United States

To create the workplace of tomorrow, auto suppliers need to act today


Each quarter, RSM US LLP sponsors the Original Equipment Suppliers Association’s Automotive Supplier Barometer, a survey of the top executives of OESA’s regular member companies. The survey provides a snapshot of the industry’s commercial issues, business environment and business strategies that influence the supplier industry. Each quarter’s survey focuses on a different topic, from planning to production. For Q4 2019, the OESA examined the workforce of the future. The following analysis is based on the survey results.

Not since the buggy whip gave way to the internal combustion engine has the American automotive industry experienced as profound a period of change as it is today. From innovations in autonomous driving to electrification to the greening of the manufacturing process, automakers, and the vast network of middle market suppliers that serve them, are grappling with how to adapt their businesses to survive.

Central to that shift is the composition of their workforce, and the need to attract younger, millennial employees who have greater technical know-how and adaptability to address these changing needs. Just as the ad campaign said, “This is not your father’s Buick,” this is not your father’s factory floor.

Yet it’s not clear that middle market suppliers fully grasp the significance of this shift. No fewer than 45% of executives of these auto suppliers surveyed during this quarter’s OESA Supplier Barometer said they were only somewhat concerned about adapting their workforce to changing market conditions.

“We’ve got a workforce that not only will need a more complex skill set but will need to be more flexible,” said Lawrence Keyler, the global automotive sector leader at RSM. “We’re going to have to be proactive in how we approach training.”

Keyler identified three vital areas of change that will require a newly skilled and flexible workforce:

  • Innovation and technology. Innovation is driving profound change on the factory floor as mechanical and electrical processes are increasingly being managed by sensors and robotics—part of the continued automation of the manufacturing process. When you combine this with the demand for greener technologies, the need to recruit a new workforce takes on greater urgency.
  • Financial results and metrics. Companies, ever mindful of cost structure, are increasingly taking advantage of production analytics and workforce metrics to streamline their operations and, ultimately, to save money. This is possible only with a workforce that is savvy enough and knowledgeable enough put this data to use.
  • Research and development. These activities—which require workers with cutting-edge knowledge and the ability to take the technology to market quickly—are often situated in major markets, to be closer to the customers. This often will require competing with deep-pocketed technology firms for that limited pool of workers.

Get ahead of the curve

All of these challenges mean that auto suppliers in the middle market must attract a savvier, more flexible workforce—something that workers in the millennial and Generation Z cohorts offer in abundance.

But where to find them?

Jason Alexander, RSM principal and industrial products senior analyst, said it is imperative to look to nontraditional sources for labor. “Be creative when it comes to finding talent,” he said. “It can be done. Just not always in the traditional ways.”

Alexander identified four sources of workers that have yet to be fully explored:

  • Partner with community colleges. Community colleges have deep experience in providing students with skills and training, and are often open to collaborating with local industry. For example, Cuyahoga Community College in Ohio rolled a mobile classroom—a refashioned truck trailer—to the parking lot of a plumbing products manufacturer to retrain workers in robotics. It was a winning arrangement all around: The company, which paid for the training, gained workers who could handle new technologies. And the workers gained new skills and the community college had a full classroom.
  • Reach out to high schools. Make it clear to the local community that jobs are available for those with the right skills. The message can resonate with students who are considering a vocational track, and by using an apprenticeship model they can be trained for well-paying jobs in four years.
  • Be flexible. Many workers want the flexibility that temporary work offers, and employers need to be prepared to accommodate them.
  • Look abroad. Even amid a national debate around immigration, it’s no mystery that one tried-and-true way to fill the skills gap in a labor force at home is to look to foreign workers.

None of these solutions necessarily involve a higher hourly wage.

“In general, compensation is actually lower down on the list of items demotivating employees,” Keyler said. “What employees are actually looking for is opportunities to progress and improve their skills through education and training, allowing themselves to move up.”

This doesn’t mean it’s a free ride for employers. Refashioning a staff requires spending in the short term on items that can affect margins, such as severance, retraining, worker replacement and new compensation arrangements that are more incentive-based, Keyler said.

“Employees will be attracted to companies that invest in them,” he said. 

One success story

Consider the German manufacturer Siemens. It struggled to find skilled workers for its new gas turbine factory in Charlotte, North Carolina. So in 2011, Siemens, together with a local community college, created an apprenticeship program aimed at high school seniors. After four years of on-the-job training and classroom instruction, the apprentices emerged with an associate degree, a job that paid more than $50,000 a year and coveted skills.

To Keyler, the question boils down to this: “What are you doing today or in the future to address the issues that can have a very significant positive impact on the morale and motivation of your workforce?”

The cost of inaction

If these measures are not taken, the price is nothing less than the health, and even survival, of the firm.

“A lot of those companies are no longer going to be there,” Alexander said of suppliers in the auto industry that do not embrace change.

The good news is that some firms have gotten the message.

Keyler offered the example of one of his clients, a $7 billion Japanese global auto supplier that is trying to envision the workforce of the future. Five years ago, Keyler said, one phase in the assembly of a vehicle may have taken five people with specific responsibilities crawling around the car. Today, that number is falling as automation is implemented.

“We are trying to visualize the production of our cars in a way that is more efficient and takes less of a physical toll,” Keyler said. “We don’t know how many people we’re going to need in the world of robotics just yet.”  Companies need to plan not only for the changing skills and competencies required but also for how many skilled workers they might need.

But that number is inexorably falling. A 2017 study by Ball State University found that nearly nine in 10 of the manufacturing jobs lost in recent years were lost to robotics, not to offshoring.

So while auto suppliers will need fewer workers as their factory floors automate, one thing is clear: Those workers will need to have more sophisticated technology and engineering skills in the future. 

To see OESA's Q4 barometer results, download the PDF.


Completing the renovation of Detroit: Transforming the auto industry


Completing the renovation of Detroit: Transforming the auto industry

Automaker industry changes and challenges are explored along with the resulting economic impact on its vast network of suppliers.

8 Key opportunities auto suppliers need to embrace


8 Key opportunities auto suppliers need to embrace

From alternative fuels to telematics, suppliers need to rethink their business models in order to be successful in the future.


Manufacturing Insights

Get the manufacturing insights you want right in your inbox.


Lawrence Keyler
Global Automotive Sector Leader



RSM Automotive Monitor Survey

Case Studies

Events and Webcasts

Manufacturing Insights
News, trends and insights for manufacturing and distribution executives.