Lose the war for skilled labor and you may lose everything you have. But you cannot ever win the war. It will only intensify over the next ten years. Consider:

• We are currently enjoying the longest boom in U.S. history-and the lowest unemployment rates in a generation. We see HELP WANTED signs everywhere. Employers simply cannot find satisfactory people to fill the openings they have.
• Workers are taking advantage of this situation to leave lower-paid, less-attractive jobs for better ones. This puts management between a rock and a hard place. Raise pay to keep these people and profits go south. Hold the line on wages and get constant turnover and low productivity.
• The Baby Boom Generation is in its early fifties now and thinking about retirement. Many Boomers will leave the work force at the age of 55-this year at the earliest--while others will wait longer. By the year 2010, every Boomer will be at least 60 years old and many will be long retired.
• The Baby Boom was a population bulge. The rate of U.S. population growth is declining and this trend is expected to continue well into the new century. U.S workforce growth is currently at the slowest pace in the nation's history.
• The economy will grow in the coming decade, increasing the demand for skilled labor as the supply continues to shrink. Competition for good employees can only intensify.
• Many young people who might fill jobs in metalworking facilities do not wish to work in a factory setting. They want white-collar employment-and often will accept inferior wages if they can be called a "manager."
• These young people do not enter manual arts training programs during their school years. They never gain the skills that shop owners want and will never be able to replace the current work force as it retires.

The skilled labor crisis resolves itself into two questions.

• How do you find good plant floor employees today, get the best from them, and hang onto them?
• How do you plan for a future with an ever-shrinking talent pool?

The answer to both questions is that metalworkers must accept and accommodate a changed situation. They must make the work force a major priority and seek imaginative ways to win the loyalty of the employees they now have, raise their productivity, and recruit and train their successors.

What to do? Metalworking Equipment News looked around-and found some pretty good answers.

Jim Warren, for example, says that productivity is the answer to the skilled labor crisis-and to many other economic problems as well. He is president of Sunset Manufacturing, a machine shop in Tualatin, Oregon, which shares its gains with the workforce.

According to Warren, the overall gross profit in machine shops nationally is "about two percent," while Sunset's exceeds 20 percent. What's more, there's hardly any turnover or absenteeism at his plant, even though machinists can get better pay at Boeing in nearby Portland.

Fifteen years ago, Sunset was chronically late in filling orders. "I tried everything to change it," says Warren. "I'd go out and get mad, or try different ideas." Finally, he realized that his people had no real stake in the company. When he changed that, improvement was swift and dramatic.

Warren sat down with his plant floor people, told them how the business worked, and began to involve them in decision-making. He showed them blueprints and asked them how long jobs would take and the costs. "I gave them latitude to think for themselves as a team," he says.

He also created a rewards program, which he tied to team productivity-time needed to complete jobs, attendance, and costs. Performance bonuses varied from $25 to $850 per month, he says, with a $250 average. This program paid for itself with a 90 percent reduction in over-runs -from a total of 1,000 hours per month to less than 100, he says.

The rewards program penalized absenteeism, with the result that attendance shot up. Both the employee and the team lost out when someone took the day off to go fishing. Once absenteeism stopped-it averages two to three days per month in most fabrication plants---Sunset started to fill orders profitably and on time.

Empowering employees took pressure off supervisors, says Warren. Once everyone on the floor realized that the new program was not a trap of some sort, employees took more initiative and supervisors no longer had to breathe down their necks. Team spirit replaced the old "us-and-them" attitude. Sunset's employees got financial and psychological gains from their work.

Warren has now created a customizable gainsharing software system which he calls PIP Plus. This program lets management track a wide range of general performance problems, such as absenteeism, lateness, and low productivity.

PIP Plus also monitors custom job-specific goals, translating them into charts and figures that employees and management can use to improve job performance. The program incorporates Warren's successful bonus system.

Manufacturers can customize PIP Plus to the needs of their business. As they define parameters, the program helps them focus on the critical goals and processes that they should track and measure for maximum labor productivity and profit. For more information, visit www.shopwerkssoftware.com

According to the Hudson Institute, a public policy think tank, many employees with excellent skills and experience want to continue working past retirement age. Management should identify the best of these reluctant retirees and should give them reasons to stay--flexible work schedules and an accommodating work environment.

If a machinist who's past retirement age wants to spend his winters in Florida, he should do so if he can be counted on for eight months of the year. If he wants to come in just three days a week, his skills and experience are welcome. Management should encourage older people to train and mentor younger employees-their eventual successors.

Much can be done at very little cost to make the workplace more attractive to older employees. Management should set an example of welcoming and tolerance. Job ergonomics should be reviewed to protect older, less physically capable employees. It costs nothing to enlarge the fonts on computer screens, for example, but this may make life easier for some employees.

Older employees will leave the work force sooner or later, so management should prepare for a long-term future with fewer people in the shop, says the Hudson Institute. Possibilities include re-engineering processes and changing the product mix.

If the pool of available labor continues to shrink, management may wish to consider relocating the plant. Another alternative is to look overseas for help. Software firms already employ many programmers from Asia. For all we know, tomorrow's fabricator may end up importing skilled workers from Eastern Europe.

What can shop owners do when young people don't want to work for them? To combat such attitudes, shop owners should work through industry associations and local chambers of commerce to reach the young at schools and job fairs. Sustained cooperative effort is the key to success.

Plastics manufacturers in the area around South Bend, Indiana, for example, have teamed up to ensure a future supply of skilled labor. The manufacturers set up an educational partnership with a local community college to prepare students for careers in plastics and sharpen the skills of current employees. The plastics technology program covers injection molding, materials properties, materials handling, and quality assurance.

Editor's Note: To contact Jim Warren or find out more about PIP Plus, call 1-800-619-2055 or visit www.shopwerkssoftware.com.