MRO consultant and Oliver Wyman Partner David Marcontell calls it “the elephant in the room.” The U.S.’s Aeronautical Repair Station Association says the elephant may already be costing U.S. repair shops $1.95 billion a year in lost business. Many shops are worried and scrambling for ways to placate or avoid this problematic pachyderm: the difficulty in securing sufficient aircraft skilled mechanics.
Has the beast already arrived? ARSA says a survey of members reveals more than a thousand unfilled technical positions. Extrapolating that count across all shops and reckoning that each position loses $177,000 a year in work, the average MRO revenue per worker, the cost is nearly $2 billion.
That estimate seems dubious or exaggerated. All businesses have open positions, as they grow, seek to replace workers and deal with employee churn. Economy-wide, U.S. firms had open positions equal to 3.8% of their employees in March, 2017, according to the Labor Department. That was more than double the 1.7% rate in the second half of 2009, the depth of the recession, and generally a sign of economic health, not desperation or lost opportunities.
Marcontell’s portrait of the problem is more plausible. His survey shows 95% of shops are having a tough time securing sufficient skilled workers and are compensating with overtime, outsourcing, hiring foreign workers and other devices. He also used FAA data, tech graduations, MRO and airline experience and UK retirements to peer into the future. Marcontell predicts the real problems will come in the early 2020s as a wave of retirements by an aging MRO workforce exceeds the supply of new hires.
One way or another, supply and demand will balance. But why is the balancing act increasingly difficult?
One reason is economy-wide social trends. Partly due to expanded disability benefits and lingering effects of the recession, participation in the labor force is now 63%, more than 3 percentage points lower than before the recession. And the dip has been sharpest, down more than 7 points, for the 20- to 24-year-olds who are usually ideal candidates for recruitment.
The recruiting picture is unfavorable for the young men shops traditionally sought. Only 85% of male high-school graduates are now in the labor force, 87% of those with some college and 92% of those with associate degrees. These figures are down 5 to 6 points from 2000.
The collapse of marriage rates among non-college graduates may make things tougher here. Aircraft maintenance requires training, commitment and conscientious hard work, not exactly the long suits of young males with no family responsibilities.
Of course, women can and do turn wrenches, but don’t count on a surge here. The big increase in female participation in the workforce occurred from the late 1940s through the mid-90s, but in recent years a slightly smaller portion of women are working or looking for work.
So overall, MRO has been competing for a bigger slice of a pie that is not growing as rapidly as population or air traffic. How well does it compete?
At first glance, mechanics’ wages seem decently competitive. In May 2016, U.S. avionics technicians and aircraft mechanics both averaged a bit over $61,000 a year in wages, not counting benefits. That is substantially higher than almost all other repair workers, such as auto mechanics at $42,000, computer and office-machine repairmen at $39,000 and those who fix electrical and electronic equipment for industry at $57,000.
But aircraft repair requires much more training than for other equipment. And tech compensation can vary substantially. About 10% of aircraft mechanics make $36,000 a year or less, while the top 10% make $88,000 or more. Differences reflect skill, seniority, location and type of shop. For example, techs in the Atlanta area, presumably mostly Delta Tech Ops workers, averaged nearly $77,000 in May 2016, while those in and around Miami, presumably mostly in independent shops, averaged $50,000. Recruitment challenges will require at least some shops increasing wages. The elephant definitely wants more peanuts before going away.
But the industry is right to look for other solutions too. Anything that makes training for aircraft maintenance more affordable, accessible or efficient or becoming a tech more attractive would help. ARSA hopes Congress will favorably consider new legislation to advance all technical education, including aircraft MRO, by giving state leaders easier access to Federal help and enabling local educators to work more closely with industry. The repair association also wants FAA to require only the training necessary and relevant to modern shops’ needs. And airlines like Delta are partnering with local training firms to align objectives.