Phil Biggs covers the automotive industry for NewsTalk 1340 WJRW
December 5, 2013 – 4:30 pm ET
DETROIT, Mich. – Perhaps the most critical issue of all facing the automotive sector is workforce readiness and deployment as the industry regains its momentum. The workforce areas most acutely affected are the training of assembly line workers to match the new shop floor requirements (laser welding, robotics, systems programming, etc.), and recruiting engineering staffs despite shortages in the U.S. Finding and keeping engineers on the job has become a paramount task…
What is causing scarcity in the engineering ranks? The U.S. automotive industry has historically operated a manufacturing-finance business model until it moved to a design-marketing business model during the middle part of last decade. The design-marketing focus was in part a response to the direct relationship between the car buyers’ changing tastes and the proliferation of on-board electronics content and the development of powertrain variants.
Since the mid-2000’s, market fracturing between Baby Boomer and Echo Boomer segments has caused greater vehicle program diversity. This market shift, coupled with recent significant unit volume growth in North America, has created massive engineering requirements as, simultaneously, engineering talent has become scarcer.
Because chip electronics and new technologies comprise nearly 85% of vehicle content, a blurring of software, mechanical and electrical engineering skills has occurred, creating a greater need for collaboration and process improvement among OEM and integrator engineering teams. Thus, the auto space is seeing the need for its engineering teams to go through a major transformation, led primarily by re-positioning of people and processes, and secondarily via software applications.
What are some of the current gaps between engineering requirements and resources? Because of the increasing number of program launches, field production support is more vital than ever. Most customer program delivery now occurs in a time-span less than two years, with advanced technology projects spanning four to five years. These future projects now require greater definition of time and motion (hours) and a better means to enhance prioritization in order to achieve appropriate project ROI goals. There is also a need to develop comprehensive database tools that enable engineering teams to assess and allocate resources/requirements by global region, in real time. But first, a global process cadence that incorporates common work standards is critical, in order to understand and then realize efficiency goals.
When doing capacity planning, engineering managers are considering contractor versus full-time talent. Contractors are preferred in some cases to avoid higher permanent capital expenses (capex). However, heavy use of contractors has caused quality and re-work issues (sometimes in large volumes) from BRIC countries, particularly China and India, and at times Chinese and Indian engineers don’t always want to follow Design & Release (D&R) plans. High turnover of engineering talent in China, where engineers stay on the job one year or less, is happening with greater frequency. Matching software updates with new or ongoing project requirements without disrupting workflow is a problem.
How will automotive OEMs, integrators and suppliers solve the shortage crisis? Over the long run, we must invent smarter ways to do old jobs and unique ways to do new jobs, and encourage more American kids to graduate from college with engineering degrees. It is critical to change the perception that manufacturing is unattractive. Here in the U.S., most Millennials view manufacturing as a slow, dirty grind, basically a dead-end road. And why would they want to build one when they don’t even care to buy one? With benign indifference today toward manufacturing in our country, plus the fact that the Millennials don’t believe it’s sexy to be in the auto space, we expect to see fewer new automotive engineers in the coming decade.
In the short term, it is crucial for OEMs and integrators to begin to make plans now to realize aggressive industry growth goals with the same or fewer engineers. This means engineering teams will need to optimize their time, run projects more efficiently, and generally become more productive both in the advanced technology workstreams as well as program management delivery requirements.
Unit volumes are now expected to exceed 17 million in North America by 2015. To take advantage of the market opportunity, OEMs and integrators must accelerate their new product speed-to-market for the options and performance requirements consumers will select. Engineering work processes must be continually improved as the pressure on product development grows. The dual challenge of scarce engineering talent and spiking volumes is causing a dramatic need to evaluate, re-evaluate, and improve current engineering and product cycle plans, processes and tactics. And that in turn makes resolving this complex issue “Job One” for the North American auto space.
Phil Biggs is Partner, Automotive Markets, for the Bethesda, MD-based management consulting firm The Highland Group.
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