The Aging Workforce – The Challenge and the Opportunity

Do you have a list of your field service and technical support engineers and the date they plan to retire or are eligible to retire? How often do you look at it? Do you have a plan to offset the effects of their departure?

If you answered NO to these questions, is it because you are hoping it will all go away?

Don’t shoot the messenger… but the silver tsunami, the gray tsunami, or the aging workforce (these terms are used interchangeably) is real. It’s time to start doing some heavy-duty planning.

The Current Workforce Situation

Whatever you knew about the Silver Tsunami before mid-March 2020 is likely incorrect and very conservative since COVID-19 changed everything.

In general, we must consider a few major factors before we plan how to deal with the situation.

• The vast number of businesses that closed and will remain closed has significantly increased the number of workers who need and will continue to need new jobs.
• Many unemployed and underemployed workers will not look for the same type of job they left; instead, they will make a career change. Highly skilled people will be looking for lower-level positions that pay less than they earned before COVID but are more secure, less stressful, and much healthier than their previous jobs.
• Many older workers already planned to retire or completely change fields to something less stressful and challenging. COVID-19 accelerated this trend.

In the service space, some of the major changes are:

• End users are becoming more self-sufficient when it comes to touch labor. They would rather use their employee than an OEM’s field service tech.
• End users and OEMs have widely accepted Augmented, merged, and virtual reality.
• All businesses are squeezed financially and are looking for ways to achieve their pre-COVID business objectives at a seriously reduced cost.

The one thing all businesspeople seem to focus on is that these significant changes only affect them and their industry peers.

• The OEMs seem to think that they are the only companies losing their highly skilled older field technicians and are only now trying to figure out how to capture the knowledge they created in their long careers in their business. Also, they are trying to figure out how to “inject” new hires with the practical experience their soon-to-depart senior warriors will be taking with them.
• The end users are losing long-term maintenance and setup mechanics who know everything about the plant’s equipment and how to keep it running. They know which replacement parts to buy from the OEM and which should be purchased at Grainger. Like the OEMs, the end users are trying to figure out how to “inject” new hires with the practical experience their soon-to-depart senior warriors will be taking with them.

While the customers and the OEMs are both facing profoundly serious workforce challenges, they have an opportunity to cooperate and create new business models that will increase uptime and decrease costs for both parties.

A Closer Look at Workforce Data

The first two charts below are from the August 7, 2020, report from the Bureau of Labor Statistics (BLS) entitled Current Employment Statistics Highlights, July 2020. They are here to show the impact of COVID-19 on the U.S. workforce. Please keep these two charts in mind as you look at the remaining data, which is pre-COVID.

 

 

Note: OTM is the “Over the Month” net change in the prior two month’s data.

Remember that not all changes affect manufacturing. Most impacted retail, restaurants, travel and leisure, and other consumer-based businesses.

Since about March 2020, employment in manufacturing declined from about 150 million to 121 million. A drop of almost 20%!

Here is some information from the March 31, 2020, report entitled May 2019 BLS National Occupational Employment and Wage Estimates. The first row of data is all the working people the BLS knew about at the end of May 2019. The next row is all the people working in installation, maintenance, and repair operations (all OEM field technicians, end-user machine maintenance people, and all other mechanics, including the Maytag repairman).

The remaining four rows show the data for the industries in which I am strongly interested. If I missed your specific industry, click the link above for more information.

We learn from this chart that all installation, maintenance, and repair operators account for 3.9% of the U.S. workforce. So, compared to the total labor pool, the number of qualified and/or experienced people in the industrial repair sector is relatively small. Depending on where you employ these people, you may find that when you hire qualified people, your choices are few and far between.

Here is information from a May 2019 BLS “Daily Economics Report” about labor force participation.

Note: From the BLS, the labor force participation rate is the percentage of the civilian noninstitutional population 16 years and older who is working or actively looking for work.

The report states, “In 2019, the last baby boomers will reach age 55 and transition into age groups with much lower labor force participation rates. Due in large part to an aging population, the labor force participation rate for all workers (age 16 and over) is projected to decline to 61.0% in 2026.” Remember, this is before COVID-19 emerged!

2 Major Opportunities to Take Advantage of Right Now

1. If you don’t have a knowledge management system, you must prioritize that.

Anyone must satisfy one prerequisite before implementing alternative plans to support their customers and grow their service business. You must provide easy, quick, and current access to all the information anyone working on your products needs to understand, troubleshoot, repair, test calibrate, and demonstrate safe operation.

According to ServiceMax, a provider of Field Service software systems, there are two types of field service knowledge:

1. Tacit knowledge, which resides in employees’ minds, can be difficult to express. Think “tribal knowledge.”
2. Explicit knowledge already exists somewhere in the company but may be difficult to locate. Think FAQs, parts lists, service manuals, and test and repair procedures.

Today most of us rely on highly experienced support people to access and share their knowledge, but you should assume that in the future, these people will no longer be your employees. You may have had to furlough or lay them off; they may have retired, changed jobs or professions, or moved to a different part of the country.

Your first efforts to create a knowledge management system should start with collecting and publishing the explicit knowledge. It is a more straightforward process than trying to collect and achieve agreement on which approach to solving a complex problem will work in the greatest number of cases. But, without being able to access all the “tacit knowledge” locked in the heads of these older workers, your support mission will be strained to perform to your customer’s satisfaction.

2. Build a service team using or including part-time, on-call retired technicians and mechanics.

In May 2017, our friends at the BLS published another interesting report entitled “Older workers: Labor force trends and career options.” Here are two fascinating charts from that publication:

Each of these two charts yields one critical piece of information:

1. About 27% or 28% of people aged 55 years and older (about 40 million) work part-time.
2. About 8 million people aged 55 to 64 and about 16 million additional people aged 65 and older are self-employed.

We can assume that at least 40 million people, including about 1.5 million people who worked in the equipment repair industry, want to work for themselves in a part-time role. With some considerable effort, both OEMs and end-users can create programs to give these people an opportunity to feel needed while earning some money to supplement their retirement income.

Note: An article titled “Top Platforms to Hire Freelancers in 2020” reports that there are about 57 million American freelancers and that number is growing every year. The article also describes six platforms to hire freelancers so the search may not be as difficult as we can easily imagine.

I suggest that businesses can take advantage of this workforce to perform two jobs:

1. Maintain equipment
2. Train the next generation

Sharing Real Life Case Studies

About ten years ago I was working with a VP of Quality and Customer Satisfaction at EMC², the data storage company that DELL would eventually acquire. One of the more interesting things I learned from my client was that he employed retired senior sales and service executives to make survey calls to executives at their most important clients. He did this because he wanted the clients to feel comfortable about having a structured conversation with the survey caller, so he ensured it was a peer-to-peer relationship.

And he got great feedback.

Recently I was consulting to the VP of Service for a manufacturer of packaging machines. They used commercial robots to stack pallets at the packaging machine output. Coincidentally, I know the Head of Service for the robot manufacturer, so I contacted him. He told me that he had a service team that included more than 10,000 former service engineers and mechanics certified to repair his products. These people were in almost every community where he had installed systems. He dispatched these people to the least demanding customers who were happy to get the quick, local response and accepted that they might require a bit extra technical support from my friend’s organization.

I thought this was special until I spoke with two customers who included my client’s packaging equipment as part of a turnkey production line. Both customers told me they used independent service technicians who were retired and still competently servicing their equipment.

Getting Started: OEM

Here is a high-level list of steps to follow if you decide to go down this path as an OEM:

1. Start working on creating a knowledge management system. Maintaining a knowledge system is a never-ending job, so choose a platform that is easy to update and enhance.
2. Discuss with key customers in all the sectors you support (sectors include geography, industry, product used, installed base size, and past service purchases from you). Explain what you are considering and get their comments, ideas, and suggestions.
3. If you get enough encouragement, begin creating a comprehensive certification process and decide on who will be eligible, how much to charge (if anything), and how to maintain control of service delivery.
4. Consider adding a merged reality system like Help Lightning or SightCall so your technical support engineers can provide enhanced help to the on-demand service engineers for any problem where the engineer is uncertain.
5. In parallel, start talking with your own and your key customer’s recent retirees. If they are interested in participating, use their input to confirm or change your early decisions as appropriate. Remember that you need both machine owners and machine technicians to make this process successful.
6. Remember the administrative side of this plan. People must hire, certify, communicate with both parties, process work orders, and handle invoices and payments. Also, there will be some interesting challenges with parts.

Getting Started: In-house Manufacturing

The process for in-house manufacturing is remarkably similar to the one for the OEM, except you must coordinate with your OEMs for technical support, training and certification, access to the knowledge base, and parts and repairs. But the basic idea is the same: you talk with your critical OEMs and see which are ready to join you on a new journey.

Planning for the Future

It may sound like a far-fetched idea, but remember that many other companies are already following this roadmap. Maintain a positive attitude and consider how you will feel when your customers thank you.

Related article: Creating Lasting Shareholder Value By Creating Customer Value

About Middlesex Consulting 

Middlesex Consulting is an experienced team of professionals with the primary goal of helping capital equipment companies create more value for their clients and stakeholders. Middlesex Consulting continues to provide superior solutions to meet the needs of its clients by focusing on our strengths in Services, Manufacturing,  Customer Experience, and Engineering. If you want to learn more about how we can help your organization create more value for your customers and employees, please contact us or check out some of our free articles and white papers here. 

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