November 26, 2022

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The Automotive Shortage That Won’t Go Away

CEO at Actify, Inc., helping manufacturers to build some of the world’s most complex and advanced products.

The auto industry, like many manufacturing industries, is suffering from a shortage of human resources. This shortage runs the gamut, from the shop floor, to the managerial level to the engineering department.

As a CEO of an automotive program management solution company, I believe the way this shortage is addressed and how the fight to retain talent plays out has implications that could ripple throughout the entire automotive industry and impact consumers as well.

It’s Been Brewing For A While

The pandemic might have kicked off this human resources problem in earnest, but even after lockdowns were lifted and the threat of Covid-19 was blunted by vaccines, auto employees have been reluctant to return to their jobs.

It turns out that the Great Resignation isn’t just limited to lawyers and investment bankers—auto workers have been reevaluating their jobs, their priorities and the importance of “quality of life,” making talent increasingly hard to find and retain.

Any Takers For Maximum Daily Stress?

At Tier 1 auto suppliers, I’ve noticed the battle to retain talent is particularly pronounced among automotive program managers—the individuals responsible for overseeing the programs that develop and deliver the various parts and components that the automotive OEMs depend on to create their final product.

This is an incredibly high pressure, high stress position. Program managers spend large portions of their day calling and emailing people, trying to get status updates and then reporting that status back to somebody else. Tasks that in other areas of the business would be automated. If some aspect of the program isn’t on schedule or isn’t on budget, program managers are the ones who get dinged—it’s on them to make things happen.

This would be fine if they had sophisticated tools at their disposal to help them interface with the various stakeholders, but most don’t. More often than not, they’re using homegrown systems to try to manually pull together all the information that they need to stay on top of.

Meanwhile, the rise of new electric vehicle (EV) programs in combination with existing internal combustion engine programs means that program managers are managing significantly more programs than usual. Where they once might have been expected to take care of approximately 20 programs, I’ve observed they’re now trying to carry as many as 40 programs at one time.

As it turns out, when you double the workload without doing anything to help alleviate the pressure, people tend to walk out the door rather than continue to endure the acute stress the role is placing on them.

Not Enough People Means Not Enough Cars

Why should anyone care about this human resource challenge? Because if it’s not addressed, we’re headed toward a crisis in the automotive supply chain.

Production capacity is an area where, while still challenging, suppliers often have various levers they can pull—they can add production shifts, they can add more machinery, they can add more production lines and so on. Program capacity, however, is a different kettle of fish. Suppliers can’t add, for instance, an additional 25% capacity across their engineering teams, designers, tooling specialists, quality assurance people, purchasers and program managers. The capacity simply isn’t there on the human resources front.

Even worse, suppliers can’t quickly plug the gap if one of their program managers has had enough and decides to leave: Newly hired managers have to shadow an existing program manager for up to a year. There are no shortcuts here.

All this means that auto production could slow to a crawl for the simple reason that there aren’t enough program managers to oversee the programs and keep the various automotive components coming in a timely manner.

As the microchip shortage of the past two years has amply demonstrated, all it takes is the inability to source a single component to suddenly turn the entire market upside down. When the supply chain freezes up, OEMs wind up losing money and consumers can’t get their hands on the car they want. That’s the lose-lose situation that awaits if there aren’t enough human resources to keep the wheels of industry turning.

The Smart Thing To Do

Can the automotive industry stave off this human resources crisis? It’s true that technology can help in several ways, first by making existing automotive program managers more productive, and second by reducing the stress and burnout they face, thus helping with retention.

In choosing a technology to implement, suppliers should keep an eye out for a solution that is intuitive and easy to use—after all, program managers have enough stress on their plates without being tasked with learning how to use a complicated enterprise system. Even more important, this system should function as a centralized hub that can complement and work with existing ERP, PLM and CAD systems. Program managers don’t work in a technological vacuum, so it’s crucial to be able to pull in and push out updates to these other systems as the situation around the program evolves—which it tends to do on a daily basis.

Without that connectivity, suppliers are simply adding to the stress of their program managers by giving them one more system to manage and more manual updates to enter. Without this kind of automation and streamlined task management, automotive program managers will continue to feel like they’re on a treadmill that’s only getting faster. Their job is to keep programs on track and anticipate and resolve problems before they occur, but the sheer volume and pace of operations leaves them struggling to keep up. While this has been a long-running problem, I believe the HR squeeze combined with other industry challenges like the increase in number of programs to manage suggests that it is about to become a crisis.

Rather than viewing the act of making automotive program managers’ lives easier as “a nice thing to do,” suppliers (and OEMs) would do well to view it as “the smart thing to do.” The health of the entire auto industry might just depend on it.


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