Worker shortages drive employers to take creative approaches to
retirement.
By Dee DePass Star Tribune
JULY 17, 2017 — 12:24AM
Roger
Klug started talking about retirement as he neared age 65 a few years ago, but
his bosses wouldn’t hear of it.
Klug
had been the 13th employee at the company, Alexandria Industries, when he
joined in 1971. He had unique skills from the start, when he was the only one
who “corrected” aluminum extrusion molds by grinding away precise slivers — by
hand — until the mold met specifications. Over the years he excelled at picking
up the newest technologies.
In
a tight labor market with accelerating baby boomer retirements, his experience
made him too valuable for the company to lose. He eventually agreed to a
two-day workweek, with more days filling in for vacationing co-workers.
Staying
“was a very good thing to do because I enjoyed my job,” he said. “I didn’t want
to be working full-time on one day and doing nothing the next.”
Hanging
on to talented older workers steeped in institutional knowledge has become a
critical issue for many manufacturing businesses. About 78 million baby boomers
are nearing or at retirement, and the National Association of Manufacturers
(NAM) estimates that factories will need 3.5 million new factory workers in the
next 10 years just to keep production lines and distribution routes going.
The
workers, experts say, are not there right now. In fact, factories are
struggling to grow because they don’t have enough well-trained staffers. The
shortages are already are acute in manufacturing.
Manufacturing’s
retirement picture
9:
Percent of all U.S. workers who are in manufacturing.
27:
Percent of workers in manufacturing who are 55 and older.
11:
Manufacturing human resource professionals who foresee employee retirements as
a crisis or problem.
$81,289:
Average annual pay (including benefits) for U.S. manufacturing worker.
Sources:
Society for Human Resource Management, Bureau of Labor Statistics, National
Association of Manufacturers.
The
Society for Human Resources Management (SHRM) found that 19 percent of factory
employers like Alexandria Industries, Harmony Enterprises and Dotson Iron
Casting now float the idea of phased-in retirements by asking senior employees
to stay, work fewer days or adopt more flexible hours. That’s up from 6 percent
four years ago.
“There
has been a definite increase in informal phased retirement programs over the
last five years,” said SHRM spokeswoman Kate Kennedy.
Lynette
Kluver, Alexandria’s organizational development director, said the 550-worker
company has 56 experienced workers nearing retirement and is trying to steer
them into job-sharing or part-time work, even consulting or mentoring.
“Boy,
if they are willing, we sure are willing,” she said.
The
Sloan Center on Aging & Work at Boston College found that other firms go
further. Some have started to retrofit production lines with older workers in
mind.
They’ve
installed assembly tools that reduce reaching and moved supplies closer to
staffers so older machinists and assembly workers can save knees and backs.
Some trucking firms have even made ergonomic changes to truck cabs so
desperately needed drivers are comfortable and stick around, said Sloan Center
co-director Jacquelyn James.
Retaining
older workers “is something we have been encouraging for a long time.”
A
decade ago, BMW realized a fifth of its German employees would be age 65 by
2020. It started a pilot program to retrofit one auto plant in Germany.
Managers enlarged type on factory computers, installed ergonomic assembly tools
and replaced concrete floors with wooden ones that were kinder to feet. They
bought workers better shoes and had physical therapists retrain line workers on
safer ways to move. With the changes, pros with seniority stuck with jobs
longer. BMW spread the pilot program to other plants.
“BMW
is still talked about as the shining example of an employer looking ahead and
seeing what was coming down the pike and doing something that was very
effective,” she said.
The
lesson’s not lost on Dotson Iron Castings. The Mankato foundry recently had 15
of 140 employees retire and has several more who are approaching age 70. To
boost retention, owner Denny Dotson and CEO Jean Bye recently oversaw the
installation of robotic lifts so workers no longer have to haul 50-pound
castings to de-burring machines. They bought new tools to get workers farther
from the 2,400-degree furnace. They also rotate people through jobs every two
hours to lessen repetitive injuries.
“We
invested in the jobs that are physically hard,” Dotson said. “Our goal is to
make sure [our staff] can work as long as they want and retire comfortably
without being [broken]. We have to invest in this. Obviously, when you have
people with talent, you will be accommodating.”
Employment
pros predict more factories will follow suit. They may not have a choice. NAM
estimates that in the next 10 years the country will need 3.5 million more
factory workers on top of the 12.3 million that exist today in a labor-stressed
industry that generates $2.2 trillion in revenue a year.
In
Minnesota, Abbey Hellickson, business growth consultant for the
Minneapolis-based manufacturing consulting firm Enterprise Minnesota, said
midsize manufacturers are brainstorming to slow the pace of retirements.
“The
labor shortage is definitely driving this,” she said. “Employers once really
had the pick of who came to work for them and didn’t struggle to get workers.
But today [the tight labor market has] put a strain on employers.”
That’s
why Ultra Machining in Monticello has de-emphasized 65 as a retirement target,
said President Eric Gibson. “We have discouraged workers from retiring,” he
said. “We need more qualified employees. We are short of good help.”
Ultra
Machining has three employees over 70 and more right behind them in age who run
high-powered robots, lathes and drills that convert chunks of steel into
implantable spinal cages and knee replacement parts. As long as these workers
are happy and productive, Gibson is thrilled to have them, he said.
Enterprise
Minnesota CEO Bob Kill said such thinking marks a shift.
“Owners
are much more cognizant about having these conversations early. ... It’s vital
to keep your experienced people longer than you would have historically,” he
said.
Kill
is putting his money where his mouth is. When his top manufacturing consultant,
Dick Pedersen, 77, mentioned retirement three years ago, Kill immediately asked
him to go part-time instead.
Now
Pedersen works 20 hours a week, which allows him to travel and take long
weekends with his wife while staying engaged with clients such as Harmony
Enterprises, Cardsource and 28 others in Rice and Steele counties.
“I
keep telling them about the demographic shifts we have in Minnesota,” said
Pedersen, a former Cybex engineer. “I ask the owners, ‘What are you doing about
trying to keep your skilled workers?’ … Often the owners say, it’s going go
create a really big hole.”
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