Bye-bye Baby Boomers: Companies expect workforce shortfall to cost an average of $52M; $100M for largest manufacturers
A new survey shows Baby Boomer retirement coupled with a lost generation of factory workers is creating a perfect storm, aggravating a costly skilled labor shortage for U.S. manufacturers.
A new survey commissioned by Advanced Technology Services and Nielsen Research shows Baby Boomer retirement coupled with a lost generation of factory workers is creating a perfect storm, aggravating a costly skilled labor shortage for manufacturers in the U.S.
The need to replace these lost skilled workers has grown from a concern to a wholesale crisis in just three short years, according to the 100 senior manufacturing executives surveyed. They say the shortfall will cost their companies an average $52 million each, and even more, $100 million, for the nation's largest companies that report more than $1 billion in annual revenue.
The benchmark survey polled 100 senior manufacturing executives representing companies with revenue between $10 million and $1 billion in this way: "Forecasts indicate that during the next five years, approximately 40 percent of your skilled labor force will retire. What do you anticipate the retirement of 40 percent of your skilled labor force will cost your company in these five years?"
Eighty-one percent of respondents said they would be affected by the shortage, versus 68 percent three years ago, demonstrating this issue has become of even broader concern to manufacturing executives. Further, they calculate the lack of an adequate replacement pool will cost them an average $52.2 million each, compared with an average $50 million when asked in 2005.
And the cost is worse for companies with more than $1 billion in annual revenue, where 44 percent say the shortage will cost them more than $100 million over five years.
"As manufacturing becomes more sophisticated, technical, and precise—and as an entire generation of experts retires—we are recruiting the cream of the crop to do more than fill the gap, but to give manufacturers an edge," says Jeffrey Owens, president of ATS. "Those skills are particularly critical in maintaining plant assets and keeping the factories running better, particularly during an economic downturn."
ATS is a privately held factory services company that's created a growth-niche since spinning off from Caterpillar 20 years ago. The company is on track to achieve record revenue this year, up double digits despite a slumping economy.
ATS provides the skilled workers to perform sophisticated maintenance on production machines. Not only does ATS fulfill a gap in staffing, but its work is said to make factories so efficient that in many cases plants are able to double their production capacity.
A new white paper offered by ATS, Workforce Trends: Tools for taking control of today's skilled labor shortage , provides guidance on what companies can do to stem the tide. Workforce Trends illustrates the benefits—immediate and long-term—to be found in taking proactive steps to recruit, train, and promote a multiskilled labor force.
The paper also enumerates the steps ATS takes to satisfy two significant needs facing U.S. industry: providing the hard-to-come-by talent to work in factories; and making factories more productive in-house, so that manufacturers won't look elsewhere for less expensive production alternatives.
Visit www.advancedtech.com/workforce to obtain the white paper.
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Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Read more: 2015 Salary Survey