Workforce crisis: No easy answers

MarineMax launches its own training school; Correct Craft CEO says ‘healthy immigration’ could help
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The marine industry’s problem — and it’s a big one — is filling job opportunities, not creating them.

The marine industry’s problem — and it’s a big one — is filling job opportunities, not creating them.

When marine dealers approached Matt Gruhn, president of the Marine Retailers Association of the Americas, and said their biggest challenge was filling jobs, Gruhn sensed there was a crisis brewing.

“The problem is multifaceted — to wrap your head around it is pretty difficult,” Gruhn says. “We went through a whole campaign cycle [to elect] our nation’s president and they were all talking about job creation. We’re not faced with a job-creation challenge today. Our industry and a lot of other industries are faced with finding people to fill the jobs.”

The more members brought their concerns to the MRAA, the more Gruhn and his team realized there was not much information, apart from the anecdotes they were hearing. The first step they took was to see how widespread the problem was. That led to a report detailing staffing demographics, skills deficiencies, training problems and retention, to name a few, and an announcement that boat dealers faced “an unprecedented workforce crisis.”

Now the MRAA has taken things a step further, compiling data from roughly 300 dealers, estimated to be about 10 percent of dealerships in the United States, regarding compensation in a 35-page report. Prior to the survey, the industry had no information regarding salaries, bonuses, benefits packages and the like. Now the survey is available for purchase — $299 for a year of access, with a $50 discount for members, and another $50 discount for those who participated in the survey. The data are searchable by position, location, gender, annual revenue total of dealership and more. About 80 percent of the dealerships that responded earned less than $10 million in revenue.

Fluctuating compensation

A wide variety of respondents from around the country weighed in; there was substantial variation in what service directors earned — an $80,000 difference between the 10th and the 90th percentiles — and less disparity in lower-level positions, such as entry-level service technicians, who were paid $25,000 at the low end and $41,600 at the high end.

Service directors and managers are most likely to be salaried rather than paid on an hourly basis. Service directors are eligible for bonuses at 81 percent of locations; service managers at 72 percent, and shop foremen at 63 percent, the survey found. Fewer than half of locations offer bonus eligibility to each of the other listed service positions.

Service director and entry-level service technician are just two of 34 marine dealership job descriptions on which the MRAA collected data; the information covers all departments, from office to F&I to sales.

Ed Sherman, training manager with the American Boat & Yacht Council, says not only are wages lower than in other industries, the work environment also can be more difficult. Although the top average salary of a marine service manager was akin to that of the aviation industry, according to a group that represents the business component of the industry (meaning, airplanes used at companies), the bottom tier of technician was vastly different — the average salary for aviation maintenance technicians is $92,865.

National Business Aviation Association spokesman Dan Hubbard points out that this is because the failure rate among airplanes has to be less than 1 percent. That’s a stark contrast to the largely unregulated boating industry, which has successfully self-regulated as an industry thus far, as ABYC president John Adey says.

“Most dealers have no clue on how to make this all work, and most are not business-minded,” commented Scott Williams on one Trade Only article that researched some of the workforce shortages on the manufacturing and the dealership side. “They grew up in the industry and follow the same methods that dad used, which in today’s environment, it may keep them in business, but only because of low salaries and cutting corners. They don’t understand the concept of investing in marketing to get more business into the dealership, so they can’t pay. Vicious cycle. Some get it, most don’t.”

MarineMax has started a new training program, calling it a huge investment in its future workforce.

MarineMax has started a new training program, calling it a huge investment in its future workforce.

All-industry shortage

But Gruhn says that when analyzing Department of Labor statistics, “We actually looked very comparable to what other industries are paying.” However, those statistics are breaking down hourly wages, and it was unclear whether the seasonality of the work was factored in.

“If you look at hourly wages of marine, compared to some sectors of RV, or compared to motorcycle, we actually looked very competitive as an industry,” Gruhn says. “But a lot of dealers here in Minnesota shut down for a month or longer. We don’t know whether or not the Department of Labor takes that into account. We’re trying to gain a deeper insight into what the needs are from a competitive standpoint with other industries.”

Regardless of the root causes, employers with hands-on jobs across all industries are struggling to find workers. In other sectors, employers are paying to educate workers or partnering with training facilities. John Deere designed a curriculum and donated farm equipment to several community colleges to train technicians for its dealer network, said an article in The New York Times that was published in January.

About 15 to 20 students come through the program at Walla Walla (Wash.) Community College each semester. Because they are sponsored by a John Deere dealership, where the students work for half the program, most graduate in two years with a job. Technicians start at salaries just under $40,000, on average — well above the average starting salary for marine industry technicians.

Anthony Carnevale, director of the Center on Education and the Workforce at Georgetown University, told the Times that one of the problems is a lack of understanding regarding higher-tech jobs: “Higher ed needs to respect the dignity of labor.” A study undertaken at Ball State University in Muncie, Ind., found that 90 percent of the jobs that have disappeared since 2000 were lost to automation and efficiencies, not offshoring.

The shortage is contributing to a lack of customer satisfaction, Sherman says, and that will continue as long as there is a shortage of qualified people to work on increasingly complex systems. Responses to the MRAA Workforce Assessment showed that more than 21 percent of the positions dealers had budgeted for in 2016 remain unfilled and that more than 90 percent of dealers have multiple positions unfilled.

Employers across many industries are struggling to find workers for hands-on jobs.

Employers across many industries are struggling to find workers for hands-on jobs.

MarineMax U

MarineMax, the nation’s largest boat retailer, has changed course and launched a new training program at its Clearwater, Fla., facility, says chief operating officer Brett McGill. After trying a variety of training programs, the company decided to make a huge investment in developing its workforce.

“This has been an ongoing challenge,” McGill says. “We have an aging workforce and not a lot of new young people coming in. Our climate is tough, compared to [other industries like] auto.”

The company initiated a technician apprentice program with some success, but it was “very slow” because top technicians were then expected to also be teachers. “That was one program we had on and off for many years,” McGill says.

Eventually, MarineMax made the leap to significantly invest in the future workforce by turning the top floor of its Clearwater facility into a classroom. Travis Fraley, who is heading up the venture, hired technician Chris Butts as a full-time trainer, McGill says. It’s a huge financial undertaking — investing in the trainer, the program, the equipment, and even the young technicians. “We’ll pay them to enter our program. Then when they’re done, they’ll be deployed to one of our 62 stores across the country.”

Right now, seven students are enrolled in the fledgling seven-month program, and they will graduate in batches. They’re able to get hands-on, practical experience in the classrooms and the stores — they can recondition boats that have been traded in, for example — and Butts mentors them through the program and afterward.

The students range from motorcycle and marine tech training graduates to entry-level workers in dealerships. “We had somebody who was a laborer in our yard who wanted to grow with the company,” McGill says. “He put his name in a hat, the manager said yes, I think he’s got the ability, so he is in a program to learn how to be an entry-level technician. He literally got a standing ovation when we announced he was going to enter the program. He’s one of the hardest-working guys at the store, and now he’s able to advance his career.”

The industry faces a shortage of qualified people to work on increasingly complex machinery.

The industry faces a shortage of qualified people to work on increasingly complex machinery.

A conducive environment

The opportunity for advancement helps to address one of the industry challenges, Sherman says. Without the potential to move ahead, workers become discouraged.

The MarineMax program “is a long-term approach,” McGill says. “It’s not going to fix the shortage overnight, but manufacturers of engines and boats should look at this and realize it’s a benefit to their product, too.”

Dealers are busy and often say they don’t have the time or resources to invest in their workforce, but McGill says “we can’t afford not to.” He acknowledges that most dealerships don’t have the same resources as MarineMax, with its 62 locations, but says, “If this works, we should have lots of dialogue with the industry to see how we should expand it. “As you can see, it’s a major investment. We have a dedicated trainer, who’s been a technician. His salary, administrative costs, classrooms, computers — it’s a substantial investment. But it’s becoming very difficult to attract new technicians to our industry. We built our business on providing world-class customer service. We have to be able to provide that forever for clients.”

“If you’re not making [your workforce] better, you’re not doing your company any good,” agrees Gruhn. “You can say you can’t afford to train someone who won’t stick around, or you can find ways to create an environment to make employees successful — take care of them, train them, make them better, give opportunities for growth and advancement, and they enjoy that. If you choose not to do that, you’re going to have lot of other challenges.”

Entry-level service technicians were paid $25,000 to $41,600, according to a marine industry survey.

Entry-level service technicians were paid $25,000 to $41,600, according to a marine industry survey.

Keeping up with technology

Last fall, the Wall Street Journal published an article discussing widespread shortages at the factories that are still operating in the United States. The number of open manufacturing jobs has been rising since 2009, and it now stands at the highest level in 15 years, according to Labor Department data.

In the same vein as the Ball State study, the newspaper found that as in the marine industry, work has evolved in the past decade or so as companies have invested in new machinery requiring new skills. As manufacturing has become more technology-driven, its share of managers and professionals has risen, the WSJ reported, citing Labor Department data.

In 2000, 53 percent of manufacturing workers had no education past high school. By 2015 that share had fallen by nine percentage points, while the share with college or graduate degrees increased by eight points. Some manufacturers said in that article that raising wages wouldn’t fix the problem because the issue is that there is a skills gap. That seems to resonate in the marine industry — on the service side, for sure — as systems are more focused on full integration and being more user-friendly.

That said, sectors with high-margin products, such as pharmaceuticals or medical device manufacturing, often can afford to pay more than makers of more traditional manufactured goods, such as heavy machinery, the newspaper said. Those industries are facing fewer shortages, according to the article.

Some analysts worry that a growing emphasis under a Trump administration to re-shore manufacturers on American soil will cause the employment and skills gap to increase even more dramatically as competition for workers increases. A National Association of Manufacturers webinar, designed to help U.S. manufacturers understand potential changing tax and import policies, touched on the workforce challenge. “Every manufacturer I talk to talks of a workforce development challenge,” says NAM chief economist Chad Moutray.

A focus on new-product development, innovation going to market and customer focus, paralleled with American jobs first, “creates a huge supply chain challenge,” says Brian Murphy, national managing partner of state and local tax services for Grant Thornton accounting and consulting services. The skilled labor talent needed to support on-shoring will require “other policies in place or it’ll be very, very difficult to meet expectations” of consumer demand, manufacturing demands, capacity and productivity, Murphy says.

Though not always a popular viewpoint among Trade Only readers, Murphy’s point was that these decisions don’t occur in a vacuum, and thus far politicians on both sides of the aisle have not addressed the legitimate workforce shortage that is prevalent across the country among factory jobs and service technician jobs. Without policies to help provide training and apprenticeships, bringing more manufacturing to the United States could compound the shortages, Murphy says.

Immigration

At a National Marine Manufacturers Association board meeting that Correct Craft CEO Bill Yeargin attended in October, almost all of the 20 manufacturers in the room cited workforce shortages as their biggest current challenge. “There’s a lot of discussion around creating jobs, but unemployment is really low, and our challenge now is finding people for jobs we do have,” Yeargin says.

“This ties into the whole immigration issue,” he adds. “There are people all over the world who are good, hard workers, who want to come here and work. We’re fearful because we don’t want to lose jobs, but the bigger threat is getting people to fill the jobs.

“Obviously,” Yeargin emphasizes, “nobody wants terrorists to come into the country. We’ve got to figure out the right balance and continue to do what the United States has done for 200 years — allow immigrants to provide the fuel to grow our economy. I think healthy immigration is clearly part of the workforce solution. We’re creating more jobs, and we need people to fill them.”

All of the issues — onerous corporate tax rates, trade deals, immigration and workforce challenges — are tied together, said the NAM webinar speakers. Although Gruhn says he does not want to enter any politically charged frays, he agrees that there are no easy answers.

“We have to find people to fill these jobs,” Gruhn says. “And if we can’t do that — in the past, we’ve grown our workforce through immigration.”

This article originally appeared in the March 2017 issue.

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