Industryweek 13403 Spreadsheet

The Cost of a Common Workforce Strategy

March 24, 2016
    Has your workforce strategy during downturns jeopardized your company's--and the manufacturing industry's--ability to attract skilled workers?

I read an article the other day that points to an overlooked cause of manufacturing’s skilled workforce challenge.

The Wall Street Journal article, “Many Shale Companies Are Unable to Ramp up Oil Output,” speaks to the challenges faced by oil companies that find themselves unable to restart production now that the oil industry has begun to turn positive.

One reason? They won’t be able to quickly find and hire the skilled workers they’ll need.

Sounds simple enough: Isn’t that a common theme among manufacturers?

But here’s the rub. These same companies, according to the report, “laid off 110,000 people in the past year, Evercore ISI analysts estimate, and many of those workers have no plans to return to the industry.”

Further, it notes that “A recent survey by Hays PLC found that 72% of laid-off oil and gas workers around the world are looking for jobs in other industries.”

One company is quoted as saying that it had cut its workforce more than 40% and estimated that “only one in five laid-off workers will return, taking with them the expertise they developed …” [italics added].

The CEO is quoted: “We lost a lot of good people. They won’t be back.”

Is anyone surprised?

Why, pray tell, would someone invest time and training, then years of their careers building knowledge, skills and experience working in an industry that has a reputation of treating its workforce as costs to be cut?"

Why, pray tell, would someone invest time and training, then years of their careers building knowledge, skills and experience working in an industry that has a reputation of treating its workforce as costs to be cut?

Why would any millennial be attracted to such a career?

I remind you of a survey conducted by the Manufacturing Institute and Deloitte, which was designed to gauge Americans perspectives on the U.S. manufacturing industry, relative to other industries. One finding:

“While 84% of respondents rank job security and stability as very important or important job selection criteria, 75% strongly agree or agree with the statement, "manufacturing jobs are the first to be moved to other countries" and 41% strongly agree or agree with the statement, "U.S. manufacturing jobs are stable and provide job security relative to other industries."

Granted, the oil industry, with its boom-and-bust reputation, is an extreme example. But other manufacturers facing similar business cycles should pay attention.

One company, Schlumberger, the report notes, has tried to “head off what some see as a looming brain drain,” by placing “1,700 of its young engineers with two or three years of experience...on extended leave—receiving some elements of salaries and benefits, but not costing the company until they are needed again.”

Implementing strategies to stabilize employment is not a new idea, though certainly not widespread in manufacturing. Toyota Motor Corp. (IW1000/8) is perhaps the most widely recognized as a company dedicated to prioritizing long-term employment security for its employees. During slowdowns, the company reduces production, conducts additional training and continuous improvement projects, and in some cases, provides paid time off to volunteer in the community.

Others that come to mind include Nucor Corp. (IW500/55) and Barry-Wehmiller.

I understand that this strategy alone likely will not solve manufacturing’s skilled workforce shortage. But the survey results suggest it’d be a selling point for your company. Also, it might help change manufacturing’s negative reputation as an industry that treats its employee as costs to be cut, not assets in which to invest.

Given the critical skilled workforce shortage, don’t you think it’s worth a try?

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