rss icon

Sunday, 07 December 2014 22:00

Manufacturers struggle to find talent, yet resist push to raise worker pay

Written by 
Rate this item
(1 Vote)
Manufacturers struggle to find talent, yet resist push to raise worker pay SOURCE: OESA AUTOMOTIVE SUPPLIER BAROMETER

All indications point to West Michigan manufacturers continuing to struggle in the coming year to find qualified talent.

Although many companies have developed innovative training programs and established relationships with community colleges, they still have trouble finding qualified workers to fill positions ranging from assembly to engineering.

One reason, according to experts: stagnant low wages.

While the boom and bust cycle of manufacturing has dissuaded some employees from entering the field, low wages remain one of the main causes for manufacturers’ talent woes — particularly when it comes to worker retention, said George Erickcek, senior regional analyst at the W.E. Upjohn Institute for Employment Research in Kalamazoo.

“If you’re willing to add a couple more dollars to the wage and benefit package, you may not have a problem adding workers,” Erickcek said. “But the more I think about it, the real challenge is that employers don’t have an effective way to measure the impact of turnover.”

While manufacturers can easily account for wage increases in their budgets, the cost of employee turnover is a more abstract calculation, Erickcek said. But over time, the losses in productivity and quality issues that result from higher turnover will all add up to real impacts to a company’s bottom line, he said.

According to Erickcek, if companies were more conscious of the real cost associated with turnover, they’d be more likely to offer a wage structure and benefit programs to keep employees around.

“When you talk to employers, they’ll complain that turnovers are very expensive,” Erickcek said. “But it’s not a cost that is put down in the books, whereas wages are recorded.”

Turnover rates showed signs of improvement in 2013, but this year saw both salary and hourly turnover rates on the rise, according to the Automotive Supplier Barometer for November conducted by the Original Equipment Suppliers Association (OESA) and Deloitte LP.

Of respondents to the OESA survey, 38 percent cited a lack of qualified candidates as the most prevalent reason that they cannot fill positions, which is down from 48 percent a year ago.

That finding is not surprising given that manufacturers are now seeing activity starting to level off, Erickcek said.

“The urgency may not be as great. (Manufacturers) could have three shifts running and might have turnover problems but still need to replace workers,” Erickcek said. “It’s not as frantic as it was in the last two years as the industry really picked up.”

Even so, 83 percent of respondents have trouble hiring hourly skilled trade workers and 80 percent struggle to hire technicians, according to the survey. Engineering jobs remain the most challenging human resource shortage. Eighty-seven percent of companies surveyed said they had trouble finding engineering talent, according to OESA.

But not all manufacturers have experienced the same challenges when it comes to sourcing and retaining talent in West Michigan.

When California-based SolarBOS Inc. launched production in Walker earlier this year, it opted to pay its Michigan workers the same wages that it offered its workers in its home state, which traditionally has a higher wage structure than West Michigan, as MiBiz previously reported.

The manufacturer of power management systems for photovoltaic solar arrays and other electrical systems starts temporary assembly workers at $17.50 per hour, while assembly workers can earn close to $23 an hour as they move up within the company. That compares to a rate of $13 per hour suggested by local staffing agencies when the company first moved to the area.

“When you’re willing to pay the wage, you’d be surprised at how many people become available,” CEO John Hass told MiBiz at the time. “You get what you pay for in life.”

Despite the focus on wages, companies are not planning to change benefits package offerings in 2015, according to the OESA survey.

“You’d think that the workers would be really interested in the full package, but I think people put too much emphasis on the wage,” Erickcek said. “I worry that young workers don’t really appreciate the value of good health insurance or a retirement plan. They’re thinking about wages.”

Meanwhile, the OESA Automotive Supplier Sentiment Index remained flat in November at 56, the same reading as in September.

“Though markets and sales remain the cornerstone of optimism, the OEM warranty/recall issues and global economic and political volatility continue to drive pessimism,” OESA stated in the report.  

Read 3899 times Last modified on Sunday, 07 December 2014 23:07

Breaking News

September 2018
S M T W T F S
26 27 28 29 30 31 1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 1 2 3 4 5 6

Follow MiBiz