Labor shortages, especially in service and manufacturing, are hampering industry growth
Listen to political speeches or check out the news and you’d get the idea that there isn’t a job – especially a good paying blue-collar job – to be found in this country.
Statements like “What will it take to bring back domestic manufacturing jobs?” or “Why Trump will struggle to add manufacturing jobs” dominate the headlines.
But anyone who’s been paying attention lately knows that – at least in the boating industry – there are plenty of jobs if only companies can find people to fill them.
It’s no exaggeration to say that this workforce crisis may be the biggest challenge facing the boating industry right now. Affordability, expanding to new markets and access issues are all important, but if there aren’t enough people to build and service the boats and engines, none of the rest of that will matter.
In this Special Report on the workforce crisis, we’ll not only share some of the key data and challenges facing the industry, but also look at some of the creative solutions that companies and associations are taking across the country to tackle the issue.
Supply and demand
As the boating industry has recovered over the last several years, dealers, manufacturers and others are increasingly struggling to fill open positions.
In our survey of Boating Industry readers last fall, 71 percent said they planned to add employees in 2017. Sixty-six percent of boat and engine manufacturers were trying to add employees this year, while more than 70 percent of dealers said the same.
At the same time, many of those companies reported difficulty in filling positions. In fact, 96 percent of manufacturers reported trouble filling open manufacturing positions in 2016 in our survey. For the dealers, the service department represented the most significant pain point, with 93 percent having difficulty filling those jobs.
“Most [manufacturers] are challenged, no question, to find employees,” said NMMA President Thom Dammrich. “They can find people to interview, but they can’t find people who have skills – even basic skills – that they can train.”
Discussions with manufacturers and dealers provide numerous horror stories about interviews with applicants who eat their lunch or respond to texts during interviews. Others share anecdotes of employees that disappear after the first day – or even after the first break on
the first day.
“We’ve got unemployment under 5 percent,” Dammrich said. “Most economists would say we’re at full employment. The only people looking are people that are having a hard time finding a job.”
The struggle is not limited to the boating industry. When a large group of manufacturing CEOs met with President Trump in February, they said the problem is not one of jobs, but of training, saying students aren’t coming out of school prepared for technical jobs. Government figures showed there were more than 324,000 open manufacturing jobs in February, which is three times what there was in 2009.
As Dammrich notes, many of these boating industry manufacturing jobs are good paying jobs, well above the proposed $15 minimum wage many have advocated for, with good benefits.
“Manufacturing in general still doesn’t have a good image,” Dammrich said. “Kids don’t think about going into manufacturing.”
The Marine Retailers Association of the Americas recently completed a Workforce Assessment survey of dealers in the United States and Canada. The association received responses from 517 businesses representing 1,300 locations across North America.
The respondents featured a wide cross section of the dealer population when it came to location and revenue. Dealers were from a variety of settings from metro areas to small towns to rural locations. More than half of the dealers surveyed had annual revenue of less than $3 million. The average dealership reported 15.3 full-time and 2.1 part-time employees.
MRAA conducted the study in response to an increasing number of its members saying they were having trouble finding qualified employees.
“Anecdotally, we had all kinds of examples of the issue,” said MRAA President Matt Gruhn. “We needed to define it and we needed to be able to understand a little better what the problems
The results show a stark set of challenges for dealers looking to grow their businesses.
According to the survey, 21.6 percent of the full-time positions dealers had budgeted for in 2016 went unfilled. The average dealer needed an additional 3.8 employees. The majority of those employees (59 percent) were from the service department, while 86.6 percent of those open service department positions were for service technicians. Overall, 86 percent of respondents had multiple positions unfilled.
Even more significantly, the average dealership said it will need an additional 6.1 employees by 2019 beyond current openings.
“Take that 9.9 employees needed over 3,100 dealerships and we’re looking at needing 31,000 employees by 2019,” Gruhn said. “That’s a huge number and potentially an even bigger problem than we’re faced with today.”
Many respondents to the MRAA and Boating Industry surveys were quick to point to what they saw as the poor work ethic of Millennials.
“There’s a generation gap, but there’s always a generation gap,” Gruhn said. “When I came into the workforce, we were known as the lazy generation, we didn’t want to work hard and we didn’t want to do anything. Today it’s the same, but it’s the Millennials that they’re talking about. Saying they don’t want to get their hands dirty, they don’t want to work hard, they want management level pay structures, but don’t want to work the hours.”
Clearly, there is a skilled labor shortage in the marine industry, especially in the service and manufacturing sectors. The reasons are varied, from lack of interest to insufficient training programs.
In many cases, government programs set up to develop manufacturing skills are lacking in real-life experience, notes Dammrich.
“There are hundreds of government training programs, but they’re not structured in a way for small businesses to take advantage of,” he said. “They train them in a school, but we need to train them in the factory. Why don’t you subsidize their employment for six months? We need to take our government training programs and look at that them a different way.”
Dealers encounter similar problems with many of the technical school programs the currently exist. First of all, there’s a shortage of students coming out of the programs, and most students are hired before they even finish their training. Secondly, even those graduates still fall short of what dealers are expecting. In the MRAA survey, 96.5 percent of those who had hired technical school graduates said they are “poorly or partially prepared” for the job.
“The expectation from both the employer and the employee are off,” Gruhn said. “The employer expects the student to know and be able to do a lot more than they should be able to do. They expect them to … just walk in the door and know how to operate within the structure of their business and be able to do all of the important tasks that they need technicians to do and these are kids fresh out of school.”
On the other hand, “students are coming in with the expectation, based on what the dealers are telling us, is they want to be paid more, they don’t want to work as hard and so forth,” Gruhn added.
The reality is that dealers and manufacturers need to invest in additional training if they want their employees to succeed, to bridge the gap between school and the “real world” workforce.
On the dealer side, 30 percent of respondents said they don’t budget for employee training, and the average dealer spends $574 per employee per year on training. In the Boating Industry survey last fall, 33 percent of respondents across the industry said they spend less than $500 per employee on training, 38 percent spent $500 to $1,000 and 30 percent spent more than $1,000.
Downside of a recovery
The recession and resulting crash in boat sales had pushed many of these issues for dealers and manufacturers to the background, but the recovery means these challenges are returning.
“We’ve been in a period here for almost 10 years where there were more people looking for jobs than there were jobs,” Dammrich said. “
Boat manufacturer Smoker Craft is experiencing that challenge firsthand. Located in Elkhart County, Ind., the company is smack dab in the middle of an RV manufacturing boom. Unemployment is near 3 percent in the county, meaning there are very few people looking for work. Smoker Craft has about 30 openings on its list now.
Some of the RV manufacturers are hiring new employees at $30 an hour starting wages, a level Smoker Craft can’t compete with and keep its boats affordable.
“It’s hard to compete getting employees,” said Peggy Cronin, vice president of corporate human resources. “The pace is very different – they’ll work them until they get their units done. Depending what job you’re in, you can get out of work at 1 in the afternoon, maybe noon.”
And with the higher pay rate, those employees can make as much money as working a full day for other manufacturers. That means Smoker Craft is usually hiring employees with no manufacturing experience, so the company partners new hires with more experienced workers as part of the onboarding process to get them up and running. That also leads to a high exit rate as employees find out they can’t handle or don’t want to do the hard work of manufacturing – if they show up at all.
“If they do show up, they maybe work for half a day or until the first break and then they’re gone,” Cronin said. “We’ve always had stories like that, but they were rare. Now it’s much more frequent.”
The six following case studies look at how marine industry companies are successfully tackling the workforce crisis.
Recruitment and retention
Many of the parts of this special report have touched on what, in the end, is the key problem: Finding and keeping great employees.
When it comes to finding new employees, the marine industry is decidedly behind the times. Simply posting an ad on Craigslist or Indeed won’t cut it anymore.
“We refer to that in the recruitment world as ‘trapping’ – you’re putting a job out there online, you’re hoping that the right person comes along, sees it and applies,” said Neal Harrell, president of Brooks Marine Group, which specializes in employee recruitment for the marine industry.
In a survey of Boating Industry readers in October 2016, employee referrals (used by 72 percent of companies) and online job sites (63 percent) were the most common ways of finding new employees. In a survey of dealers last fall by the Marine Retailers Association of the Americas, word of mouth and employee referral programs were identified as the top two methods of finding employees.
The problem with most employee referral programs is that they aren’t targeting the right individuals.
“What the employee hears … is if you know anyone who’s good, who’s looking for a job and you refer them and we hire them, then we’ll give you this gift certificate. So the employee isn’t thinking about who they know who’s good, they’re thinking about who they know who’s looking,” Harrell said. “There’s a big difference between someone who’s actively looking for a new opportunity and someone who’s gainfully employed and is good and could be approached.”
The best companies, in any industry, have a “hunting mindset.” They are always looking for someone who might be a good fit now or in the future. Unfortunately, most companies don’t start looking for help until they need it or when an employee puts in his two-week notice out of the blue.
“The great companies do that, what I call opportunistic hiring,” Harrell said. “If a talented individual comes along and they deem that person might be up for a job change and might be available to them, even if they don’t have an opening, they’ll create one. That’s the mindset of great companies.”
While there is understandable sensitivity about actively poaching an employee from a competitor, taking the opportunity to strike a relationship with someone from a different company, and have an ongoing dialogue that may one day lead to employment is an important part of building the best team, Harrell said.
Although Brooks Marine Group’s primary focus is on management-level talent, the company still sees the biggest challenge out there is at the hourly workforce level. That is where the future industry leaders are going to come from.
“We have to get folks in at an entry level and we’ve got to train them up,” Harrell said. “For whatever reason, our industry has been resistant to that. It’s not going to fill that immediate need for that skilled technician, but if we don’t do that we’re going to keep driving wages up and stealing each other’s best people and eventually we’re going to run out of folks.”
Keeping the best
In MRAA’s Workforce Assessment, conducted in 2016, the most common takeaway from dealers was that they couldn’t afford to pay their employees as well as other industries. So as a follow-up, MRAA conducted a compensation study, which was released in February 2017.
The responses to the study represent 292 dealer locations and include data from 2,600 positions. (The full study is available for purchase from MRAA.)
The study found that, despite what seems to be a common belief in the industry, marine dealer salaries are on par with many other competitive fields such as the auto and RV industries, said MRAA President Matt Gruhn.
That backs up a long history of research that shows that, as long as wages are competitive, money is not the reason people leave jobs. Instead, it’s issues like work/life balance, poor supervisors and a lack of recognition.
“You’ll always have a competitor who could pay them more and steal them away, but if we can understand that we’re competitive, it’s things like employee satisfaction, it’s things like the culture and training and things like that that will contribute to the health of the workforce,” Gruhn said. “We’ll be able to keep them if we train them properly, if we create a better work environment.”
Harrell echoed that sentiment, noting that employees want to see the work they are doing making a difference.
“Talent is typically driven by the opportunity to impact the organization they work for,” he said. “Help me realize that my role is important. Challenge me, train and develop me. Discuss with me career ladders that make sense within your company.”
That comes in a number of ways, from recognizing high performers among their peers to feedback and performance reviews.
“Where companies tend to put themselves at risk of losing people is when there’s a breakdown in communication,” Harrell said. “Are we doing annual reviews with employees? Are we challenging our people? Are we addressing things like life/work balance?”