Challenges in the Heat Treatment Industry-Labor Costs & Shortages
It has been rather challenging the past almost two years in the heat treatment industry and “The Monty Heat Treat News” is looking at what those challenges are in a continuing series entitled “Supply Chain Issues & The Heat Treatment Industry”. To date we have been looking at issues in the supply chain resulting in longer deliveries and increased pricing. Today we look at another component of the industry, that being labor and for that we went directly to industry expert Josh Hale, President, International Search Partners, one of the top recruiting firms in the industry.
Josh responded with these thoughts and comments about labor shortages, increasing costs and how to find and retain good people.
“As many other experts and industry thought leaders have already opined, this is truly a market like nothing that has ever come before. However, while the experience is unique, the contributing factors are the same fundamentals that have govern all economics: supply and demand.
When it comes to labor specifically, the demand is for workers and there is a palpable shortage of supply. In other words, it’s an employee-driven market and employers are no longer calling the shots. This is true for most industries, but especially in heat treat due to a confluence of factors, including COVID-19, the “great resignation,” an aging workforce and broader robustness in the economy.
The result has had many businesses thrust into an all-out war for talent. To be able to compete, companies are left with little choice than to offer higher wages, flexible schedules, expanded benefits and a slew of other “carrots” to attract and (hopefully) retain workers. Illustrative of this fact, ISP has seen an increase of 20-50% in salary on offers across the board, as well as a much higher percentage of counteroffers and bidding wars in just the past 6-9 months.
Interestingly, heat treaters aren’t only vying for resources amongst themselves, but with companies in other industries as well. This is especially true for hourly, production workers. A job as a heat treat operator used to provide a nice career path with fair wages and overtime for a hardworking laborer, but these days those same candidates can earn just as much, and sometimes more, in the service industry. As a result, compensation for hourly workers is also on the rise with some seeing as much as a 20-30% increase (whereas someone in the $18-20/hr range is now demanding and getting closer to $20-24/hr).
Advice for employers to succeed in acquiring necessary resources in this current climate is threefold:
- Accept the reality of the current situation and don’t get stuck in past baselines. Just because the last hire made for a certain position was $X, these days that number likely $X + 30%.
- Be flexible. If a candidate has 6 or 7 out of 10 requirements for a job, maybe training on the remaining 3 or 4 is a viable option. Also, don’t be afraid to get creative. Can a job be partially work from home? Can someone who has experience in another industry transfer their skills? Asking these questions can open to door to a wider slate of prospective candidates for hire.
- Be aggressive and proactive with both retention and recruitment efforts. Turnover is always costly and even more so now. Keeping current employees engaged by providing clear expectations, purpose, training, advancement opportunities and incentives (bonuses are nice, but could be gifts, contests, extra PTO, etc.) is critical to minimizing employee churn. As far as recruiting, this is not a time to “post and pray” (advertising an opening online and hoping for the best applicants), rather the company that obtains the best hires will be proactive and directly reaching out to the passive job market through networking/referrals or the use of an experienced and knowledgeable industry niche specific recruiter.
A company’s biggest asset is its people. Therefore, having the right strategy and focus on talent acquisition and retention may be the single most important determinant for success. Accepting the reality of market conditions, being flexible and looking for ways to be proactive will help.
Josh Hale, President, International Search Partners
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