The devil is in the demographics

Dec. 1, 2007
How short will the labor shortage get? You may answer, Labor shortage? What about the sales shortage? Good point. But if your company has a future beyond

How short will the labor shortage get?

You may answer, “Labor shortage? What about the sales shortage?” Good point. But if your company has a future beyond the current business cycle, here are a few things to think about:

  • Approximately 550,000 Americans make a living in welding.

  • The average welder is 54 years old. And Baby Boomers are beginning to retire.

  • By 2010, demand for welders may outstrip the supply by approximately 200,000 jobs.

These numbers, gleaned from the Bureau of Labor Statistics and the American Welding Society, were distributed at the Fabtech International and AWS Welding Show the previous month in Chicago.

We pass these stats on to you because welding is a skill that almost everyone in our industry requires — truck body manufacturers, trailer manufacturers, truck equipment distributors, trailer dealers. If you fabricate metal — or repair what someone else fabricated — chances are good that your company needs welders.

But welding is not the only skill that will be in short supply in the coming years. Truck equipment distributors and trailer dealers are concerned about the long-term shortage of technicians. Truck drivers — despite a temporary downturn in freight volume — will remain in high demand as freight volumes grow and the number of people in the demographic group from which drivers traditionally are drawn remains low.

Demand is expected to outstrip the supply of other trades as well. According to research conducted by the National Association of Manufacturers in 2005, 90% of surveyed companies reported moderate to severe shortages of skilled workers — including machinists, operators, and craft workers. According to the NAM research, the results were roughly the same for large and small companies — regardless of company location.

As Baby Boomers begin to reach the end of their careers, even the number of entrepreneurs will be affected. Some 40% of business owners are expected to retire in the next 10 years. If a typical career lasts 40 years, that figure normally would be only 25%. A lot of companies will change ownership in the coming years.

As John Engler, president of the NAM, said at the past year's Fabtech show, “Demographics are catching up with us.”

So what's the solution? As we visit the companies that appear on the pages of Trailer/Body Builders, the actions we see being taken seem to cluster around these general areas:

  • Offshore fabrication

    A number of industry suppliers manufacture outside the United States, but it is not a common practice among the core readers of Trailer/Body Builders. Hyundai Translead is one of the few, producing trailers for the U S market from its manufacturing complex across the border in Tijuana, Mexico. However, operating there presents its own set of challenges, as we mention in the story that begins on Page 22.

  • Upgraded wages

    Given the demand that outweighs supply, it's not surprising that wages for welders are rising. According to the Bureau of Labor Statistics, welders earned an average of $596 per week in 2005, up 17% from 2000. But in remote locations and in high-risk operations, welders can earn more than $100,000 per year.

  • Improved working conditions

    We see a lot of manufacturers working hard to make their companies more appealing places to work.

  • Community involvement

    According to NAM research, large companies consistently reach out to the community more aggressively than their smaller counterparts. Among the things that most large companies do that most small companies don't: participate in job fairs and career days at local schools, organize special programs and events at schools, and contribute space or equipment to schools. Part-time jobs or unpaid internships for students are opportunities that most manufacturers — large or small — reported offering, according to the NAM survey.

    Manufacturers providing these opportunities recognize that they aren't just competing against other manufacturers for skilled workers. They also are competing against other industries. Medical technicians are in demand, too.

  • Automation

    When a machine does a job, that's work a human doesn't have to do. Fortunately, the cost of automation is coming down in many respects. For example, according to one robot manufacturer at this year's Fabtech show, a robot that costs $50,000 today can do more than one that costs $200,000 several years ago. To see some of the latest technology that might help automate your operation, see our coverage of Fabtech International, beginning on Page 34.

It's going to be a challenging future. We hope you find something in this year's Fabrication Issue that will help you compete in it.