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Fine-tuning for the future

July 27, 2011
“The chaos and complexity of this new world era is posing supply and demand challenges that threaten economic growth.” –Jeffrey Joerres, chairman and CEO, the ManpowerGroup I’m sure almost everyone in trucking is exceedingly tired of the word “change” ...

“The chaos and complexity of this new world era is posing supply and demand challenges that threaten economic growth.” –Jeffrey Joerres, chairman and CEO, the ManpowerGroup

I’m sure almost everyone in trucking is exceedingly tired of the word “change” right about now, since it’s become so ubiquitous across this industry over the last decade.

I mean, just dealing with the fallout from tighter emission regulations alone has proved tremendously difficult for carriers large and small. Then throw in a host of contentious regulatory efforts such as hours of service (HOS) reform, the Federal Motor Carrier Safety Administration’s new Compliance Safety Accountability (CSA) program, new drug-testing rules, even potential mandates for electronic log books, to name just a few.

And if that weren’t enough, we’re now watching population demographics beginning to under seismic shifts that may leave trucking left empty handed in its quest to find qualified drivers now and in the future.

Yet all of those challenges also offer opportunities for carriers as well – especially those willing to explore new ways to solve the industry’s many timeless problems, such as improving freight efficiency and boosting fuel economy, to name just two.

For example, take a look at an effort down-under in Australia to use what’s been dubbed a “Living Lab” to get truckers, shippers, logistics firms, and researchers working together to investigate real-world problems and see where different kinds of technologies can help out.

One of the biggest future challenges facing trucking is the “generational shift” now occurring in the U.S. and other developed nations. In the U.S., some 77 million “Baby Boomers” will be retiring over the next two decades, yet replaced by only 46 million new workers, according to numbers tracked by the American Society for Training and Development (ASTD).

And, according to a study by the Boston College Center for Aging and Work, more than a quarter of all U.S. companies have not analyzed the demographics of their workforce. That inaction could potentially lead to a major disconnect in terms of how new workers perform their jobs versus company expectations.

[In trucking’s case, technology can jump in and help play a role here. Take for instance efforts in Sweden to promote “eco driving” via the use of several technological enhancements.]

If you don’t think there are huge repercussions from such a shift, think on some of the research conducted by financial firm Schroder Investment Management North America on how these very same populations shifts can affect economic growth north of the border in Canada.

Virginie Maisonneuve, head of global equities at Schroders, and researcher Katherine Davidson crafted a report that analyzed how the larger-than-usual baby boom in Canada and significant immigration in the 50s and 60s has resulted in a unique demographic profile only now rising to the surface.

“Canada's unique demographics and rapidly aging population will create challenges for future GDP growth if left unchecked,” noted Maisonneuve. “The only ways to break the relationship between reduced labor supply as baby boomers retire and lower GDP growth is to increase immigration or raise participation rates, especially of older workers.”

She points out that by the 2020s, all population growth in Canada is expected to come from immigration and many sectors of the economy will be dependent on foreign workers. However, it won’t be enough to rely on just them, as future economic growth will have to be driven by improvements in labor productivity.

“It is unlikely that immigration could be raised to high enough levels to fully offset the effect of domestic population aging,” Maisonneuve added.

She also stressed that demographic analysis is part of a coherent macroeconomic and thematic road map that serves as a framework to our stock analysis and selection as a way to explain why an investment firm like hers is interested in population trends to start with.

“[Companies] will need to adapt to demographic challenges in order to ensure success and shareholder value,” Maisonneuve said

Jeffrey Joerres, chairman and CEO of global human resource firm ManpowerGroup, noted at a recent conference that ALL companies – transportation firms included – will need to evaluate their employments strategies in order to deal with such demographic shifts, as well as other new challenges, too.

“With demand for their products and services remaining soft, companies are so margin squeezed that they are only willing to hire when they can find a perfect fit,” he said. “When demand does comes back there will be no shortage of available candidates, but there will be a lack of qualified talent, sparking an employability crisis.”

[To get some visual "flavor" on how Joerres views this issue, watch the video below.]

In the meantime, just as companies have become more sophisticated with systems that allow them to facilitate just-in-time (JIT) manufacturing, they now have similar capability through more visibility of their workforce. In the face of spikes in uncertainty and weaker demand, they have the ability to dial down their workforces – halting hiring at a moment's notice and operating in a JIT talent mode, Jorres noted.

This ability to swiftly adjust to a soft patch in the economy is evidenced by the swings in recent U.S. unemployment numbers, he pointed out.

After an encouraging rise in jobs growth in April, the Bureau of Labor Statistics (BLS) numbers for May and June showed hiring has slowed, with only 18,000 new jobs created during June and unemployment rising to 9.2%. Yet, paradoxically the country's employers are finding it increasingly difficult to fill mission-critical positions, as ManpowerGroup's 2011 Talent Shortage Survey found that 52% of U.S. employers are experiencing such difficulty — the highest percentage reported in the annual survey's six-year history – up from a measly 14% in 2010.

ManpowerGroup believes employers should take urgent steps to attract and retain the talent they need to win, including developing a robust workforce strategy that "manufactures" the talent they need to execute their long-term business strategy.

[Con-way Truckload is one carrier trying to solve this issue by partnering more closely with truck driving schools. You can read more about that effort here.]

“With ‘on-demand’ talent deteriorating as a viable option, long-term holistic workforce strategies must be aligned with business strategy to effectively forecast internal demand as well as accounting for external talent supply factors such as demographic shifts, the rise of emerging markets and rapidly evolving technology,” said Joerres.

“Organizations must reconsider their work models and people practices to move away from ‘one-size-fits-all’ training and development plans to those that build the skills most valuable to the company and help employees achieve their full potential,” he added

While it’ll take a lot of time, hard work, and (of course) money to make such changes, such efforts should put carriers in a good position down the road as this “generational shift” picks up speed. That's the hope, at least.

About the Author

Sean Kilcarr 1 | Senior Editor

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