The Skills Gap & Labor Shortages: A Threat to the Automotive Supply Chain

Perhaps more than any other sector, the automotive industry must pay attention to labor continuity. 

First, there is an ongoing skilled labor shortage in the automotive industry. Some estimates say it could exceed 2 million auto manufacturing jobs within a short time. 

According to research carried out by the Automotive Industry Action Group in collaboration with Deloitte, more than half of OEMs and suppliers believe they will face a high level of difficulty if appropriate action isn't taken to close the gap between the rate at which the industry is losing experienced workers and the rate at which it's acquiring new workers.

On top of this, labor disputes remain a threat to the industry, and natural disasters can prevent workers from making it to the production site. And then of course, depending on the region and the role, there are often local talent shortages as well. For OEMs and suppliers, there are lots of labor challenges to overcome and problems to solve when meeting a production schedule. 

This is why having a contingency staffing service at the ready is important to help reduce the risks of potential supply chain interruptions and meeting production schedules. Here's what you need to know about ensuring labor continuity for your business:

Automotive Supply Chains Are More Vulnerable to Disruptions Than Ever

What happens if a disaster affects your your physical plant, employees, and local labor pool? Where will you source additional labor from quickly? Will you pull employees in from other locations and if so, who is managing this process? Do you have a contingency staffing provider who can quickly deploy teams to your facility and manage the process for you so you can focus on business resumption? Business continuity plans traditionally account for the risks of natural disasters, however, manufacturers today should also include contingency plans for how they will respond to the increasing skills gap.

There are many industries and areas of the country that are already feeling the impact of the skills gap, such as Michigan's auto tooling industry which has the largest concentrations of openings in the Grand Rapids-Wyoming area along with Metro Detroit. Ask any distributor across the United States how they're doing hiring CDL-A Drivers and they'll tell you the same thing -- that's it's becoming more challenging each year and hiring qualified drivers is a constant struggle. In 2014, the industry was facing a shortage of nearly 40,000 CDL Drivers and as of 2017, that number has more than doubled. 

While many U.S. manufacturers are planning for long-term solutions, business should also be incorporating short-term solutions to help source qualified personnel for unexpected and more immediate needs. 

There are many ways business continuity can be disrupted and many are outside of your control. What is under your control is how well prepared you are and how decisively and quickly you respond.

For example, since the 1970s, the number of natural disasters across the world has increased. Knowing this, you should undoubtedly have a business continuity plan for bad weather which addresses the possibility that key personnel may not be able to make it to your plant.

What you need is to partner with the right temporary staffing agency that can provide you with the skilled labor you need. Given that extreme circumstances can arise at any time, you need that partner to also be able to provide those skilled workers at a moment's notice. This way, you will be able to avoid falling behind production and keep your clients satisfied.

You Need More Than Just A Staffing Agency

In the United States alone, there are more than 20,000 staffing agencies. Obviously, this can make it difficult to know which one can provide your automotive facilities with the necessary talent and ongoing support. 

First, understand that there is a difference between a consultative managed workforce provider that supplies industrial labor and a staffing firm. A staffing agency may have access to workers, but these workers may not have the proper skills and experience to work in your manufacturing environment or the experience of providing those personnel under taxing circumstances. 

Plus not all agencies are the same and traditionally focus on reducing costs of labor rather than sourcing top quality talent. Can you be certain that when the need arises, the staffing agency will be able to provide you with the necessary skilled workers as quickly as you need them? The question then arises, within a highly interdependent automotive supply chain, can you afford to take such a risk?

Conversely, a high-performance contingent staffing service provider is able to fill key automotive manufacturing and assembly positions quickly by sourcing personnel based upon skills and experience without the limitation of locality. Service providers not only send the right people with the right skill sets, but are proactively preparing backups to provide to coverage for any unforeseen issues that may arise moving forward, and are focused on getting your manufacturing and production back up quickly.

What's more, service providers offer on-boarding, on-site management and logistics support as needed so you can get the most out of your skilled temporary personnel such controls engineers, millwrights, machinists, welders, industrial electricians, machine operators and assemblers. 

As you look for a source of temporary skilled labor, it’s important you evaluate how skilled the labor pool is from which they draw from, and how quickly they can have their personnel up to speed. To assess an agency and its workers, we recommend that you:

• Examine the agency's hiring process, check references and analyze the skills and experience of the workers the agency provides.
• Look at all the services the agency provides. Do they conduct background checks and drug testing on all employees? How frequently are these conducted? 
• Is on-site management available? This is critical for fast ramp up speed of large groups of temporary workers and to lessen the burden of bringing in temps on your management team.

The right service provider ensures you won't run into delays or quality issues at your facility and is available to you 24/7 to ensure everything is going well and to address any issues that might arise. That's not guaranteed with a traditional staffing agency. 

Have a Labor Contingency in Place 

Along with tremendous opportunities to create value, tight supply chain environments also pose real challenges and threats, with labor continuity emerging as one critical element to the success of the whole operation.

Conduct a labor audit to identify skills gaps and proactively identify different staffing solutions to respond to a variety of threats to your business operations. Download our free Labor Audit Workbook here, and asses key manufacturing personnel by skill sets, department(s), shift(s), priority level(s), ramp-up time by position, and more.

During times of crisis, this will enable you to quickly identify critical staffing needs, various staffing vendors from inside and outside the affected area, who is responsible within your company for reaching out to vendors, and estimate how quickly skilled labor can be deployed to your site(s) in the event of an emergency. 

To reduce risk and avoid disruption in your production schedule, you not only need the right in-house workers, but also a service provider that can deploy skilled temporary labor no matter when and where you need it.