The Real Cost of Retraining Your Workers to Keep Up With Your Robots
As small companies in stodgy industries embrace automation, they’re spending hundreds of thousands of dollars to train their employees for the future.
PHOTO CREDIT: Getty Images
In some industries, it's a given that your workforce must include robots--to run a competitive, efficient company in, say, logistics or manufacturing, you have to automate some of your processes. Still, it's left some employers grappling with the question, what does this mean for your human employees?
Smaller companies that have embraced automation increasingly are realizing that they not only still need humans, they need humans with a specific skill set. In a 2016 McKinsey report, 62 percent of executives said they needed to retrain or replace more than a quarter of their workforce within the next five years due to automation. In today's tight job market, finding the right skills at a reasonable cost is a challenge. To cope, many businesses are investing in retraining their existing workers--and grooming the next generation now, says Joseph Fuller, professor of management practice at Harvard Business School.
"You're better off growing your own [workforce]," Fuller says.
Sounds good in theory, but how does it work in practice? And how much does it cost? Inc. spoke with several businesses in the middle of retraining their workers to find out.
In Edwards, Colo., Symbia Logistics CEO Megan Smith has increasingly incorporated technology in her 1,600 distribution centers to help boost productivity. In the past five years, she has been outfitting the centers with sorting-and-dismantling robots--to cater to a growing e-commerce business--as well as shrink wrap machines, conveyor belts, and automatic printers.
"I would say that it's moving from being a physical job to a mental job," she says. Automation has taken "almost all of the physical labor out of the sorting and painting" that her employees used to perform.
When Smith took over Symbia Logistics in 2009 from her father at the age of 25, she wanted to give workers more of a "career," hoping that would make them want to stay longer than six months, she says. She declined to give numbers on turnover but said the company was "just cycling through people" when she took over. So she's made it a priority to build a sustainable team.
In addition to increasing pay 10 to 15 percent across the board and changing job titles to be more inclusive (from "journeymen" to "craftspeople"), the company is sending mechanics to automation training where they learn how to troubleshoot or service robots. In a couple of months, the company will roll out free online courses that teach supervisors new skills such as analyzing data around production quality. Most of her workforce did not go to college, she says.
Since 2016 Smith has invested over $350,000 in retraining, largely devoted to rewriting training manuals and creating specific courses. So far, she says that certain centers that have made training and structural changes have seen a 20 to 30 percent improvement in retaining workers.
In Hicksville, Ohio, APT Manufacturing Solutions is preparing for the future by cultivating the kind of high-tech workers it needs while they're still young. The company helps other manufacturers automate their assembly lines by building and installing robotic equipment. President Anthony Nighswander says that he probably needs to fill about 20 new jobs every year. To broaden the pool of potential employees, he launched an automation training program for high schoolers in 2015 and then an apprenticeship program the following year.
For two academic school years, high school students spend every afternoon learning electrical engineering, automation assembly, and robotic programming. They're then eligible to continue on to the apprenticeship program, which counts toward community college credits. Currently, he has nine students in the training program and he's had 40 go through the apprenticeship. Those who continue to become machinists at his company, for example, can make up to $60,000 per year. About four years ago, the same position paid around $35,000 and involved building parts from scratch rather than starting with a robot.
"Those people at one point were kind of put down because they didn't go to college," he says. "But America can't survive without them."
Like Smith, Nighswander is betting that the right training and higher pay will reduce job churn. APT currently has a 10 to 14 percent turnover rate in the 140-person workforce.
Neither business owner, however, sugarcoats the reality of investing in employee education. It requires a significant chunk of change: Nighswander says he spends $200,000 a year on the high school programs, apprenticeships, and robot training (which doesn't include an initial investment of $30,000 from Defiance County Economic Development). In his case, there's a risk that after all the training, students may change their minds about the career path.
There's also the fact that at the speed technology is moving, the retraining work is never done. Smith says she wants to equip her workers with augmented reality and vision recognition in the future. But, she's wary of making additional big investments.
"There [are] a lot of opportunities, and there [are] a lot of risks unknown that we're all facing," she says.