Aviation Week & Space Technology
08/20/2007, page 80
Carole Rickard Hedden
Phoenix
Study of U.S. A&D companies indicates shortage of workers and dearth of ‘top opportunity’ slots
Printed headline: Help Wanted Engineers and other technically trained men and women who aspire to enter the aerospace/defense industry should have no problem finding work. As of mid-year, there were no less than 40,000 job openings, according to the 2007 Aviation Week Workforce Study.
If that’s really the case, competition among employers is sure to be fierce to attract the most qualified candidates—and that raises a troubling question. Have companies in the market for fresh talent set the bar so high that they are creating artificial shortages in some of the industry’s most critical disciplines?
It’s a matter worth pondering, because aerospace/defense companies can ill afford to exacerbate an already tenuous situation: an aging workforce that will be retiring in growing numbers in the next 3-5 years.
The numbers look real, according to three leaders in the industry. Rockwell Collins Chairman/CEO Clay Jones says the 40,000 jobs represent the current need based on revenue growth of 6% across both commercial and defense sides of the business, paired with voluntary attrition.
Northrop Grumman President/COO Wes Bush notes that even if weapon systems requirements in Iraq fall, “it does not necessarily mean a reduction in demand for people skilled in science, technology, engineering and math in the industry.” Rather, he says, “It is quite possible that as threats to national security evolve, there could well be more demand for a high-technology workforce to design and create new strategic systems to combat new threats.”
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On whether A&D is manufacturing an artificial shortage of engineering and technical talent, the answer from these executives is a resounding “no.” “Our industry requires technologically advanced and specialized skills,” adds Ralph Heath, president of Lockheed Martin Aeronautics. “It impacts our industry, but also our nation’s industrial base. The data is further evidence of the business case for developing a workplace culture that will attract and retain the best and brightest. Obviously that won’t solve an industry-wide shortfall, and that is something we absolutely must deal with.”
The five most difficult engineering disciplines to fill, according to the study, are avionics, electro-optics, propulsion and power systems, complex enterprise architecture and integration software, and systems engineering. Modeling engineering, too, is receiving increasing attention, especially as it applies to Defense Dept. contracting. This niche discipline refers to the science of planning for the containment of a weapon system over its useful life and the ability to adjust to unanticipated uses, as well as the insertion of new technology.
High production levels virtually across aerospace/defense also have led to an increased requirement for highly skilled touch labor, especially for individuals experienced in working with composites and other advanced materials, computerized numerically controlled machines and other precision machining.
So rich is the industry in career opportunities that it now takes an engineering or technically skilled job candidate an average of just 90 days to get hired, according to Chicago-based outplacement company Challenger, Gray and Christmas. This is the shortest time required to conduct a successful job search since the first half of 2001, before the tech industry went through major downturns.
What the survey’s hiring numbers don’t illuminate is an issue that leaders refer to as “the gap.” There is a shortage of workers in the 35-50 age group—the group hardest hit by past layoffs. “[It] is much deeper than we anticipated,” says P.D. Shabay, COO at Bell Helicopter, referring to the increased need for experience in light of mounting technological and production demands. New leadership development efforts have been introduced to accelerate the time and opportunities for more junior employees to gain experience.
Senior managers responding to this year’s survey say a source of encouragement is that technological challenges provided by the industry—the area of most interest by employees—are extensive and complex. These include:
•New environmentally sound approaches to power and propulsion.
•Exploration and “frontiering” deep space.
•The search and application of advanced materials.
•Building air traffic capacity in a system that now is inadequate.
•Use of software and electronics to link and transfer information from space to land, between cultures and across time zones in innovative ways.
The 2007 Workforce Study reinforces that individuals pursuing science, technology, engineering and math (STEM) studies look first for technological challenge, then for an environment that nurtures learning, followed by ethical and responsible leadership and ongoing career advancement. Location emerged as a top concern for the first time since the study was launched in 1997.
The Workforce Study also looks at how companies are meeting employees’ basic requirements. Evaluations were based on compensation, technological challenge, career development and how employers value individuals.
Responses to the Workforce Study represent 71% of U.S. A&D workers. Despite growing concerns across all industries about retirements, industry professionals seemingly are staying on the job to respond to critical demand from the Defense Dept. and record-breaking production in the commercial aircraft sector. Overall, retirements fell from 2.5% of the workforce in 2005 to 1.67% for 2006. The industry’s average age remains relatively stable at 45.
One conundrum is that the aerospace and defense industry was lauded throughout the year by Black Engineer magazine, Hispanic Engineer and other entities for job opportunities and efforts to hire and advance women and minorities. In reality, the industry has been unable to effect significant change, based on the percent of workforce reflected in the Study’s demographics.
“It’s disappointing that the industry lost a little ground on female and minority representation in our workforce,” Lockheed Martin’s Heath says. “Given the focus on this issue, it begs the question of why. But the study also illustrates we don’t have enough candidates. Period. We need to do more to attract all students to math, science, technology and engineering programs.”
Tyrone Taborn, president and founder of Career Communications Group, says part of the problem is that while there are more minority students enrolling in college, they are not pursuing STEM degrees.
Employees define technological challenge by companies’ commitment from leaders for innovation, the ability to work with the experts in given fields, and a workplace that includes the resources to develop processes and technologies.
Companies reported investing an average of 11.23% of their revenues in research and development in the first half of 2007. Nearly 60% of the companies and government agencies in A&D are led by individuals with STEM degrees. Workers also continue to monitor the amount of engineering capacity within companies. This may explain the sensitivity to that data point—companies reported 6.66% of their engineering effort was outsourced in 2007, nearly double that reported in 2006.
Based on these criteria, it should come as no surprise that two of the three organizations ranking high in the survey in technological challenge are laboratory-like workplaces where science research is the primary activity. They are, in order, The Aerospace Corp., Hamilton Sundstrand and Mitre Corp.
Career growth and professional development remain among the top considerations for A&D professionals. The Workforce Study evaluated career development along five indicators: promotions from within, average hours per employee per year spent on education/training, tuition and tuition reimbursement programs (with direct payment of tuition outweighing tuition reimbursement), in-house career programming and formal career path and mentoring programs.
For the industry as a whole, employees spent an average of 27.5 hr. per year on education and training. One-fourth of the organizations offer educational leaves of absence and/or sabbaticals. The professional development most sought by employees in the first half of 2007 was additional technical education, management/leadership training and program/project management.
About 7% of the industry’s employees were involved in some form of tuition or tuition reimbursement program, equivalent to more than 70% of the individuals attending outside higher education institutions. A third of the industry’s companies pay for any degree program, while the remainder pay for programs linked to a defined employee career plan.
Companies ranking at the top in professional development for 2007 were Rockwell Collins, Bell Helicopter, The Boeing Co. and Hitco Carbon Composites.
Valuing the individual is defined by an organization’s diversity or inclusiveness, average years of service and voluntary attrition.
The average number of years of service for A&D salaried employees is 11, and 11.84 years for production/touch labor employees. Retirements in 2006 remained at less than 2% for the overall workforce. The highest retirement rate came in the production/touch labor workforce. Voluntary attrition remains in single digits for most companies. However, it rose to double digits for production/touch labor in 2006. Among salaried workers, attrition rates were highest among engineers, computer science/information technology and program management professionals.
Companies ranking at the top in terms of valuing the individual are Airborne Systems North America, Curtiss-Wright Controls, AAI Corp. and Hitco Carbon Composites.
Curtiss-Wright Controls has finished at the top of the list for valuing the individual for the last three years. Hitco Carbon Composites is the only company to rank among the top three in more than one category.
For the first time, the Workforce Study asked about which institutions the companies prefer for recruiting graduates. Richard Stephens, senior vice president for human resources and administration at Boeing, notes that his company has narrowed its list of preferred universities. Basically, the company applies the same rigors it uses in selecting supply chain members to the recruiting process. Thus far, it’s pared the list from 260 universities to 155, which Stephens says has improved recruiting success.
Pennsylvania State University, Virginia Polytechnic Institute and State University, Georgia Institute of Technology, University of Maryland, University of California-Los Angeles and Purdue University were the top institutions named.
The average pay increase for A&D workers in 2006 was 4.08%, compared with 3.5% across the U.S. Performance bonuses, awarded by more than 60% of A&D companies, averaged 17.46% of base pay in 2006. The only job category and technical industry sector to exceed A&D pay increases was software engineering, where pay increases averaged more than 5%.
At that rate, while base pay in the U.S. remains higher than in other countries, there will be record salary increases for technology workers in China, India and Eastern Europe, according to the Hay Group. Increases in these high-growth economies are expected to be about 8%. Hay Group vice president, Ian Fitzgerald, notes that it would take up to about 10 years for salaries in India to catch up to those in the U.S. “However, keep in mind that cost is not the sole reason companies are going to India—it is the quality of the work as well,” he says.
The cost of health care and benefits, which comprises more than 30% of the total compensation package, continues to be a major issue for all U.S.-based businesses. In 2006, on average, A&D employees paid 23% of their health care costs. However, employers are expected to place less emphasis on increasing the employee share in the future and focus more on prevention and case management. Human resources consulting firm Hewitt Associates’ study on health care benefits trends in the first half of 2007 found that large companies in particular plan to invest more in health improvement, with “aggressive, multi-year steps to help employees improve their health.”
Engineers develop architecture concepts for future space systems at The Aerospace Corp.’s Concept Design Center.Credit: ERIC HAMBURG/THE AEROSPACE CORP. |
With the increased competition for workers, companies are offering new features to their health care programs. The Aerospace Corp. closed its defined benefit pension plan in 1993. In 2005, the space defense contractor reopened the plan as competition grew more fierce for Ph.D.-level scientists. Sabbaticals, leaves of absence for education or development and a range of diverse benefit plans also are being developed or honed throughout the industry.
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