The future is arriving a lot sooner than human-resource leaders in aerospace and defense manufacturing expected, and as the U.S. goes through an extensive migration of workers, industry fears it will get left behind.
Like a homeowner who, after a destructive thunderstorm, finally decides to patch a leaky roof, aerospace and defense (A&D) leaders are emerging from the COVID-19 crisis with both renewed hope and growing anxiety about transforming their workforces. The race is on to attract and retain new workers while helping current employees adapt to new realities. The urgency is driven by what could be a historic ramp-up in narrowbody airliner production as well as growth spurts in next-generation niches of A&D, such as outer space and urban air mobility.
- A&D leaders emerge from the pandemic with renewed hope and growing anxiety about workforces
- Culture, remote working rival ongoing challenges like manufacturing’s attractiveness
But according to several industry sources—many of whom spoke without attribution to be more candid about the relevant issues—legacy A&D companies are struggling. “Did COVID make this worse? It did,” says the global head of human resources (HR) for one provider. “We’re going to have to face some of these problems a little sooner than we thought.”
The list of issues includes several longstanding challenges, such as retiring baby boomers and the subsequent loss of veteran institutional knowledge as well as other factors that may have existed in the background but are now spotlighted as the willingness of U.S. workers to change jobs appears to have reached a historic level. Such decisions hinge on company culture, reputation, workforce diversity and remote-working expectations.
In turn, seasoned executives report an exodus of talent on a scale they have never experienced before, while the difficulty of attracting new workers remains the same or greater.
Worse yet, this change comes after a proverbial tsunami of pandemic-related job losses and the Boeing 737 MAX crisis. Kathryn Creedy, editor and founder of the new Future Aviation/Aerospace Workforce News website, says it is still hard to know exactly how many jobs were lost in recent years because not every staff reduction was publicly announced or detailed, and a fraction of workers have been recalled.
But from what is known, it is clear that the hit was significant. In 2019, the U.S. aerospace industry employed roughly 2.2 million workers, including 1.2 million in the aerospace supply chain, according to U.S. labor data. The historic slump in air travel demand stemming from the pandemic cost the country more than 100,000 jobs, and “hundreds of thousands more” are still at risk, according to federal officials.
Similarly, the industry’s most prominent trade group said last September at least 220,000 U.S. jobs tied to A&D could be lost as manufacturers see civil aircraft production cut by as much as half, depending on the aircraft program. “The full scope of the pandemic’s impact remains a matter of great concern, especially when it comes to our top priority: our workers,” the Aerospace Industries Association said when it released its latest annual industry data compilation.
Congress and the Biden administration are trying to provide fresh federal aid, and in June the Transportation Department opened the Aviation Manufacturing Jobs Protection (AMJP) program for applications. Created under the American Rescue Plan Act, which became law in March, the AMJP program makes available $3 billion in total payroll support for aviation manufacturing companies that furloughed workers during the pandemic. Employers can receive up to 50% of their labor costs for an affected employee group for a single six-month period. The program is set to run through April 2023.
AMJP funds must be used only for the “facilitation, retention, rehire or recall” of at-risk or furloughed employees and can only apply to base compensation and cost of benefits. The aid cannot be used for back pay of rehired or recalled workers.
To qualify, companies must be “established, created or organized” in the U.S. and have a majority of their employees based in the country. Eligible firms must also have furloughed or laid off at least 10% of their 2020 workforce from 2019 levels or experienced a revenue decline of at least 15% over that period. Notably, employers cannot have received any aid under last year’s CARES Act or currently be expending financial assistance under the Paycheck Protection Program.
Efforts such as AMJP are welcome as industry seeks to stop the loss of more talent and recall furloughed staff. “The human resource part of this is probably the most important part of this [recovery], next to maybe cash,” says one longtime supplier executive who is now a consultant.
Larger, publicly traded companies have advantages over lower--tier shops in that the bigger companies can offer benefits to existing workers and to those who boomerang back. However, because of union rules, newer workers in those shops were more likely to be let go, and they had less invested with their employers.
The consultant notes that when manufacturers go through a downturn, managers know exactly what they already have, and they can make choices about which businesses and factories to keep alive or close. “But when you make large layoffs, and everyone has, what you get back is not necessarily what you want,” he says. “Layoffs disproportionately affect younger workers. If they moved on to something else—a nice automated warehousing job, making the same money they made in aerospace—how do we get them back?”
In addition, the pandemic spurred a relative exodus of more experienced talent, according to several HR managers (AW&ST Sept. 14-27, 2020, p. 58). Even midlevel U.S. workers appear willing to question their positions and careers in greater numbers.
The phenomenon is not isolated to A&D, of course, but it means that industry is fighting a larger societal trend. A recent Korn Ferry survey concluded that the No. 1 catalyst for leaving jobs after the pandemic, representing 35% of responses, is company culture and purpose. Another 21% of people said they intend to quit because they are concerned about company leadership.
“People want to understand who they are playing for right now,” Marat Fookson, a senior vice president at Korn Ferry, said in a June report. “What team is on the field? Is there a vision? What do the company’s values mean for them.”
Meanwhile, cultural attractiveness and work-life balance have become front-burner issues with the advent of work-from-home opportunities and the social disruption of 2020. One aerostructure executive says after his company started to foster more conversations among its workers and with management, the results caught leaders off guard. “Some of the things we’re hearing are shocking,” he said. “Maybe we didn’t see or hear or want to hear.”
A different midlevel A&D HR executive says practically every new-hire interview includes questions about remote working—an issue for which her company still has not hammered out a formal policy. “What our workers will expect is some level of flexibility going forward,” she says.
“I’ll be honest—we’re struggling with this,” another HR executive at a leading Tier 1 says about remote working. Aerospace manufacturing is still traditional, so that change was always going to be hard. But his key aircraft supplier is already seeing unexpected turnover of employees as salaried workers quit instead of returning to the office. “There’s a second wave, and it’s about to hit us in the face,” the executive says.
Another challenge for A&D could be its cyclical swings. “Most small and medium businesses have made substantial efforts over the past year to diversify and pivot their business in other sectors,” aerospace manufacturing consultant Bernard Boite observed during the Aero Montreal 2021 conference. “The danger is that they [and the associated engineering talent] may not come back to a ‘risky sector’ even when business picks up again.”
Related to that concern is the well-known trend that younger generations prefer to do almost anything except manufacturing, lamented one Tier 1 executive. “Maybe only insurance sales are less desirable,” he says, joking. By 2030, as baby boomers retire, more than 2 million total U.S. manufacturing jobs will go unfilled.
Younger workers especially are looking for companies with a purpose beyond profits—for example, sustainability—and they are interested in quicker advancement and seek greater work-life balance. The second-shift, for instance, long a rite of passage for new workers in manufacturing, is unacceptable for many of them. “We’re going to have to find a balance with that generation,” the Tier 1 executive says. “We haven’t done it yet, at least not in aerospace.”
To some degree, managers take solace in the fact that the issues have been longstanding and they are not starting from scratch. Industry leaders have known for decades that although aerospace and military service can be a passion or professional calling for some workers, those alone are not enough to fill workforce ranks. Fortunately, industry can lean on other strong points to attract new talent generally. Increasingly, new data indicates that A&D has much to offer people who are not already hooked.
According to Aviation Week’s 2021 Workforce Study and New Generation Leaders survey of young professionals, A&D’s most attractive features for younger workers begin with its relatively higher salaries, opportunities for finding a job and advancing and overall job security. Each of these features ranked among the highest of those polled in the latest study, while others—such as offering technical challenges—perhaps surprisingly, ranked lower. For individual companies, the study further telegraphed which features and benefits younger workers said they found most appealing (see top chart).
Nevertheless, the study reminds HR leaders how challenging it is to hold on to younger workers. This year’s results, for instance, indicate that a fourth of the young professionals polled were looking for a position outside their current employer while a third were hunting within their company. “For the majority of those looking for a new position, the search is driven by an interest in earning a better opportunity or salary, looking for a new challenge and advancing their careers, investing in their learning or education, and pursuing new challenges,” the study says.
Other deep-seated challenges remain, the study shows, starting with long-running efforts to diversify what remains a mostly white, male workforce. Among young professionals surveyed, 68% were male and 67% were white. On a positive note, the percentage of women rose for two consecutive years to 30% of the respondents. Yet the percentage of Black and Hispanic/Latino employees remains mostly unchanged, at 8% and 5%, respectively.
HR managers across industry remain upbeat about the task ahead, as is their nature. Several suggest the experiences of 2020 can strengthen companies by accelerating issues that they knew were already there, whether that means improving communication, achieving better work-life balance, digitalizing factories or attracting new workers.
“Last year, we went through something pretty significant,” says one director of global HR at a top-tier supplier. “It has taught us more in a year than probably a lifetime of a career.”
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