Skilled Labor Shortage to Be Costly

Manufacturing Engineering, Jul 2005

The looming shortfall of skilled labor in the US will cost manufacturers an average $50 million from their bottom lines, according to results of a survey commissioned by Advanced Technology Services Inc. (ATS) and conducted by Nielsen. The survey showed a dire need for specially trained workforces across industry.

In the survey of 94 senior manufacturing executives, with titles of CEO, CIO, Vice President, and Plant Manager, ATS asked: Forecasts indicate that during the next five years, approximately 40% of your skilled labor force will retire. What do you anticipate the retirement will cost your company in these five years?

Approximately two-thirds said the crisis will cost them, on average, $50 million. Yet 46% percent of the respondents with more than $1 billion in revenue predict their costs at more than $100 million in the next five years.

Automotive manufacturers will be impacted the most, followed by ball and roller-bearing makers, metalvalve manufacturers, and engine and transmission manufacturers.

In another worker-related survey released by Accenture, a global management consulting, technology services, and outsourcing company, gave the worker's side of the story.

Of the 500 full-time US workers between 40 and 50 years of age questioned, nearly half (45%) of respondents' organizations do not have formal workforce planning processes and/or tools in place to capture their workplace knowledge.

* Some 26% said that their organizations will let them retire without any transfer of knowledge. Just 20% said they anticipate an intensive, monthslong process of knowledge transfer prior to their leaving.

* Fully 28% said they believe the knowledge-transfer process will last on or two weeks, and 16% think they will simply have an informal discussion with others in the organization prior to retirement.

* With more than 25% of the current working US population reaching retirement by 2010, companies must undertake workforce development and training initiatives to capture knowledge and minimize its loss. Additionally, they must support these initiatives with technology, which can help capture critical information and distribute it directly to employees' desktops.

* Of the respondents, 41% said their companies are doing only a fair or a poor job of providing the training they will need to meet the skills challenges they will face prior to retirement.