site visits which resulted in the participation of more than 120 firms. Participants were asked to fill out three surveys on the following topics: plant operations, sales and human resources.
Workforce by Occupation
CURRENT STATUS: On average, survey respondents noted that production workers (general laborers, assemblers and machine operators) comprised the largest share of companies’ workforce. While these positions account for nearly 60 percent of the workforce, the workers in these jobs receive the lowest wages compared to other occupations surveyed –averaging $13-$15 an hour for the firms in this study.
On average, the occupations that have the lowest share within the surveyed firms are apprentices (2 percent) and engineers/scientists (nearly 7 percent). The highest paying occupations at the surveyed firms were engineers ($37/hour) and skilled trades/technicians ($23/hour).
CHALLENGES: The number one challenge noted among the majority of firms surveyed was the inability to find qualified workers with the right skills. As the industry continues to advance and companies continue to adopt new technology, the need for highly skilled and technical workers will grow.
Among the top skill needs are data analysis, electrical engineering, software engineering and cybersecurity. Also, many companies have an older workforce in certain occupations, e.g., tool and die makers. With retirement on the horizon, these workers’ knowledge and skills need to be transferred to younger workers.
CURRENT STATUS: More than 80 percent of the survey respondents said they valued employee loyalty and agreed with the statement: “We prefer to hire workers who stay with the company until retirement.” This response is not surprising, as retention of employees at organizations is an everyday struggle amongst many companies within the automotive industry.
CHALLENGES: The competition to attract and retain talent continues as the demand for highly skilled jobs increases within the industry. Not only are jobs in demand increasing, but in today’s job market, we see employees hopping from one position to the next for a variety of reasons, and the cost of this turnover is problematic for various companies.
In fact, according to the Society for Human Resource Management (SHRM), turnover costs are estimated to be 100 percent to 300 percent of the base salary of the replaced employee. The second biggest challenge that surveyed firms have is building employee engagement (noted by roughly 45 percent of respondents). By building employee engagement, companies have a greater chance of retaining an employee versus losing them to another company.
CURRENT STATUS: Survey respondents, when asked about their company’s layoff policies, had an even distribution across the various factors – except for one, “we had to lay off employees made redundant by automation.”
Due to the advancing automotive industry, adoption of automation – including, sensors, robots, collaborative robots, machine vision, automated parts tracking – has been occurring over the past several years and will continue. That being said, less than 5 percent of the firms surveyed noted that their company had laid an employee off due to automation. Instead, nearly 25 percent of firms retrained workers whose old skills were no longer needed to do new work within the firm. As always, companies note that if their facility does not have work, they will lay off employees.
CHALLENGES: Training and retraining of employees will continue to be a challenge that many automotive companies will continue to face.
Employers will need to attract the most qualified candidates, and training and retraining programs are attractive to incoming workers. Employees will need to continue to advance their skills as their facility adopts technology.
Several respondents noted that their organization is not analyzing the data from these machines as best as they could be. Therefore, skills related to the use and interpretation of data will be critical in the future.
For more information on this study, contact the Center for Automotive Research at firstname.lastname@example.org.
Terni Fiorelli is an industry analyst for the Industry, Labor, and Economics group at the Center for Automotive Research (CAR) in Ann Arbor, Mich.