Technician Shortage Expected as Early as This Year
By Kathryn B. Creedy
- Increasing demand leads to hiring recovery
- MRO workforce cuts minimal compared to other sectors
- Labor shortages, costs remain a serious concern
- Key people abandoning the industry
- Covid is cyclicality reminder making others leave
- Shift in demand may make recovery harder to predict
- MRO recruiting efforts succeeding in increasing AMT enrollment
- Schools will have to produce 2700 new graduates to meet demand
- Acid test will be 2020 enrollment figures
- Industry doing poor job of recruiting military, capturing only 10%
The technician shortage is expected to re-emerge as early as this year, according to an Oliver Wyman study especially as some unemployed technicians leave the workforce permanently, similar to what has been experienced in the pilot corp covered in the last issue.
The good news, MRO workforces were not as devastated as other disciplines and are estimated to be down just about 3%. The recovery, which Oliver Wyman expects in 2022/23, makes MROs reluctant to lose employees given previous shortfalls.
JSFirm, the industry-leading placement company, reported hiring has already resumed. Its Hiring Trends Survey of hiring professionals, executives, and business owners indicated over 50% are projecting growth in 2021. Additionally, 66% of those surveyed did not cut any jobs in 2020, despite the pandemic. Furthermore, 33% expected to hire in the second quarter 2021 with pilots, maintenance and avionics techs in highest demand.
“The results of our recent survey are encouraging for the industry,” said Managing Partner Sam Scanlon. “It’s interesting to see how many companies were not affected too much by the pandemic: airlines make the headlines, but the fact is, the small-to-medium size companies that make up the majority of our infrastructure made it through the past year and are now gearing up for growth. Overall traffic on our website continues to increase from both job seekers and companies – we are anxious to see how the remainder of 2021 plays out.”
An interesting insight comes from Launch Technical Workforce Solutions CEO Mike Guagenti in a recent interview with Lindsay Bjerrgaard in Aviation Week, indicated his company was back to pre-pandemic demand.
“Our experience is that most of the folks that took early retirement either indeed retired or were kind of waiting out a job transition to do something different,” he siad. “The younger workforce that was furloughed certainly became available, but not in any great waves that you might have expected.”
He pointed to business aviation and cargo markets absorbing furloughed talent and reported those returning to the airline workforce are bringing new talent with them. He also sees opportunities in the maintenance airlines deferred during the pandemic as well as rehiring at manufacturers. Significantly, Guagenti sees a major shift toward hiring recent graduates because labor is so tight. This tallies with findings in the Aviation Technical Education Council’s Pipeline Report discussed below.
While the MRO workforce was not that impacted, the work most definitely was with Oliver Wyman saying: “It’s no exaggeration to say that modern commercial aviation has never faced such a long list of challenges as COVID‑19 has created. For MRO companies, a smaller fleet translates into less work. Demand is expected to be 33%, or $60 billion, below combined pre‑COVID projections for 2020 and 2021. While the market is beginning to recover, the long‑term MRO growth trend is now roughly half of pre‑COVID expectations. Cumulatively, MRO demand is expected to be $95 billion lower over the forecast period.”
In a more recent Recovery & Rebuild MRO Survey, respondents reporting a decline in revenues of 35% on average while 27% cited revenue declines of more than 50% compared to a 39% decline expected in its 2020 forecast.
“While the impact of the crisis remains severe, recovery does now appear to be underway,” said the report. “Two-thirds of respondents expect MRO demand to recover to 2019 levels in 2022 or 2023, in line with Oliver Wyman’s forecast of fleet recovery to pre-pandemic levels in 2022 with MRO following closely. Notably, airline respondents generally expect a slightly earlier recovery than MRO respondents. Regionally, Western European survey respondents were more pessimistic than respondents in North America and other parts of the world on how long recovery will take.”
The company indicated there was more concern about materials and labor cost management. “Lurking just below the surface are perennial industry concerns, such as the competitive positioning of OEMs versus MROs in the aftermarket and labor availability,” it reported. “These are all issues that will impact recovery as companies seek to both build back and manage costs.”
It noted 89% of Western European airline respondents said they reduced headcount, while only 40% of North American airline respondents did so.
“Labor scarcity has been top of mind over the past several years for all segments responding to our survey and continues to be a major concern,” the company said. “Survey respondents indicated that instability in the industry will be the top factor increasing the challenge of securing labor, closely followed by competition from other industries, lack of qualified applicants, and a reduction in long-term labor supply.”
Will Workforce Find More Stable Industries?
As NAVEO Consultancy Managing Director Richard Brown points out, for many in the aviation/aerospace workforce, Covid is their first experience with a serious downturn. He also noted MRO has always had serious competitors for talent and the economic downturn may see many walk away.
“Covid reminded us of the cyclicality of the industry,” he told Future Aviation/Aerospace Workforce News. “The last time we had mass layoffs like this was in 2001. The question is how this event has affected worker’s tolerance for cyclicality. The younger generation has lots of options from finance to IT to manufacturing, oil, gas, green industries, drones. The challenge for the industry is ensuring it is an attractive career path. But every time there are big layoffs younger workers are encouraged to migrate to what they perceive to be cooler, more stable, industries.”
Brown in his latest MRO market forecast says the pandemic set back passenger growth dramatically but, he told FA/AW News this week he revised his 2025 recovery timetable to 2024 or before for resumption to 2018 levels. He cited pent-up demand seen, at least in the U.S. where major carriers plan to bring back the majority of aircraft over the summer.
“History has shown we tend to underestimate the future,” he said. “We were already experiencing softness in the industry before the pandemic forced an economic shutdown. Now we are seeing pent-up demand so there is reason to be optimistic.”
He also thinks the impact has largely focused on US and Europe despite the fact this is now an entirely global industry.
“Over the last 10- to 15-years demand has become more global so dusting off the playbook from 9/11 to predict recovery may not be applicable,” he said. “So much demand is now in the Middle East, India, Vietnam so we need to be watching what is going on there where the middle class was growing much faster than the US. We also have to remember the importance of China and other developing regions. Finally, business travel is not just US-Europe. It is Jakarta to Singapore or Hanoi to Kuala Lumpur. Emirates, Etihad and Qatar now connect New York to Pakistan via the Middle East. We don’t hear enough about the significant market changes over the last decade or so to really be pessimistic about the future.”
The Oliver Wyman MRO Forecast expects the fleet to reach pre-Covid January 2020 levels in the second half of 2022. It suggests as many as 4,700 aircraft that had been on the production schedule at the beginning of 2020 will be delayed imposing a significant impact on the midsize and larger parts suppliers to the airframe and engine OEMs.
“At its nadir, the global fleet had only about 13,000 aircraft in service, less than half the number flying in January 2020 before the pandemic was declared, said the recently published report. “Today, the 2021 fleet is up to more than 23,700 aircraft. By 2031, we forecast the fleet will number more than 36,500. But it’s still a far cry from pre‑COVID projections, which put the 2021 global fleet at 28,800 and the 2030 fleet at more than 39,000.”
100k+ Workers in Air Transport Gone in US
US General Accountability Office (GAO) Director, Physical Infrastructure Heather Krause told the House Aviation Subcommittee last month an estimated 122,600 jobs (23%) in the airline industry in the US have been lost since peak employment levels of 516,900 in February 2020. Kraus recounted similar workforce reductions for manufacturers and repair stations, emphasizing one engine manufacturer permanently reducing its global workforce by 25%.
“Credit rating agency representatives told us that repair station operators will likely be affected as airlines may conserve cash by using up existing inventories of spare parts and managing their fleet where possible to limit maintenance requirements,” said GAO in its report. “They told us this could cause demand for repair station services and parts to lag a recovery in air travel.”
Still, US numbers suggested the impact on the US was not as harsh as elsewhere.
The problem is global workforce losses have not been tabulated. International organizations, such as IATA, favor reporting the financial impact on airlines and the downstream impact for tourism-related jobs dependant on airlines. The only thing the International Air Transport Assocaition said in October was maintaining 2019’s level of labor productivity (ASKs/employee), would require employment to be cut 40%. Meanwhile, Oliver Wyman said MRO productivity fell 13% to 16% last year.
Workforce data, especially future needs, is woefully limited in international industry reports. Without such information it is difficult to prepare for workforce needs as will be outlined in Part IV.
In the meantime, the Oliver Wyman, Naveo and GAO reports come after scores of older aircraft were permanently retired from the fleet. While immediately precipitating a decline in work for the MRO sector, it accelerates the digital transformation designed to reduce the variability of maintenance timing, quicken maintenance activity and reduce downtime from unexpected maintenance events. This will also accelerate changes in the skills required for workers which will be outlined in Part IV.
Industry Hard Work Pays Off
Pre-Covid the trajectory for new aviation maintenance technicians was all positive, according to Aviation Technical Education Counsel’s 2020 Pipeline Report. The message to students at the time was to continue their education to be ready for industry recovery. The acid test will be the 2021 Pipeline Report giving insight on what happened with students during Covid especially the numbers who pursued jobs in aviation rather than its competitors.
ATEC reported more FAA mechanic certifications in 2019 than in any of the previous 17 years, meaning young people are responding to the opportunities available in the industry. There were 7,373 certificates issued, the largest number since 2002 and a 10% increase over 2018, said ATEC in its survey of Part 147 schools. It reported enrollment was up 2%, the largest increase in five years while those taking jobs outside of aviation declined from 20% in 2016 to 13% in 2017 to 8% in 2018. In addition, 81% of 2018 graduates took the FAA test for A&P certification, up 10 basis points in each of the previous two years.
In fact, the report indicated, the number of certificated mechanics has steadily increased 1-2% a year since 2001, with 2019 seeing its biggest jump in recent years at 3%. All that was before Covid, but it indicates the work over the past several years to sell aviation careers is resonating. And, there is additional capacity given the fact two out of five aviation technician schools seats lie fallow.
“To meet anticipated demand, the US will need to certificate an additional 2,707 mechanics annually, over the next 20 years,” said the Pipeline report outlining the industry’s challenge. “That’s a massive increase over today’s numbers. Because aviation maintenance schools produce 64% of new mechanics, schools would need to increase output by 27%, or 1,732 new mechanics per year, to meet their share of the need. Continued focus on student and instructor recruitment and retention to improve school load factors and expand bandwidth will be instrumental in meeting those targets. At the same time, the number of individuals qualifying for a mechanic certificate on the basis of military and civilian experience must also increase by 974 per year. There is certainly opportunity for enhanced outreach and partnerships with military programs.”
In fact, ATEC said industry did a poor job of capturing exiting military service members with aviation maintenance experience although programs exist to enable a quick transition including the DOD and DOT Skillbridge program which begins post-military training prior to separation.
ATEC described the opportunity with military talent. “In 2018, there were 22,000 service members with aviation maintenance backgrounds that separated from the Air Force and Navy alone, more than the entire current A&P school population,” it said. “We estimate less than 10% of these new veterans obtained an FAA mechanic certificate.”
Private interests, including Viper Transitions and Veteran Air Warriors are also helping veterans bridge their military and civilian careers. Viper just signed partnerships with AAR Corp and Aviation Institute of Maintenance. Viper President Kyle Kaiser described VIPER Transitions as more of an overall support system than other bridge programs and is specifically designed for suicide prevention.
“The system to transition veterans back into society is broken,” Kaiser told Vertical Magazine. “Sometimes, people get left behind. We make a personal connection, and once they leave the program, if they need assistance, now they have a resource network they can come back to.”
Guagenti, who sees a major shift toward highing veterans, pointed to his company’s Working Heroes program that has already placed more than 1,000 veterans with commercial companies.
Survey Reveals Progress
Schools also reported providing employment opportunities for students while they are still enrolled along with tuition reimbursement and internship programs are also driving students to take the FAA test. Those programs also offer big returns for companies investing in them, according to the Pipeline Report.
Wages were also growing with survey respondents reporting an average starting hourly rate for aviation school alumni at $21.54 per hour, up $1.84 (9%) from the previous year, or $44,803 annually. ATEC pointed out the Bureau of Labor Statistics reports median pay for all aircraft mechanics and technicians – both certificated and non-certificated – at $30.32 per hour.
In addition, Business Insider just tagged several tech jobs including technicians as both high paying and not needing a four-year degree. While impressive, it also shows the competitive environment for such workers. It noted the median pay for aerospace engineering and operations technologists and technicians was $68,500, while transportation equipment electrical and electronics installers and repairers was $70,000. It was the same for first-line supervisors of mechanics, installers, and repairers and for non-scheduled commercial pilots it was $93,000. Finally, it noted the median pay for air traffic controllers was $130,000.
ATEC also reported on the barriers remaining for students and recommended companies reimburse new hires for testing. Northrop Rice Foundation is already offering testing grants and help in acquiring tools. Schools are also seeing big returns on high school partnership programs as a means to break down barriers.