A Fortune article was recently republished on Yahoo, describing the sentiments of one manufacturer regarding the American workforce. It is intriguing and worthy of consideration for two reasons. The focus is Ford Motor Company. Its CEO was focused on two aspects of the workforce: income and preparedness.
Henry Ford is widely credited with his response to a transient workforce in the early days of that company. The pundits claim that the highly repetitive and fast-paced nature of the early mass production made employee retention difficult. By increasing wages, Henry Ford was able to retain workers, reduce expenses related to recruitment and training, and, in the process, build a workforce with sufficient economic status to actually buy an automobile.
The initiative in 1914 was to pay those workers an outstanding $5.00 per day. That rate for an eight-hour day ($.63/hr) was a 140% increase over the previous $2.34 for a nine-hour day ($.26/hr). The gambit worked, applications soared, and retention improved. The current Ford CEO recently agreed to a similar gambit described in the Yahoo article.
Notably, that $.63/hr in 1914 would be about $20.46 in 2025. The current Ford CEO was negotiating a contract in which the workers were already making $17 an hour, not so far removed from the exemplary 1914 wage. Thus, there is also some likelihood that today's economic macrocosms are somewhat different if not more complex than a century ago.
The impetus was learning that Ford employees were working multiple jobs. That meant they were sleeping less, and the implication is they were missing work, making errors, and likely facing safety concerns. More mistakes happen when we are tired. That said, the cost of various inputs (labor, materials, marketing, etc.) dictates the price that must be charged for an output (car).
The consumer will rarely consider social implications (patriotism of buying an American car) when making a purchasing decision. Less frequently still will such implications override the evaluation of price (up front), value (long haul), and quality. Thus, when the price of an input (labor cost) is increased, the price of the output is likely to increase. That will be evaluated in the consumer decision of Ford versus the spectrum of vehicle alternatives. The second point of the Yahoo article is an other supply and demand conflict that is classic in economics. The Ford CEO lamented that the company currently has
"5,000 open mechanic positions that have remain unfilled, despite an up-to $120,000 salary for the role."
The implication of that is patent. There are not enough repair experts to keep the various vehicles serviced and roadworthy. That has an impact on the value equation described above. If one brand has a longer repair cycle than another, the difference may influence the purchasing decision(s). Two points: that is a notable salary, and the supply of open positions is significant.
Then comes the rub. Ford's CEO believes that the government is to blame for the lack of mechanic applicants. He says it is time for the government to "get really serious about investing in trade schools" to train people for these roles. The fact is that schools used to exist. When the Boomers were in high school, every school had a wood shop, auto shop, and some had metal work and more.
There was a recognition that not everyone would want or need college. There was appreciation for the value in classes other than calculus and English literature. I am not knocking the academic necessity of such classes, but suggesting that the imperative for shop class, band class, and more are equally if not more imperative.
That said, school systems are often large and cumbersome. They have seemingly all bought into the "calculus for everyone" model and closed their vocational offerings. Striving to restore those will be of monumental difficulty and the results will require a decade or more to effect real impact. If you began today with hiring faculty and acquiring premises and equipment, your first graduates are three to four years out.
Add to that, you will face some uphill effort in recruiting the early generations of students. For years the trades have been ignored and even derided by the academics who closed shop programs. Convincing the young to flock back to these programs will likely require some marketing, some re-education, and some patience.
Having encouraged great public investment—"government ... investing in trade schools," the Ford CEO notes the European model that instead has young people working as "an apprentice" in manufacturing. There, the training is occurring in the manufacturing setting. There is private investment in the worker, and then the resulting retention and contribution envisioned by Henry Ford with his efforts in the early 20th century.
Some will question whether the industry or the government or both should shoulder the burden of training, opportunity, and evolution.
In any event, the worker volume could benefit from multiple courses. Skill sets could be readily identified and training offered in both academic and practical settings. The efforts will be successful only if the result is attractive jobs, be that monetarily or otherwise. The result is not a panacea. Even with increased supply of trained workers, manufacturing industries will compete with other trades (plumbing, electrical, and HVAC). Market competition will not be eliminated, nor should it be.
Those workers will all have to compete with the wage expectations of others. Ford vehicles made in America will have to compete with the price point and value perceptions of cars built in Europe, Japan, and China. Manufacturers will have to compete for labor in a market shifting and adjusting to artificial intelligence and increasing automation and robotics. There will thus be competition among and against humans in any scenario.
As Ford's CEO aptly noted, the challenges are not for Ford alone. More importantly, they are not for manufacturing alone. The economic balance is changing. Technology will continue to augment and replace human effort. Occupations will change, consumption will change, and value assessments will change. The simple fact is that these changes have been historically persistent, whether noticed or not.
The present is subject to observation and change. But the decisions of yesteryear (closing the high school shop class) will impact the ability of the market to adjust. How far should they adjust? In the same equation, overinvestment in the trades could produce populations that outpace demand and thus do not reward the investment of education of apprenticeship.
In all, there is a necessity of balance. There is value in skill and training. But the investor (student) should be wary of the many moving parts and factors in the economy at large. Each, in shop class or calculus, should be conscious of demand, potential change, and return on investment.
The real tragedies will be those who invest in poor potentials, fail to thrive, and seek to have others bail them out of their poor decisions. Should the government, or anyone, subsidize or bail out bad decisions? Does it matter who the bailed constituency is? Students earning unmarketable degrees, cities in financial disrepair through misfeasance or worse, and industries or entities that have followed poor paths or predictions?
There will be reckonings for decisions. Some are more personal, and others are systemic. The school board's abandonment of shop classes and those who would use them is a prime example. Is the education process delivering skills and knowledge that are marketable and valuable? Are the consumers (students and employers) demanding that education do so?
Also, there is great value in thinking beyond skill itself to the economic value of "transferable skill." What can be learned and perfected that is of value in either manufacturing or plumbing? What can you learn from this job that you might use in the next one? Those skills will afford distinction, flexibility, and mobility. Employers already know that. Workers must consider and embrace it.