From the magazine: Staffing shortages

There’s one consistent topic on the mind of just about every automotive aftermarket leader: Talent.

For years — and decades for those around long enough — a shortage of skilled automotive technicians has been front and centre when discussing talent issues. Whether it’s attracting or retaining, expert after expert has discussed the need to draw more people into this industry as techs.

But the issue has become more widespread, hitting aftermarket suppliers hard. The challenge for them is finding people to work the warehouse to get products down the line and into the hands of techs.

“We’re seeing a very competitive talent market,” observed Katie Gibson, director of people, culture and diversity, and Shannon Langsford, director of human resources, operations, at Toronto-based Mevotech. “With the unemployment rate at an all-time low, we’re seeing higher turnover, and vacant roles are staying open for longer across all departments. This has required us to be more creative in our strategies to attract and retain top talent.”

Canada’s unemployment rate sits at 4.9 per cent. In the U.S., it’s 3.5 per cent. Both are record lows.

“I don’t think this one’s an ‘our industry’ issue,” said Paul McCarthy, president and chief executive officer of the Automotive Aftermarket Suppliers Association (AASA).

The Canada Emergency Response Benefit, provided by the federal government to financially support Canadians directly affected by the COVID-19 pandemic, also proved to be a challenge as it further reduced the talent pool, Gibson and Langford noted.

Companies of all shapes and sizes are at war for talent in their warehouses. Money has been thrown around. But the issue remains. Besides, there’s only so much you can pay staff because those costs are passed on in the price of products.

“We’re also hearing it from our customers: ‘We want the parts, but also control your costs. We don’t want the cost to go up too much,” McCarthy told Jobber News. “So it’s this balancing act.”

Companies are being forced to get creative and think harder about how to take on these challenges.

“We just can’t continue to throw money at people for them to work a couple of months and move on. And then we have to go back to square one with training and all of the related things that go with that.”

Recruit

Labour has been the biggest challenge in the last couple of years, which ties into supply chain issues. Consumer demand skyrocketed and people are needed to help fill that demand. Suppliers saw fill rates plummet over the last two years and are still recovering.

These are definitely tough times for the industry, acknowledged Ted Hughes, Michigan-based North America marketing director at Mahle Aftermarket.

And it will soon get harder.

As we approach fall and winter, seasonal competition for talent will only make things more difficult. Large scale distribution centres ramp up production for the holidays to meet consumer demand. So companies like Nike will pay extra to seasonal workers, attracting them away from companies like automotive aftermarket suppliers, creating an even bigger hole in the this industry.

“We’ll see more and more prolific distribution companies that will dramatically overpay for seasonal help because of the Christmas season upcoming,” Hughes said. “That’s another challenge that’s coming.”

So it’s now about finding new ways to attract. Those simply looking for a higher dollar amount per hour may look past some aftermarket companies. But for those who need more, that’s where this industry is looking to find success.

“One of the ways we’re able to compete is that we target those job seekers who are looking for a career, versus a job, a full-time permanent role with benefits and vacation, not a short-term pay bump,” Gibson and Langford told Jobber News, adding that they’re looking to become an employer of choice among job hunters.

Mahle’s plan to make up for a lower hourly rate is to enhance benefits offerings. That can include short-term benefits or a bigger package to entice personnel to stay longer. It’s part of a strategy to have not just employees but team members.

“We want, ideally, the people that want to be part of a cause, that are part of a team and enjoy being with the people that they work with. That’s how we combat it,” Hughes said in an interview

Part-timers generally don’t get good, or much of any, benefits from employers. But with increasing costs of healthcare and insurance and more people working multiple part-time jobs — or a part-time job in addition to a full-time one — having extra benefits can be enticing.

“We just can’t continue to throw money at people for them to work a couple of months and move on,” Hughes observed. “And then we have to go back to square one with training and all of the related things that go with that.”

Another strategy being used is referrals. John Hanighen, chief executive officer at Cloyes Gear & Products, noted during AASA’s Vision Conference earlier this year that he looks to his staff to refer people to the company.

It’s a strategy Mevotech is undertaking as well, telling Jobber News that the company has doubled its referral bonus for warehouse workers, implemented a fast-tracking program to convert high-performing temporary associates into permanent employees and more.

“We think associates are starting to remember the value of stability and consistency in the employer they choose to work with.”

Retain

If companies like Mahle and Mevotech can attract people with their benefits package and other perks, they hope it’s enough to retain them long term. But as many aftermarket companies can attest, keeping employees may be just as hard as getting them through the doors in the first place.

“I think a lot of that comes from that mentality of caring for you as employees and people and not just floor workers that are walking around picking parts,” Hughes observed.

Naturally, some employees only care about the hourly rate.

“There are obviously some people that are always only going to be there for the paycheque. But where we’ve had success, it’s because we’ve been able to find, properly train and incrementally reward those that have stuck through with us,” Hughes said.

Bonuses have become popular, whether it’s a signing bonus or so-called ‘stay’ bonuses, which is where an employee may get a bonus for staying a month, six months, a year or similar milestones.

“That’s a way that we want to reward employees that stick it out with us and go through the training,” Hughes said.

But not everyone is a fan of the bonus strategy. Linda Brenner is managing director and founder of Talent Growth Advisors and has worked with companies across many industries, including the aftermarket.

On one hand, it’s almost a must to give bonuses instead a higher hourly rate to attract these days. On the other, it’s not a long-term solution and certainly not a strategy for suppressing employee wages.

“If your valued, tenured employees are being significantly underpaid, that’s a problem,” she said at NAPA Expo 2022.

It can also create morale issues in the business. Say two people are working together but one has been with the company for five years and the other just started. The newer one got $1,000 upon being hired while the other didn’t. That can create tension.

However, some positions aftermarket companies need filled are not enticing to begin with.

“Floor picking is the worst job and the hardest one,” Hughes acknowledged. He added that they can hire 30 people on a Monday and at least 20 are gone by the end of the week.

Mevotech works with a temporary agency partner to educate new hires on exactly what to expect in the job. “We also offer steady shifts with fixed schedules plus overtime opportunities, as well as internal training and job advancement opportunities,” Gibson and Langford said.

The last six months have seen a change, they added. “We think associates are starting to remember the value of stability and consistency in the employer they choose to work with.”

“There’s a lot of things, but [the fact is] we have this aging population and we’re not having the inflow that we’ve generally had since the 1940s when we kind of reopened the borders somewhat. And that’s an issue. Especially when you’re talking about our plants. Not the most appealing job.”

Immigration

Much of the issues seen in the lack of labour is a decrease in immigration levels. This spring, Canada unveiled plans to bring in at least 431,000 immigrants between now and 2024. About 401,000 came to Canada in 2021 — the most in a single year ever, according to the federal government.

In the U.S., immigration saw its sharpest year-over-year decline in 2021, according to data from a U.S. Census Bureau report. After more than a million immigrants came to the U.S. in 2015 and 2016, numbers fell to just 245,000 last year.

If it were up to many suppliers, more immigrants would be arriving regularly to help ease the staffing shortage. They call McCarthy every week asking how they can make that happen.

“Unfortunately, we have lost some of that labour force movement. In the middle, it’s a very complex issue. There’s a lot of things, but [the fact is] we have this aging population and we’re not having the inflow that we’ve generally had since the 1940s when we kind of reopened the borders somewhat,” McCarthy said in an interview. “And that’s an issue. Especially when you’re talking about our plants. Not the most appealing job.”

Aftermarket companies like Cardone Industries have taken advantage of bringing in workers from other countries and successfully having them part of the business.

“We have 30 or 35 languages spoken down on the shop floor. And so then someone who’s from outside the country feels comfortable when they see a lot of different people there. And I think that’s [something] we’ve really taken advantage of,” said Mike Carr, chief executive officer of Cardone, at AASA’s Vision Conference.

While acknowledging it’s cool to see a company with such diversity, for McCarthy, “it speaks to this issue of our struggle to get workers.”

“You literally walk miles. I have my phone in my pocket, it tracks my step, and it’s between 12 and 15 miles a day that you’re walking. And you have to have steel-toed shoes on, so it’s not always the most comfortable [situation]. And it’s every day, the same thing. It’s challenging.”

Working the warehouse

To keep business moving, many automotive aftermarket suppliers have taken on a strategy over the last couple of years: Bringing office workers down to the warehouse or distribution centre and helping for a week at a time.

“We have heard a lot about that,” McCarthy said. “We’ve even had some in plants — plants are challenging with safety rules and regulations — but some of them in plants, too.”

Mahle is one of those companies. Hughes, and his office colleagues, make a week-long trip every six weeks to Olive Branch, Mississippi, to do whatever jobs are needed in the warehouse, from picking orders to sending them out the door.

While Hughes called it “a change of pace” for the white-collar employees, they’re experiencing the everyday grind of those on the floor all day long.

“You literally walk miles. I have my phone in my pocket, it tracks my step, and it’s between 12 and 15 miles a day that you’re walking,” he said. “And you have to have steel-toed shoes on, so it’s not always the most comfortable [situation]. And it’s every day, the same thing. It’s challenging.”

Same with Continental. The company explored ways to meet customer demands. “One solution was that some of our office staff volunteered their time in the warehouse over the past year, making and packaging product,” Howard Laster, executive director and general manager of automotive aftermarket North America at Continental Commercial Vehicle Services, told Jobber News.

Office staff will take on jobs in the warehouse that meet their physical abilities. Those who have mobility issues may package items; those who are forklift certified will operate machinery; and those who can handle more physical labour will be picking orders.

Naturally, not everyone would be thrilled at the idea of leaving their desk, travelling across the country and working the warehouse floor. People went to school to get a job working in finance or human resources, not to do manual labour — so pushback was expected.

“I think the response has been much more positive than negative. I think that comes from the fact that we’re only down there for a week at a time,” Hughes observed.

That said, people like Hughes do have their regular job to do. No one else is answering their emails for them or finishing their projects while away. “That’s really a lot of the challenging part. Our other job is still there waiting.”

This raises another important point for AASA’s McCarthy — companies are also struggling to find qualified office staff as well.

“Every member I talk to has multiple open positions [and] has been losing people to full-time virtual positions — everybody’s working short-handed at the office,” he said. “There’s also the fact that we can’t really take people out of the office to stick them on the DC lines when we’re already running way below capacity in the office.”

This has indeed been the case at Mevotech. “In today’s employee’s market, we see candidates that have multiple job offers and some roles are taking longer to fill,” Mevotech’s Gibson and Langford said. “We try to focus on what we can control, which would be the culture and providing the best environment for our employees.”

“In today’s employee’s market, we see candidates that have multiple job offers and some roles are taking longer to fill. We try to focus on what we can control, which would be the culture and providing the best environment for our employees.”

Timeline

McCarthy was asked to pull out his crystal ball and estimate when things will get better. While that’s an impossible ask, he did note that this situation won’t fix itself.

“This is an issue we’re going to be dealing with in terms of not having all the workers we want. And in terms of having supply chain issues and disruptions, probably for at least the next three to five years,” he said.

There are also demographic challenges and immigration ones, as mentioned earlier.

“Adding resilience and shifting the footprint and adding diversification to the footprint of the aftermarket, that’s a five to 10-year activity,” McCarthy said. “That doesn’t happen overnight.”

This article originally appeared in the September/October issue of Jobber News