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October 12, 2005
Baby Boomer Exodus: Cost and Transformation
When the Baby Boomers retire in a large labor mass starting in the next five years, the manufacturing industry is forecast to feel the impact. However, the gap also brings potential for innovative trends.
Many human resource departments and labor recruiters are currently scrambling, as the impending mass retirement of Baby Boomers fuels an unknown future in the manufacturing industry and across myriad workforces. This starkly forecasted exit of skilled laborers brings with it a costly though potentially innovative hereafter.
According to a Wall Street Journal article that appeared in the Wisconsin State Journal late last month, companies across a number of industries "are starting to address the impending exodus of baby boomers — the 76 million Americans born between 1946 and 1964." Next year the eldest of this group will begin turning 60 years old.
The predicted 40 percent of skilled labor force leaving the manufacturing workforce during these next five years will purportedly cost companies between $50 million and $100 million from their bottom lines, as reported in a survey conducted by Advanced Technology Services (ATS) and Nielsen Entertainment's Consumer Products Group earlier this year.
Among the most affected manufacturers, discrete and automotive manufacturers will be hit hardest, according to ATS' survey of 94 manufacturing executives, followed by ball and roller bearing makers, metal valve manufacturers and engine and transmission manufacturers. Approximately two-thirds of those surveyed say the shrinking workforce will cost them $50 million on average, while 46 percent of manufacturer respondents with more than $1 billion in revenue predict their costs will be more than $100 million during the next five years.
To what does the manufacturing industry owe such high costs? According to the ATS survey, the blame rests with recruiting, training and lost productivity. At the same time as the forthcoming retirement surge, the number of workers between ages 35 and 44 is expected to dwindle by seven percent, notes New York research firm The Conference Board. To many, it seems there is no next generation of factory workers.
ATS President Jeffrey Owens notes in an APICS e-NEWS article on Oct. 4 that further blame for the soon-to-be-seen gaping hole in the manufacturing workforce can be accredited to the elimination of apprenticeship programs, to mistaken views of trade and vocational schools, to a chilling economy and to the overall public image of plant work.
As this problematic labor shortage incurs, however, many see an opportunity for dramatic, creative transformation in the workplace over the next two-and-a-half decades — starting now. Of course, several studies are now showing that many Baby Boomers expect to stay at their job for longer than traditionally expected (fully 70 percent to 80 percent), or retiring and then working on a temporary basis. "Working in retirement, once considered an oxymoron, is the new reality," according to a report by The Conference Board.
But unique, innovative solutions could also abound.
According to John A. Challenger, CEO of international outplacement firm Challenger, Gray & Christmas, in an article from MRO Today, the human capital crisis "could also present some intriguing opportunities for enterprising individuals and companies." He further notes, "The response to these challenges and opportunities will drive the workplace trends, many of which are already beginning to take shape."
Recent cases of companies' progressive ways toward gap avoidance, as noted within the aforementioned WSJ article, include implementation of a "retiree reservists pool" (Southern Co., an electric utility) and a developed partnership with AARP to recruit older workers (Home Depot), as well as an online directory called the "Blue Pages," wherein younger employees can find detailed descriptions of about-to-retire employees' experiences, thereby gleaning shared expertise (IBM).
Challenger predicts myriad eccentric trends, a selection of which is as follows: recruitment being replaced by online auctions; significant gains in/for workplace women; a Dot-com comeback; and a civil war between the public and private sectors for workers. (Read the MRO Today article for Challenger's further predictions regarding the next innovative top trends across industries.)
As the aging full-time population makes its long-sought exit, many industries are expected to feel the pressure. Experts' proffered advice is to take advantage of advancing technology, a "just-in-time" workforce and creative processes. Owens further notes, "Ultimately, we need to reposition skilled trades as a more fulfilling, profitable and professional career path." And get the word out: manufacturing jobs are not dead ends.
References:
Companies prepare for baby boomer exodus
Kelly Greene
The Wall Street Journal, September 25, 2005
http://www.madison.com/wsj/home/biz/index.php?ntid=55409&ntpid=1
Manufacturers Face Skilled Labor Crisis
Katrina C. Arabe
Thomas Industrial Network, June 21, 2005
http://news.thomasnet.com/IMT/archives/2005/06/manufacturers_f.html
America's Aging Workforce Posing New Opportunities and Challenges for Companies
The Conference Board, Report: Managing the Mature Workforce-Report #1369
September 19, 2005
http://www.conference-board.org/utilities/pressDetail.cfm?press_ID=2709
Labor shortages could bring unique employment solutions
MRO Today, Web-exclusive Special Report
http://www.mrotoday.com/mro/archives/exclusives/LaborShortages.htm
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46 CommentsBaby Boomer retirements is a good indication on why corporations should think twice before looking at only younger candidates when filling positions. We have many boomers seeking transition who are well qualified and capable of taking reign to replace retirees. Newly educated candidates are one thing, but the hands-on,
experienced people are still needed to groom
the younger generation, so corporations have qualified replacements.
My personal experience of the exodus of the baby boomers between the birthdates of 1945 and 1951 is derived from friends in the automotive and manufacturing industries. These retirees have literally been "driven out" by pressures executed upon them by myopic managers who are focused on the bottom line. There is minimal thought about the loss of the knowledge of these people. These boomers can't stand working where they are because of the incompetent managers promoted over them. These managers are leading by the strength of their position and not by the charisma of leadership. People on this final ride through the cesspool of their company shut down from full functionality months, even years, before they are offered an "out" on some kind of offer. American industry is its own worst enemy.
Respectfully submitted.
Jack Edwartoski, PE
What I have seen in our industry of sheetmetal fabrications for the areospace industry has been a lack of Generation X lack of detail. There has been a noticable "i don't care" attitude, and that they feel they're owed, or better still, they know it all. If this is our future, we may not have one.
Respectfully submitted.
Joseph Daniels,
Maintenance Lead Mechanic.
I have to agree with both Mr.s Daniels and Edwartoski. Upper management don't support training of the younger generation and, because of this, I find this future generation not really caring. As a Maintenance Manager I'm constantly at odds with my upper management to expand the department now while they have a chance because in 4 years they will lose myself and my lead mechanical mechanic to at best partial retirement. Management looks at me as if I have 4 heads!
Respectfully.
John Lemmon Maintenance Mgr.
Going by the current trend, by the time all the Baby Boomers have retired, most of our industries will probably have moved to China!
October 12, 2005 3:01 PMI find this article interesting in the fact that everyone looks to play the blame game. It should start at the top with the CEO's and Contolers of many corporations, they are always looking to maximize their SHORT TERM PROFITS at whose expense, the backbone of many companies, the worker.
But don't fret, as the baby boomers leave the work force so do the American jobs straight to CHINA. The handwriting is on the wall.
October 12, 2005 3:06 PMHands-on experience gleaned from years of actually doing the job and learning from others has much more value than most companies realize. There could be an opportunity to use a transition time where a near retiree is allowed to train his replacement. Picking up the fine details of the profession without learning the hard way would save millions of dollars. The retiree could possibly be put on as a part-time employee after retirement to do this training.
October 12, 2005 3:20 PMSorry, I don't buy it that we're running out of workers. The school system can't be busting at the seams (IBD headline a couple month ago "50 million students nationwide, most ever"), and we're running out of workers, you can't have it both ways.
October 12, 2005 4:25 PMDear Keith,
You need to look closer at the numbers. There is a new wave of students coming, but they aren't here yet. They need a great deal of growing & seasoning to begin to replace the "baby boomers."
Also as mentioned above, attitudes and goals are very different between generations.
Outsourcing and the changing nature of the economy will also play an important role in the jobs and workforce of the future.
A little research back to the industrial revolution and the huge work changes it brought would bring some clarity. However, please note that time compression factors for these types of changes are also a key factor.
As always, the future will surprise us, and those better prepared will do better on an individual and country wide basis.
October 14, 2005 10:03 AMDear Richard,
You need to look closer at the numbers. There is a new wave of students coming, but they aren't here yet. They need a great deal of growing & seasoning to begin to replace the "baby boomers."
Wave? What are you talking about? It's constantly growing. You make it sound like you're preparing to eat them, high school kids don't become master mechanics, they get the low-end jobs. You make it sound like people haven't been having babies in the last 30 years and there isn't any workers at all in this country. They're here and a lot more are coming.
October 14, 2005 8:44 PMWhat I strongly dislike and disagree with (and it happens all the time) is the categorizing of large groups of people into the various "birth periods / camps," ie, "Baby Boomers" or "Generation X" and whatever the next camp will be called. And then have these groups all "labelled" either positively or negatively based on what generation camp they have been "labeled" into.
I have worked with many people over the years including pre-"baby boomers" and have met with mixed types in all groups, some were ambitious and positive, some had that "don't care attitude." Some were clever and bright and some were dumb, some were interested and motivated to learn from others and wherever they could, and some had no motivation to learn anything at all. Some had very bad attitudes even, and they weren't just the Gen X group either with the bad attitude. It's especially tough for those of us born on the "borders" of these defined camps where we can be viewed as being from one camp or the other depending on the person's mood or frame of mind.
As a society, shouldn't we try and stop all this labeling of people and placing into neat little camps with pre-defined qualities, attributes and goals ?? It's time to move on from this kind of thinking, it's high time we evolved our collective thinking (and individual thinking) beyond this "blame / categorize people" type thinking.
----
I agree with your disinterest in labels and generalizations. I've personally found myself far off from the typical description of my age group.
In this case, writing for a large audience, and in order to not have to describe in every detail every mention of a group, a generalization and label was used so as to quickly acknowledge who it is being described so that the readers could move on to the "meat" of the topic, as it were. Hopefully, in this case, it was done so in a way that the audience could quickly establish the "who" of the discussion/editorial, without compromising the accuracy and (ideal) objectivity (although, this IS a blog) of the piece.
In the above editorial case, the label is apt because it's describing the age of the age group and not so much a generalized mentality of the age group.
Cheers.
-IMT Editor
We all can play the blame game and point fingers. We should look first at our own homes. The next generation of workers is exactly what we have raised them to be.
If the executive is only looking at short term profits; it's the way his family runs the home.
If the worker has the I don't care attitude; he probably is from a broken home where the parents are split and the kids raise themselves, because the parents still haven't grown up.
We need to reestablish the family and family values and responsibilities. Start by looking at your own sons and daughters and see where they stand.
Let that young worker who does care into the work force and reward him with good pay and you will find he will step up to the career challenges.
October 18, 2005 1:27 PMThe next generation here in the USA is filled with plenty of intelligent and skilled people to take on the vacancies in our industries. Training in the respective industry they join is the name of the game. The transitioning period is up to the CEOs, investing money up front to bring these newcomers in sooner (to work with the old timers before they leave). The experience they lack will only come by seeing and hearing from the workers with years of experience and eventually getting through the same lessons learned, that we experienced.
This next generation started off in elementary school with computers and advanced technical courses; when we started off with a big chief tablet and a number 2 pencil. Hopefully they will work smarter and not have to work harder.
October 18, 2005 1:53 PMInteresting discussion. I detect some sour grapes about displacement and disregard of valued experience. I guess that happens alot with "progress". BUT, industry in its endeavors to cut the bottom line due to competition have fostered this condition. All industrialized nations train their workers at the academic schools and thru in-house training & experience. It was the apprenticeship and in-house schooling programs of the late industrial revolution that lead the way BEFORE college programs existed.
Workers are healthier nowadays and many work long after retirement, by choice or necessity. Social security failure will cause even more to do it. There will be a mutual gain to use workers after retirement for mentorship and difficult non-classical tasks that require hands-on and people-savvy skills.
By the way, there is not a shortage of skilled workers that expect reasonable compensation. There IS a shortage of "low-wage" skilled workers and professionals. So, firms go off-shore using or recruiting workers with substandard wages compared to their USA counterparts.
International corporations that have grown in the USA without the threat of nationalization, a stable workforce, and protective laws, have no allegiance to the USA except to survive in the interest of the institutional investors. Soon, the industries overseas will mature and their workers with gain from those institutions and the experience similiar to the growth and experience of the USA industries over the last 4-5 generations. Then, the natural outcome is declining USA as a nation. It's coming, the prophesies predict it to a point....China?
October 18, 2005 3:21 PMThis is rich. The brainstem social engineers in Washington and rakish executives running corporate America who sent our jobs overseas in the last ten years ought to contribute their lavish bonuses and corporate equity to the massive hemmoraging that their treasure troves are going to suffer when the boomers start to retire and die off in mass numbers. "The predicted 40 percent of skilled labor force leaving the manufacturing workforce during these next five years will purportedly cost companies between $50 million and $100 million from their bottom lines, as reported in a survey conducted by Advanced Technology Services (ATS) and Nielsen Entertainment's Consumer Products Group earlier this year." The brilliance of their financial and corporate planning as they dissed the professional careers of America's engineers is remarkable in the degree of its self-serving.
October 18, 2005 5:44 PMWarning: Advanced Technology Services and its Survey, should be viewed as propaganda at best.
This company has a history of self serving data; they have done much to destroy thousands of skilled workers and remove them from the labor force.
This is nothing but a fantasy of Mr. Owens, to gain business.
His inept management teams will for a price offer you a team of super laborers to resolve your perceived labor problems.
Look elsewhere for answers.
The corporations have short-term vision because investors have short-term vision. Investors have short-term vision because the tax laws promote it. If long-term capital gain was defined as 5 years holding and a large spread between long-term & short-term capital gains tax rates was maintained, corporations would have to start looking long term because investors would be encouraged to. The current stock market is driven by momentum & momentum doen't come from long-term outlook.
October 19, 2005 9:56 AMYes, the downsizing of the American workforce in manufacturing is alarming at best. But I, as a late baby boomer who spent twenty years as a Machinist who went through the apprenticeship program and now am in a supervisory role, see this as a double edged sord.
We hear all about the young generation with their Generation X and Y mindset, but we need to look at the senior seasoned workers too.
I have seen first hand that when a young worker comes into a company, they are often mistreated simply because they are young which drives them away rather quickly.
It is true that not every person that comes into the trades is going to be "The One" that will embrace the skills needed to keep our industry moving forward, but remember that even the senior workers were young and restless too at one time, and not every one of them was the ideal worker either.
I have worked with several baby boomers who amaze me that they have been employeed for as long as they have been.
We, as seasoned workers, need to adopt the Journeyman / Apprentice mindset ourselves and pass on our "Deep Smarts" onto them regardless of what part of the world they come from or what church they belong to or do not.
I have seen too many young men come into shops and who were driven right out because they were not embraced by the senior workforce, so we the elders, have a responsibility ourselves, as well.
I say this as someone who, again, went through a formal apprenticeship and received his Journeyman's card, and that recently finished a graduate degree in Management and is now in a position to influence the opportunity we are all looking for, that the hiring process needs to look deeper for those who have the insight to carry on our long-standing reputation as the strongest manufacturing country in the world.
Furthermore, once we have those few chosen ones, to transfer our years of experience and allow them to retrofit those experiences to fit the modern methods that we know we need to have to remain competitive, resilient, and adaptive to a changing environment.
October 19, 2005 12:32 PMChina, India etc. They are not the problem it is our government. The federal government is not competitive with China, India etc. Locally we have Cook County that has no real function other than to tax and spend. Why are we putting up with this? If China and India had to go through all the regs US business does plus put up with class action law suits and all the other legal hurdles, the job growth in the USA would be overwelming.
October 19, 2005 1:53 PMMy father served in the Sea Bee's and became a construction company superintendent. He got his training from the military. He organized unions in the south when Korea was over. A very bad time to do that. He is retired now and deserves it. My generation was a mixed up mess. We couldn't figure out if the war in Viet Nam was good or bad. We lost our patriotism and our unionism in about one generation. Isn't that some kind of record? We stopped most of our apprenticeships when we stopped going union. Today's lack of enthusiasm for the mundane work/factory job is not because of the generation gap. It is due to the fact that WE as a corporate nation have, through demanded technology aimed at ending the mundane/factory worker, have caused our own downfall. Look around! Don't you see the incongruity in our society. High school kids that don't know how to count change. Why should they, the technologically advanced register is there crutch now. The all important bottom line was responsible. Less time. Less errors. People (engineers with master degrees like my neighbor) that aren't working created these machines, then we as a corporate nation shipped off the drawings to a third world country and said you guys build it. Cheaper that way. Our Corporate Nation has cut out the middle man. That's you and me and all the people that take pride in our work, and try to earn a living amidst our so called globilization. Yes, there are a lot of disenfranchised younger adults that think the way to a buck is the shortest way, and they wouldn't think of getting their hands dirty. Their solution is an attitude that says to management, WHAT'S in it for me? Not every body in a factory gets UAW wages, pity poor us. Our younger generations have this attitude about us and we have an attitude about them. If only this world were perfect. As a non-union NONworking individual that has been a laborer and a facility maintenance manager, I was once told by my father in the early Seventies that he wouldn't work for less than $15 per hour, I look at what I make today and wish I was making what he did. A sign of our times also? Gone are those days of apprenticeship and low wages with the understanding that you could work up the ladder by learning your craft and giving back to your employer. Welcome the days of our throw away society. Don't fix it, get a new one. Don't build one with any kind of quality,-----Outsource it!@$#!@%@#^&#$. Makes me kinda angry. Check your edges on your sheet metal, have you deburrred them, or did the Corporate Manager tell you to skip that step. Is your Ford or Chevy or Dodge made with parts that came from a worker in the USA or was it outsourced also. I just found another part on mine that was made somewhere else. Had to replace it of course. Look at the clothes you wear, Betch your last bottom dollar, that they weren't made here. When is the last time that you were at an antique auction a saw a hadcrafted item, and said to yourself GEE why don't we see things made like that anymore?
But we all know that, don't we!!!!
Why as a nation are we doing this to ourselves? Who is running this nation? Certainly not you or I.
Can you blame this younger generation from shying away from WORK? We don't even support ourselves anymore. Will taxation of Corporate outsourceing be the answer. No, because they will just add that on to the price of whatever it is.
Think about it, we have just built (took about 30 years) a better mousetrap, but we are running out of mice.
We have set up a maze and can't find a way out.
Is the technology yet to come the answer? I hope so.
For My Kids sake!
The citizens that I know are scratching there heads and hope so also. By the way, I'm not working now, e-mail me if you have a job that pays a livable wage. Keenanranch@netzero.net
The fact of the matter is we are heading for a labour shortage in the not too distant future.The reality of the situation is that it is actually happening now in some industries. We have seen it in our company where we have had to go from 3 shifts to 2 because of a lack of workers. And it is only going to get worse. Demographics don't lie...it is fact...there just weren't enough babies born after the "boomer generation" ( 1946-1966 ) to support the mass exodus of retirees in the coming years. It's simple math . As this "huge demographic bubble " of boomers moves through the system it will create a "vacuum" behind it whereby there will be too few workers to promote productive economic growth. Immigration will help but it is organizations that will have to change their thinking toward older workers and start treating them as an asset so that they may mentor the younger employees, and pass on their knowledge.At this point we are getting by because the economy is somewhat sluggish...but when it kicks into high gear (and it will), the deficencies will be magnified and the race will be on to keep the economic engine of supply and demand going. There will be big demand for goods and services...but little supply of skilled workers. This is not about what might happen...this is about what will happen .We have to start addressing this problem now...not ignore it and hope it goes away or won't happen.The next few years are going to be very interesting indeed...these "boomers" are really something...dictating trends still ! So buckle up, hold on tight because i've got a feeling it's going to be a bit of a rough ride...time will tell.
October 23, 2005 1:49 AMYou just know there have to be a cadre of overstuffed lawyers and green-eyeshade bean counters leading this brain child of economic wonder.
November 4, 2005 12:29 PMIt's interesting to note that so much has been talked about Baby Boomers working in manufacturing plants. No one seems to discuss those working in consulting engineering companies. With so-called Generation X students coming from engineering colleges, experienced engineers sometime have to face the reality of the matter that newcomers have the advantage of knowing computer programs, etc. At the same time, jobs are offered to the inexperienced students graduating from colleges, while experienced still look for jobs. This I call the disparity on the part of upper management. Why hire experienced engineer while they can efford to hire two for the salary of one?
I feel sorry for fresh college graduates, since they have no job experience. But at the same time, I feel as though I can do a better job but inexperience gets the job.
This is all due to the fact of what's the bottom line for the company. Today management expects you to know all at no cost to the company. You need to go and get training, etc. It's so disappointing. When will management wake up to keep the balance?
December 7, 2005 11:13 AM
