By Kathryn B. Creedy
- Manufacturing needs 3.5M workers just for A&D by 2026
- Global shortage tops 80M by 2030
- Automation will not solve the problem
- Many industry segments don’t tally future needs
- Cost of taking no action in billions of dollars
It is difficult to pin down the actual number of workers needed for the different segments of the aviation/aerospace industry because some segments of the industry simply do not track future workforce requirements. Complicating this is the fact many reports are years old, compounding the confusion from different studies telling us different things.
For instance, Aerospace Industries Association (AIA) assesses the state of the workforce annually in partnership with the American Institute of Astronautics and Aeronautics (AIAA) and Aviation Week & Space Technology (AvWeek). However, it does its workforce projections only periodically, with the last published in 2017. On the other hand, General Aviation Manufacturers Association (GAMA) does not track future workforce needs and the AIA/AIAA projections do not include GAMA needs.
That leaves us without concrete goals since we don’t know how many people will be needed or how many we need to move from not knowing what they want to do to aviation/aerospace.
For that reason, Future Aviation/Aerospace Workforce News (FA/AW News) is launching a series examining each industry sector to tally both current employees and, if it is available, establish a baseline of industry workforce needs by sector – airlines, airports and government, etc – to reveal information gaps in workforce development.
The series will also be looking at the skills future aviation/aerospace workers. While some information may not be new, it is an important reminder of the urgency required for the task ahead.
One of the many information gaps is a unified source of all the information needed to develop a remediation plan. This series will get the industry working from the same information and hopefully in unison rather than in the current silos. What is needed are tools to give industry the wherewithal to compete with Silicon Valley and build the business case for dramatic reform.
Those studies and the economic impact statements from aviation/aerospace groups clearly chronicle what will happen if we don’t get our workforce act together not only in loss of global corporate and technological competitiveness, innovation, economic strength and untold billions in lost revenues, but in the loss of our strategic defense and security readiness. The conclusion is universal, failure to build the workforce needed is bad for business and increasing automation will not make a difference.
Manufacturing by the Numbers
FA/AW News’ series starts with manufacturing covering Aerospace Industries Association and General Aviation Manufacturers Association.
In a 2017 report (latest available), The Defining Workforce Challenge in US Aerospace & Defense STEM Education, Training, Recruitment & Retention, AIA reported members predicted 3.5 million jobs will need to be filled by 2026. Alarmingly, it said a skills gap is expected to prevent 2.0 million of those jobs from being filled. From top to bottom the industry tells educators it wants employees prepared to hit the ground running without costly training programs.
AIA’s report normally tallied the total workforce at 2.4 million but, with this report redefined workers, limiting them to those who design, build and sustain systems and platforms because it more closely mirrors the codes used by the Labor Department. In the 2017 report, the industry employed 849,000.
Add to that the numbers from General Aviation Manufacturers Association (GAMA), which reported in its 2019 Data Book, the industry employed 273,500 full- and part-time workers in 2018.
The study, done in coordination with the Aircraft Electronics Association (AEA), Aircraft Owners and Pilots Association (AOPA), Experimental Aircraft Association (EAA), Helicopter Association International (HAI), National Air Transportation Association (NATA) and National Business Aviation Association (NBAA), said general aviation also generated $77 billion in labor income (including wages and salaries and benefits as well as proprietors’ income) and contributed $128 billion to US gross domestic product (GDP).
What About Covid?
To be frank, Covid makes all these numbers a crapshoot. AvWeek’s 2020 Workforce Study study showed 75,000 new hires in 2019 but 115,000 employee losses by mid-2020. We can take little comfort in Covid’s mitigating some shortages. They are temporary and accelerated retirements will make them more acute once demand returns.
AIA members were hiring, according to its 2020 Facts & Figures US Aerospace & Defense covering 2019 which showed the workforce grew by 4.8% (1.4% of the US total workforce). It boasted average wages and benefits grew by a whopping 46% to $102,900, higher than the national average. It pointed out the high wages were supported by a 6.8% increase in industry sales revenue.
The consequences of workforce shortages are stark, according to the AIA’s report concluding shortages could cost the industry a staggering $49 billion just from positions remaining unfilled.
These foregone business opportunities tally with the Aeronautical Repair Station Association (ARSA) study showing, pre-Covid, workforce shortages cost the maintenance, repair and overhaul industry $1.4 billion annually.
AIA described the impact of shortages. “82% of U.S. manufacturers across all industries say talent shortages will have a moderate or extreme impact on production levels to meet growing customer demand,” said the 2017 report. “To compensate, forced overtime is often imposed, resulting in average annual working hours that are 17% more than in all other industries. The losses caused by this shortage are real – up to $3,000 per existing employee, and an average of $14,000 per open position, by some estimates. Thirty nine percent of companies predict an extreme impact on business growth, from labor shortages, not just of senior-level engineers but a shortage of skilled technical workers versed in technology fundamentals.”
The Global Problem
It is important to put AIA’s US numbers into context. According to a Korn Ferry Future of Work: The Global Talent Crunch report shortages will result in a talent deficit of 85.2 million workers worldwide by 2030 in three major areas –technology/communications/media, finance and manufacturing. It predicts a massive shift in industrial development overseas – specifically to India.
“By 2030, all countries except India face deficits in highly skilled labor in the sector. By 2030, Brazil could suffer manufacturing worker deficits of 1.7 million, while Indonesia could see worker shortages reach 1.6 million. In the United States the deficit is expected to increase over the next decade, reaching a 2030 shortfall of 383,000 such workers, equivalent to more than 10% of the highly skilled workforce. Japan, the No. 3 manufacturing economy, could fail to realize $194.61 billion by 2030 due to severe labor shortages in this sector, the highest amount of any country analyzed, representing 3% of the country’s entire economy.
But A&D can’t send its work offshore since defense-related contracts require US citizens with security clearance.
In manufacturing, Korn Ferry said, “The shortfall of Level A workers could equal 21% of the highly skilled workforce of the 20 countries in our study. India is the only country analyzed that can expect a talent surplus, driven by a burgeoning working-age population. This global skills shortage could result in $8.452 trillion in unrealized annual revenue by 2030—equivalent to the combined GDP of Germany and Japan. A global talent crisis could cost nations trillions of dollars in unrealized annual revenues.”
“The talent crunch – an imminent skilled labor shortage affecting both developed and developing economies – could ultimately shift the global balance of economic power by 2030 if left unaddressed,” Korn Ferry said. “The United States alone could miss out on $1.748 trillion in revenue due to labor shortages, or roughly 6% of its entire economy.”
Automation Will Not Solve Workforce Problems
Manufacturers hoping technology such as robotics will dig us out of the problem will be disappointed.
“Innovations in artificial intelligence and machine learning are driving automation, and the people-tech partnership promises enhanced productivity across every industry,” Korn Ferry reported. “But in a separate 2016 study, Korn Ferry found traditional firms already struggle to find the digital talent they need to keep up with customer demand and transform to more digital operating models.
“While 67% of CEOs believe technology will be their chief value generator in the future of work, they cannot discount the value of human capital. Even companies using more robotics foresee a growing need for human talent with advanced skills for example, redeploying people from the factory floor, where robots can perform repetitive work, to the research laboratory,” Korn Ferry’s Great Talent Crunch study continued. “The problem, however, is the mismatch between technological advances, including automation, artificial intelligence (AI), and machine learning, and the skills and experience workers need to leverage these advanced tools. Technology cannot deliver the promised productivity gains if there are not enough human workers with the right skills. What we found is that global growth, demographic trends, underskilled workforces, and tightening immigration mean that even significant productivity leaps enabled by technological advances will be insufficient to prevent the talent crunch.”
Manufacturing Needs Rebranding
FA/AW News reported on the hundreds of programs designed to attract more people to the industry and to increase STEM literacy beginning in Pre-K. Coupled with annual federal appropriations for STEM education, typically in the range of $2.8 billion to $3.4 billion, according to a Congressional Research Service report, we shouldn’t have a problem attracting talent.
But AIA cited the erroneous but popular image of manufacturing as “dirty and dangerous.” It is equally about competition.
“Today more than ever, aerospace and defense recruiters compete for talent among candidates who also have skills highly-coveted in Silicon Valley,” said the organization, citing the Aviation Week 2015 Workforce Study.
But it is not just Silicon Valley, it is automotive, oil and gas and even financial industries that are looking for the high-tech talent so necessary in aviation/aerospace.
What is needed is a tool about the advanced technology that surpasses anything Silicon Valley is doing, something FA/AW News hopes to do. A tool that would discuss, as AIA pointed out, new technology that puts the industry on the leading edge of the future including virtual prototyping and 3D printing for jet and rocket parts on the International Space Station, and for advanced aircraft materials and design.
GE is already ahead of the game on creating those tools, with advertising campaigns and TV programming sponsorships that showcase STEM innovation.
Several trends are converging that could perhaps turn the tide in manufacturing’s favor including the cost of higher education. In addition, manufacturers have partnered with community college partnerships to meet their needs which attracts students from their local communities. There has also been growth of career & technical education (CT&E) which reaches down into high school to recruit new talent.
Perhaps, most importantly, is the interest of parents – especially in working class and middle-income populations – in creating alternate strategies for their children’s college education.