The world has changed, vehicles are different and top engineers are not drawn to careers in the auto industry like they once were.
SAE Foundation’s "A World of Motion" program encourages school children to be engineers, but qualified grads in short supply.
After years of cutbacks and layoffs, a real recovery is taking hold in the U.S. auto industry. Production schedules are being increased, shifts are being added and long-postponed vehicle programs are being given the green light.
It should be cause for celebration, but the industry is finding a cruel twist in the nation’s slow economic revival: There does not seem to be enough engineers and skilled technicians to fill a skyrocketing number of new positions.
The problem is particularly acute at automotive suppliers. Companies cut staffs 20% to 30% in 2009 during the depths of the recession and scaled back internships and other programs designed to recruit new talent. Now they are playing catch-up as auto makers step up product-development schedules and begin to fill new-product pipelines for the ’14 and ’15 model years.
What’s more, an unprecedented number of new models are equipped with advanced powertrains and sophisticated electronic systems that require the work of electrical and software engineers, the type of technical specialties that are in high demand worldwide by a variety of industries.
With unemployment rates still painfully high, especially in industrial states such as Michigan, it seems shocking that companies would be struggling to fill jobs, but that is the lament from a wide range of suppliers big and small.
“It’s getting so bad we are having to bring in engineers from overseas, and most of them won’t stay long-term,” says a Detroit-based engineering manager.
Analysts agree that long term the auto industry has to intensify its already significant efforts to bolster math and science programs and lure young people into automotive engineering careers and counter the grim images of the last few years of layoffs and instability.
The SAE Foundation's "A World of Motion" program, for instance, is designed to bring vehicle engineering to life with fun educational activities aimed at K-12 students.
But these programs won’t answer the pressing need for qualified engineers that has developed almost overnight.
The Original Equipment Suppliers Assn. says the number of its member companies reporting problems hiring engineering and technical people soared from 42% in 2010 to 70% at the end of 2011.
And the Engineering Society of Detroit reports dramatic changes in its biannual job fairs, with the number of companies seeking engineers rising from 31 in spring 2009 to 51 in spring 2012, while the number of job applicants attending dropped from 1,385 to 613 during the same period.
Some call it an engineering shortage and are quick to blame the waning number of U.S. students graduating with engineering and related degrees, but those now studying the jobs issue say the problem is more complex.
For one, thousands of veteran automotive engineers have retired early or taken buyouts and permanently exited the industry. Many others were laid off, moved to other states to find work and are not coming back.
“It looks like a whole demographic has exited the industry,” says Dave Andrea, senior vice president-Industry Analysis and Economics, OESA.
A recent OESA survey reports an exodus of current engineering and product-development specialists from Metro Detroit to South America and Asia, posts that many up-and-comers would consider more glamorous and better for their careers than staying in the Midwest.
And then there is the large percentage of young electrical and software engineers who believe better career opportunities are available outside automotive.
An engineering chief at a major automotive supplier privately complained to a reporter recently that he now is competing with the likes of Google and Intel for engineering talent, even in Michigan, the heart of the U.S. auto industry.
But it isn’t surprising electrical and software engineers are looking elsewhere for jobs, saysBruce Belzowski, a research scientist at the University of Michigan Transportation Research Institute.
“It has to do with the culture of the auto industry,” he says. “Software and electronics folks were never running the show. You would never see those people as heads of departments.”
According to SAE member surveys, engineering salaries are largely dependent on how many direct reports a manager has, and in the auto industry, most of the key technical management positions still are held by mechanical engineers.
It is much easier for electrical and software engineers to see a clear path for future management positions at Google or hundreds of other major non-automotive companies looking to recruit talent, Belzowski suggests.
“(Automotive) companies need to tell a story, explain what their promotional track is. They really have to do a sell job,” he says. “As the (vehicle) changes and evolves to a more electronic machine, the industry has to change itself.”
A source who asks not to be identified says there is another major reason suppliers in particular are having a tougher time hiring engineers compared with their auto maker customers: salaries.
Most suppliers chopped engineering wages and consolidated pay grades in 2009. Facing profit pressures and a fragile recovery, they have been reluctant to raise them. “OEMs have adjusted back up and are paying more. That’s why you don’t hear auto makers complaining too much,” the source says.
And that’s why the “engineering shortage” is more accurately described as a training and experience gap, saysKristin Dziczek, director-Labor and Industry Group at the Center for Automotive Research.
“I don’t doubt there are niche areas where it is extremely difficult to find candidates, but (the shortage of engineers) is not as widespread as it sounds,” she says. “This is an industry that very recently employed twice as many as it does now in a state with 9% unemployment.
“Some people retired and some died. Some people have the wrong mix of skills for what these new jobs are. But what we are really facing is there is no luxury of time to train and retrain people. We need plug-and-play (skills). We’re on such an upswing that you can’t take somebody that’s kind of close and spend six months or nine months to get them where they need to be.”
Dziczek pegs much of the blame on budget cuts that befell many student co-op and internship programs in 2008 and 2009, drying up a crucial source for new engineers with work experience in key areas.
“We’ve got a population of (semi-qualified) people with engineering degrees that need some retraining, cross training or skill upgrades to fit what is needed now. It’s not that there are not people, it’s that we don’t have time to upgrade their skills,” she says.
The solution is to treat this training shortfall like any other automotive supply-chain shortage, Dziczek says. “If it were another commodity for making vehicles, you’d pay more, develop substitutes and figure out ways to use less of it in some way.”
That means finding faster ways to train and retrain young graduates and older workers, outsourcing some work or finding talent in the far corners of corporate structures.
It also means figuring out new ways to make auto industry jobs more attractive, offering international assignments early in careers and finding talent through different methods such as social networks.
Smart companies are listening. For instance,, a major global supplier with deep roots in Michigan and the Midwest, now has a program that allows entry-level engineers to gain invaluable international experience by rotating through assignments in company operations in China, South America, Germany and Eastern Europe.
Part of the rotation might include following a specific product under development throughout the world, says Pete Carozza,’s director-Human Resources for North America.
“That’s not how things used to happen. Engineers often had to work years to get such experience,” a spokesman adds.
Part of the strategy is to rebrand the auto industry with a more exciting, global image that will help attract young people, Carozza says. That includes having booths at auto shows and elsewhere that play up Continental’s advanced technologies to the public.
It also means having a career page on Facebook and highlighting company events and student programs on social networks, says Ann Baker-Zainea, Continental’s manager for NAFTA-region staffing.
All supplier sources contacted decline to discuss the pay issue, but Baker-Zainea says Continental constantly is doing studies to make sure the company remains competitive.
She stresses that attractive compensation packages aren’t always about the salary number. They also include many health-care options and various other types of benefits and compensation.
The bottom line is that the world has changed, vehicles are different and top engineers are not drawn to careers in the auto industry like they once were. Automotive suppliers in particular are going to have to work much harder at recruiting talent they once took for granted.