Solving the skills crisis in the automotive industry

Solving the Skills Crisis in the Automotive Industry

February 2011

The auto industry was hit hard during the recession. Already coping with nearly two decades of massive structural change, auto companies over the past couple of years have shed plants and brands as they downsized, restructured and slashed budgets to bring costs in line with lower sales. They also cut jobs: as many as 300,000 or more according to some estimates. Now, however, as the fortunes of the auto industry turn around, companies should be enjoying a bonanza of available talent, right?

Unfortunately, it’s not that simple. In spite of what should be a surplus of workers, auto companies worldwide are now experiencing a shortage of the workforce competencies they need to grow. According to one study, for example, nearly all UK auto executives surveyed reported a skills gap, and 59 percent of those executives believe the gap will stay the same or increase over time. Another report found that nearly all US auto executives surveyed had worries about the future pipeline of skilled workers.

What’s going on? At the heart of the challenge is the changing nature of the skills needed by workers in the industry, especially as more teams operate globally. So-called “unskilled” employees are rarely needed now. New technologies and operations require new competencies, as well as experience with autonomous problem solving and decision making.

Creating a workforce with these new capabilities requires more effective human capital strategies and approaches. Better workforce planning is essential, as is a more innovative approach to job design. The ability to give existing workers new skill sets must go hand in hand with better recruiting. As automakers strive to sustain a new era of growth, they must ensure that their talent can grow with them.

The changing skill sets of the auto industry

The auto industry was once a bastion for the unskilled worker with only a secondary-school education seeking a decent salary and a stable, predictable (if routine and manually repetitive) job. Today, there is no such thing as “predictability” or “unskilled labor” in the auto industry. Most repetitive tasks have been automated, the product has become highly complex and manufacturing processes now require different skill sets.

Companies need capabilities in “green” technologies, for example, as well as in the wireless services that increasingly are being embedded in cars, providing navigation, communication and other features.

The globalization of the industry has also put pressure on traditional workforce skills. Auto companies are redistributing resources to high-growth, low-cost regions. They are also looking to emerging markets as significant areas of sales growth. A full 32 percent of auto employment today is by international automakers, and it is estimated that number will reach 43 percent by 2016. 

New capabilities are required to succeed in this environment. Production workers, for example, need to work in cross-cultural, autonomous global teams and must be capable of problem solving, working with computers and making decisions on the front line. Engineers and technicians—two increasingly important groups that, taken together, are becoming a larger proportion of the auto workforce as companies compete more on innovation—also need more computer skills as the electronic components of vehicles become more complex. Even top leadership needs a host of new skills to manage a more global and constantly changing technological environment.

Solutions to close the skills gap

Today’s economic realities demand that auto companies have a flexible workforce that can constantly learn and refresh its skills. Here are some suggestions for how auto companies can improve their human capital practices to create a workforce with the skills needed to support growth.

Create a more flexible workforce-planning process
Advanced analytical techniques, such as predictive modeling using both HR and business data, can be used to help executives understand and predict the demand for critical skills today and in the future. Analytics can also help managers make much quicker decisions about individual employees—focusing on high performers and those with critical skills—enabling companies to more flexibly adjust available skills to marketplace demand.

Leverage rapid learning design to retrain workers
In some cases, companies must train existing workers in new skill sets. For example, when AD&D Technology—a powertrain testing and vehicle development supplier based in Ann Arbor, Michigan—decided to diversify into batteries and more fuel-efficient electric motors as gas prices soared, the company had to retrain a full 40 percent of its workforce.

Redesign jobs
One of the big challenges in the industry today is achieving the flexibility needed to produce increasingly complex products that draw on a portfolio of skills—skills that may not be simultaneously in use at any given time. To meet that need, jobs can be broken apart in terms of tasks currently in demand and the skills needed to complete them, and then those roles can be filled as needed.

Create an internal skills market
Organizations must improve their ability to compile data on their employees’ skill sets to determine what aptitudes, interests and competencies each employee currently possesses. An internal skills-matching market can then be created, enabling a company to move capabilities more swiftly to where they are needed. Having better data and an inventory of skills, organizations can identify a new business need, identify workers with capabilities or aptitudes related to that need and fill in the gap with learning for the rest.

In addition, knowing what skills your people possess means you don’t waste time and money training people in things they already know how to do. Companies can improve the return on their investment in learning by giving training only to those individuals who have a need, or who already have an aptitude or interest in learning a new job or role.

Make learning new skills an ongoing process built into the work itself
Instead of taking employees away from their work environment for retraining, identify workers in your organization who already have the required skills and encourage them to share their knowledge with others through peer-to-peer learning vehicles like blogs, wikis or corporate social media platforms. Or pair them up with others who can learn from them on the job—even people from other companies engaged through worker exchange programs.

Learning can also be woven into work itself by offering bite-sized electronic learning components—short videos, simulations, games, podcasts, web-based learning and more—that can be targeted to individuals based on demand.

Creatively recruit and hire skilled people
Using technology like social networks or online talent markets, companies can now reach people around the world and gather an immense amount of data and information on each potential worker, including skill sets, experience, strengths, interests, peer reviews and much more. Technologies like Twitter or candidate relationship databases (which capture information about interested candidates and enable companies to send out ongoing, personalized communications) help companies build ongoing relationships with potential employees, keeping them interested and engaged.

Other new ideas include creating meritocratic competitions within the workplace to identify highly skilled individuals (as Google does with its coding competitions); crowd-sourcing job specifications to ensure the right skills are being targeted; and using videos or employee interviews to give potential candidates richer and more complete information about what is actually done in a particular job.

Driving forward with the talent you need

The recent financial crisis in the automotive industry has now led to new marketplace opportunities. Automakers are looking to forge ahead with innovative business strategies designed to suit a new economic era and global marketplace; however, many companies are hampered by the fact that they don’t have the workforce skills to successfully execute these strategies. To beat the competition, auto companies will need to quickly revamp their human capital processes to attract and grow the talent they need to succeed.

About the Authors
Susan M. Cantrell is a research fellow at the Accenture Institute for High Performance.

James Robbins is the North American lead for Accenture’s Automotive industry group.

David Smith is the managing director of the Accenture Talent & Organization Performance service line.

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Solving the skills crisis in the automotive industry - Accenture Outlook 
Following a period of severe cutbacks, one might think automakers have a supply of talent ready and waiting. It’s not that simple. New and more complex skill sets are essential.
skills, talent, automotive
Yes  Yes 
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