Skip to main content

A technician works on the assembly of a Boeing 737 at the company's plant in Renton, Wash.Ted S. Warren/The Associated Press

The U.S.'s biggest industrial companies face an average bill of at least $100-million (U.S.) each over the next five years as they struggle to fill the skills gaps left by the looming retirement of baby boomer factory workers, according to a survey of manufacturers to be released Thursday.

The survey by Nielsen Co. of 100 top executives at U.S. manufacturing companies underlines the scale of the demographic problem facing the U.S. economy. In recent decades, apprenticeships and workplace training have been gradually downgraded, to the extent that many manufacturers now complain they cannot find the skilled workers they need in spite of stubbornly high unemployment.

Mechanics and engineers from the baby-boom generation – born in the two decades following the second world war – formed the backbone of the U.S.'s industrial work force from the 1960s onwards. However, the first baby boomers become eligible for retirement this year, raising the spectre that the skills gap could worsen sharply in the next few years.

Some 55 per cent of industrial companies with annual revenues of at least $1-billion expect skills shortages prompted by retirements to cost them at least $100-million in the next five years, they said in a survey conducted for Advanced Technology Services, a manufacturing equipment maintenance company based in Peoria, Ill., whose clients include companies such as Caterpillar, BorgWarner, Honeywell, Eaton and Textron.

Most of the costs will be accounted for by recruiting, training and overtime costs, said Jeff Owens, ATS chief executive. He said the costs also take into account the likelihood that equipment would not be operated for part of the time because of a lack of qualified maintenance staff. "You're talking about falling productivity and a shorter life for fixed assets in factories," Mr. Owens said.

Rick Stephens, senior vice-president of human resources at Boeing, the aircraft maker, said his company is well aware of the problem. "Like most aerospace companies, we have a work force that is more on the mature side," he said.

Mr. Stephens said Boeing spends about $80-million annually in work force training. "We've also significantly increased spending in the past year to train up new employees to ensure they're qualified to go into the production environment," he said.

The problem of the looming retirement of highly experienced workers, Mr. Stephens said, has been aggravated by the fact that new recruits tend to be far less technically skilled than entry-level workers were decades ago. In response, Boeing recently doubled its introductory training course from between six and seven weeks to 13 weeks.

Mr. Owens said the recession had enabled manufacturers to avoid facing the retirement issue. "Companies have put this problem off for a long time because it's not been pressing," he said. "But many companies are starting to discover how urgent it is when they look at the average age of their work force."

The survey also found that 45 per cent of companies are encouraging older workers to delay their retirements as they face the prospect of losing skilled staff, while employees are keen to rebuild their recession-hit pension funds.

"The folks that we expected to retire, the age has been extended a bit because of the economy's effects on peoples' savings and retirement plans," said Mr. Stephens.

Mr. Owens said that could help postpone the problem, but could not overcome it. He also noted that older skilled workers tend to be less productive.

"Manufacturers have assumed they can simply hire people when they need them, but when they start to look, they realize how difficult it is to hire." Half of the survey respondents said they had 11 or more open positions for skilled workers, with one-third having more than 20 unfilled vacancies.