April 14, 2011/By The Center for Michigan
By Rick Haglund
Like plenty of Michigan companies, Cignys, Inc. was forced to lay off workers as the state’s economy tanked during the Great Recession.
The Saginaw-based supplier of precision-machined products to the aerospace, defense and plastics industries is hiring again, though, as manufacturing enjoys a surprisingly strong rebound.
But there’s just one problem: Cignys can’t find enough welders, machinists and the other skilled-trades workers it needs to meet the accelerating demand for its products and services.
“We are literally turning work away because we don’t have enough people,” said Cignys President Charles Lange, whose company currently employs about 165 workers.
Lange is paying his employees a $500 finder’s fee for every new worker they recruit, a tactic that was popular among Michigan companies during the labor shortages of the late 1990s.
Cignys is far from alone in facing a shortage of skilled workers. Automakers and their suppliers, insurance companies, information technology businesses, hospitals, accounting firms and many others across the state are reporting difficulties in finding workers with the right qualifications.
Experts say this mismatch between what employers need and the skills Michigan workers possess is likely to grow worse as the economy improves.
“Many job seekers in the marketplace are low-skilled,” said Amy Cell, senior vice president for talent enhancement at the Michigan Economic Development Corp. “That’s probably the biggest problem we face.”
Michigan’s employment picture is rapidly improving, but it’s not exactly a job seeker’s market yet.
A new University of Michigan forecast predicts the state will add 126,100 jobs by the end of 2012, the first job growth the state has seen in a decade.
Still, Michigan has one of the highest jobless rates in the country at 10.4 percent. The Michigan Talent Bank, where those receiving unemployment benefits must post resumes, lists about 36,000 job openings in the state — compared with nearly 886,000 resumes on file.
“Employers still have pick of the litter,” said Doug Stites, chief executive officer of Capital Area Michigan Works, an employment services agency in Lansing. “They’re taking people with specific skills.”
And experts say many of the new jobs being created in the state will require skills or educational levels beyond what many unemployed workers have.
“There is a significant mismatch in Michigan in the skills of its workers and the skills employers need,” said Larry Good, chairman of the Corporation for a Skilled Workforce in Ann Arbor. “Many companies are looking for employees with specific skills or advanced degrees.”
Automakers and their parts suppliers, in particular, are scrambling to find engineers as their sales rebound from 30-year lows posted in 2008 and 2009.
They’re especially in need of electronic, embedded software and hybrid systems engineers as automakers add more computer and electric powertrain technology into cars and trucks.
“Hybrid systems engineering has not been an area of college training and has not kept up with the growth of companies engaging in hybrid and electronic systems design,” said Martin Klein, director of engineering at LG Chem Power Inc., which is building an advanced lithium-ion automotive battery plant in Holland.
But LG Chem and other companies also are looking for experienced engineers in those areas, not just recent college graduates.
That’s a dilemma because there has been little demand in the auto industry for these types of engineers over the past five to eight years, so the supply pool never developed, said Kristin Dziczek, director of the labor and industry group at the Center for Automotive Research in Ann Arbor.
As a result, automakers are trying to recruit software and electronics engineers from California’s Silicon Valley. And in some cases, they’re sending work outside of Michigan.
A job fair at the annual Society of Automotive Engineers World Congress in Detroit this week drew 35 companies, up from 17 last year, the Detroit News reported.
“Electronics and embedded software are areas where we don’t have a great supply,” Dziczek said.
Companies likely will have to offer higher salaries to attract those engineers, if they aren’t already doing so.
“For the most part, we’re hearing if you pay enough, there’s no shortage,” Dziczek said.
Information technology is another area where good-paying jobs are going begging.
“I’ve got 250 to 300 IT jobs I can’t fill,” Stites said. “Everybody depends on IT. It’s the grease that makes companies run.”
Experts say there are many reasons why so many Michigan workers lack the skills needed to prosper in today’s economy.
“We’re a poorly educated state,” Stites said. “We lived high on the hog for a long time without being well-educated, but being paid like we were. Now management says we’re going to be paid what we’re worth. The realization hasn’t sunk in with a great many people.”
About 27 percent of Michigan residents have a four-year college degree or higher, compared to 31 percent for the nation, according to the latest census figures. Michigan ranks 37th in educational attainment among the states.
A new forecast from the Center for Automotive Research predicts that Michigan will add 43,150 auto jobs through the end of the year.
Most of them will be hourly positions, but they won’t be your father’s factory jobs. Math and computer education beyond high school are on the requirement lists.
Another factor hurting employment prospects is that thousands of workers were unemployed for so long during the recession that their skills became outdated. And older workers can find retraining for new jobs or career changes a daunting prospect.
“You’re 50 years old. You’ve done this your entire life. Going back to school is terrifying,” said Malorie Kersten of the Michigan Works Association, an umbrella organization serving the 25 local Michigan Works agencies.
It’s also an unsettling time for job-training efforts in the state.
Michigan’s work force development organization is in the process of being relocated to the MEDC, where many of its traditional economic development programs are being revamped.
The federal Workforce Investment Act funded much of the state’s job-training work, known in the administration of Gov. Jennifer Granholm as No Worker Left Behind. But this effort is under attack in budget negotiations in Washington.
The act has allocated about $200 million a year in job-training funds to Michigan. If those funds are lost, the Michigan Works agencies would shut down, Stites warned.
Back in Lansing, Gov. Rick Snyder’s budget proposes to fund community colleges, a crucial component in upgrading worker skills, through the School Aid Fund. But public school officials are strongly opposed to the idea, saying it will reduce money meant for the K-12 system.
“Not only is the federal level up in the air, there could be significant cuts in state adult education and training (if Snyder’s budget isn’t approved),” said Cell of the MEDC. “We’re going to be in a very challenging situation once all the dust settles.”
Good said one successful aspect of Michigan’s work force development strategy are the Michigan Regional Skills Alliances, in which employers, educators and community leaders address local needs. In one case, a skills alliance including Mott Community College quickly established a special training program to get unionized painters certified when federal requirements for bridge painting changed.
“There needs to be a lot of customizing in job training,” Good said. “It requires a deeper, clearer and quicker understanding of what employers need.”
And employers’ needs for skilled workers are only going to get stronger as the baby boomers retire, said Lange of Cignys.
“We have a lot of gray-haired guys who are very talented and very good,” he said. “Replacing them is tough.”