After World War II, the U.S. auto industry zoomed into dominance, setting the bar for the wages and skill levels of America’s industrial workers.
Without competition from foreign manufacturers, the accelerating demand for automobiles powered the success of The Big Three: Ford, Chrysler, and General Motors. Jobs were plentiful, training was accessible, and earnings were exceptional on the blue-collar scale. Auto industry jobs were revered.
Today, however, the auto industry finds itself a bit stalled. Though the sector did contribute $518.1 billion to America’s $18.566 trillion GDP (28%), it’s facing HR challenges under the hood.1
A Peek Under the Hood
Auto Industry’s Top 3 HR Challenges
The auto industry has had to navigate the high turnover rate obstacle for some time. Turnover hits dealerships hard with approximately 67 percent for salespeople and 40 percent for other associates. And every new hire can deflate a dealership for an average $10,000.3
And blue-collar jobs are no longer as appealing as they were several decades ago. Today, many younger employees see these types of positions as temporary, something to pay the bills through college. Once they’ve secured their degree, they’re off to a job in their schooled career.
Another road bump for the sector is finding qualified workers. A large load of its workforce has driven off into retirement, leaving behind a skills gap.
And many of the newer positions in the industry call for specialized training, such as fuel efficiency applications and electronics. These niche jobs are opening before the companies can fill them with qualified workers.
This goes in hand with the turnover rates. Employees move on before they can move up, leaving the industry with an empty management tank.
However, Automotive News reported that Toyota has found that “team members want to be developed. They want to skill up. They want to be part of the transformation."2
Perhaps, workers chose to move on before they move up because they aren’t feeling enough speed in their upward promotion motion; companies aren’t training and promoting quickly enough for employee satisfaction.
Harvard Business Review reported that “25 percent of high-potential but undeveloped employees are likely to be working for another company within 12 months.”2
Another study from PwC discovered that 74 percent of employees in the workforce "don't think they're achieving their full potential and they're craving more development.”2
WOTC Shock Absorber
All of the top three HR challenges bear one thing in common – they put a dent in a company’s revenue. But the Work Opportunity Tax Credit (WOTC) can help absorb some of that budget ‘shock’ with tax savings.
The WOTC pads a business’ pocket with up to $9,600 in tax credits per hire when it hires employees from any one of 14 target groups.
This extra cash can help offset turnover costs and pay for skills training. But the WOTC can also help put the brakes on turnover rates, as well.
Many people within the 14 target groups face barriers to employment – such as vets, long-term unemployed, and other challenged workers. Workers in these camps who do get hired are quite thankful to have a job and show their appreciation through dedication and loyalty. They want to stick around.
Additionally, if the WOTC affords businesses extra funds to pay for the upskills training that employees so crave, then loyalty may be restored for staff who want to turbocharge their talents.
Tax Credit Tune-Up
The motor vehicle sector has been a significant component of our country’s economic and social engine for decades. And though it remains powerful, the WOTC can help tune up some of the HR challenges in the industry.
Automotive-related businesses that are interested in learning more about how the WOTC can absorb some of their company’s expenses should consult a tax specialist. A WOTC expert can help navigate the tax terrain and avoid misfires along the way.
- A Breakdown of the U.S. Auto Industry: History, Economics, & Investing Dynamics, Investopedia, 2019
- Hiring challenges have Toyota focused internally, Automotive News, 2019
- The True Cost of Turnover and How Dealerships Can Fuel Retention, Auto Success, 2018