Where Industry and Security Intersect
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The ability of U.S. AT manufacturers to compete effectively both in domestic and foreign markets is determined in part by whether they can attract and retain skilled professionals and manufacturing personnel. Some survey data suggest that the AT industry could encounter problems in the future — and indicate that U.S. AT companies may have to be more proactive in recruiting people into the industry.
It is not clear whether the market conditions that existed in the late 1990s are valid indicators of the employment problems AT companies could face in the future. The robust economic conditions and the tight employment environment that existed then and its effect on the AT employment environment may be instructive for future planning.
Not only did the AT industry experience solid job growth in the late 1990s, but a significant number of companies also found it difficult to employ skilled people across a wide range of fields. Of the 357 companies that participated in this portion of the AT survey, 84 (25 percent) reported problems in hiring people. The number is sufficiently large to suggest that AT industry leaders may want to consider their future labor requirements — and options.
The key concern for U.S. AT companies is whether they can recruit the necessary workforce and control wage expense to maintain their competitive positions in domestic and world markets. It’s not clear whether the pool of workers available to the AT industry will grow slowly in the future – and whether firms will have to offer significantly higher wages to fill positions. Greater management attention may be needed to understand the potential benefits of using more automation as an economical and practical option for coping with staffing difficulties and controlling production costs.
The labor shortages reported by companies crossed 23 separate skill areas and affected very large companies as well as small manufacturers. Sixteen companies with annual sales of $10 to $315 million reported difficulties in filling positions. Most of the companies that cited employment problems, however, were smaller firms with annual sales of less than $10 million.
The staffing difficulties identified by survey participants included professional positions, skilled occupations, and administrative functions. New product engineers, software developers, and biomedical device designers are some of the professional positions (see Table 18) companies have had trouble filling.
Likewise, on the manufacturing floor, companies reported difficulty in finding qualified people for assembly work that required hand dexterity, such as soldering. Also in short supply are craftsmen in areas such as shoemaking and textile production. The manufacture of AT products is frequently dependent on the use of older, less automated production tools and processes. But, companies also stated that it is increasingly difficult to find machine operators and production managers with skills suited to these manufacturing operations.
The reasons for these shortages are varied. Many of these skilled workers are in high demand elsewhere in the job market. AT firms must compete for talented personnel against other industries. As a result, AT businesses in need of key people are often unable to find them, and finding qualified persons with experience in the AT industry is even more difficult.
While many of the skills the AT industry requires can be somewhat generic, serving the smaller and more complex market of the AT industry adds a new degree of difficulty to recruitment efforts. For example, an effective billing/collection agent in the AT industry requires specialized knowledge of insurance programs and their relationships to federal and state-level medical reimbursement programs. Similarly, AT product representatives must be knowledgeable of the variations in reimbursement levels of 50 state governments to determine a product’s actual cost to the end user.
In most industries, excessive turnover in staff generally is considered detrimental to achieving high productivity; this is the case in AT product manufacturing. While this does not appear to be a major problem for the industry as a whole at this time, at least 10 percent of AT industry survey participants are affected.
Large and small companies alike cited excessive turnover as a concern, but smaller firms appear to be affected most. About 25 percent of the 38 companies reporting employee-retention problems had 1999 sales of $10 million or greater; the balance are smaller companies. The retention problem is driven by several factors, including competition for workers, the quality of the workforce available to companies, and in some instances the very nature of the work.
Small firms often compete for — and frequently lose — skilled personnel to larger companies. Low unemployment in some regions has led to a shortage of skilled employees, which has
produced greater competition among businesses for workers. The retention issue encompasses both production workers and professionals. Companies reported difficulty in hiring and retaining marketing, computer programming, and electrical and mechanical engineering personnel.
The quality of the available workforce, in some instances, adds another dimension of difficulty to the retention problem. Several companies reported that a majority of new hires 1) have little or no manufacturing expertise; and 2) require extensive training before they are adequately productive. But once trained, many workers lose interest in manufacturing and assembly work, and quit. One firm stated that it typically retains one new hire for every six trained.