The Chips Are Down: Better Safety is Vital for a Post-COVID Auto Sector Rebound

Learn 4 ways to improve safety performance in the automotive industry.

If you’ve been following the automotive industry lately, you’ve likely heard that several automakers have recently decided to idle vehicle production at many assembly plants across North America. This decision, triggering layoffs in a sector still recovering from the COVID-19 pandemic, comes as a shortage in microchips continues across the global supply chain.

The demand for semiconductor microchips, a critical component in today’s ever-more connected and tech-heavy vehicles, has only intensified since the outset of the COVID-19 crisis. As reported recently in Autoweek, Tier 2 suppliers who manufacture these chips decided in the early months of the pandemic to shift their focus away from an automotive sector plagued by lockdowns to the exploding consumer electronics market. And unfortunately, there are few signs to indicate just when chipmakers will be able to again meet the pent-up demand from automakers for these components, and help them get assembly plants back up to capacity.

But the shortage in microchips is hiding another critical issue impacting automotive production. Even if the chip shortage is resolved soon, industry experts are cautioning that the post-pandemic economic recovery in the sector may still be in jeopardy due, in part, to a lack of skilled workers.

In search of workers: why the automotive industry struggles attracting talent

When COVID-19 struck, vehicle production and sales were particularly hard-hit. And while U.S. vehicles sales dropped almost 15% compared to 2019, production capacity was even more severely impacted, draining vehicle inventories at dealerships across the country. So, when assembly plants started coming back online last fall, there was considerable pressure to rebuild inventory levels to support the increased sales forecast for 2021. 

But automakers and suppliers soon discovered immense challenges in staffing their operations to meet this demand.  Beyond workers being unavailable due to illness or quarantine, the industry found itself fighting for skilled labor with other sectors, including general manufacturing and the exploding online retail and warehouse distribution market led by Amazon. For instance, experts have highlighted the difficulty facing automotive firms in filling nearly 5,000 open positions in the UK alone, remarking that 20% of those roles are “absolutely critical” to their operations.

If we look a little deeper, it’s clear that the signs of a labor shortage were in play long before the pandemic struck. In a 2019 policy paper entitled “Automotive Industry Labour Market Analysis”, commissioned by the Government of Canada, analysts identified a number of factors influencing the struggle automakers are facing in attracting talent, including:

  • An aging workforce: The U.S. Bureau of Labor Statistics (BLS) reports that while the median age of workers in the automotive industry is 43.2 years, as of 2020, nearly 46% of workers are above the age of 45, and 21% above the age of 55. As older workers retire and exit the sector, the labor shortage and skill-drain will only intensify.
  • Intense cross-industry competition: The automotive industry will need to compete with other sectors for workers to sustain their business moving forward. And unfortunately, changes, at times the result of collective bargaining concessions made after the 2008 recession, has resulted in lower wages and benefits for new hires, making jobs in the automotive industry less attractive than in years past.
  • Negative perceptions: Industry experts report that some of the sector’s challenges in recruitment are due to “misconceptions about working conditions”, including doubts about the safety of automotive manufacturing plants.  If we consider injury statistics from the automotive sector, it isn’t difficult to understand how these perceptions may have developed. 

Why the automotive industry needs to improve safety performance

According to the BLS, the automotive industry in the United States has struggled with workplace injury rates nearly double the US average – 6.4 vs 3.1 per 100 workers in 2018, significantly higher than other “high risk” industries including chemicals (1.3) and mining (2.3). This lackluster automotive industry safety performance has been said to result in over $120 million in additional health care & compensation costs per year in the sector.

So, if automakers want to control their operating costs, attract workers to the industry, and retain the workers they already have to sustain their manufacturing capacity, they’ll need to focus intently on improving their health & safety performance. And that means they must also consider how the economic recovery itself may impact those efforts.

In a research study recently published in Safety Science, my Cority colleague and study author, Tanya Jenke, identified an interesting relationship between economic cycles and safety performance. In the article, Jenke found after reviewing nearly 600,000 injury reports from employers across multiple sectors, that at times when the economy was growing, injury rates increased, whereas injury rates dropped as the economy slipped into recession. 

At first look, this seems counterintuitive. But Jenke suggests that part of the reason for this trend is that during periods of economic growth, work volume increases, resulting in more chances of workers interfacing with risk that can contribute to injuries, especially if that risk isn’t adequately controlled. Additionally, she suggests that “increased hiring of new, unskilled workers and increased demand for goods and services” may lead to less equipment maintenance and/or less skills training that could increase the chances for workplace harm. In contrast, in periods of economic decline, employers may have more time for training and cross-skilling, and workers, fearing job loss, may be reluctant to report injuries, leading to declining injury rates.

You Might Also Like: The Impact of Economic Change on Occupational Injuries and Safety Performance

With automotive firms on the cusp of the economic rebound, under pressure to restock vehicle inventories, and desperately in need of new workers, it appears that conditions are rife for an uptick in injury rates, especially if employers aren’t adequately prepared. So how can automakers address these short-term needs without sacrificing the safety of their people and drive up injury rates that impact productivity or place them on the regulator’s radar?

Let’s consider 4 ideas to improve safety performance across the automotive industry:

1. Empower the front-line

Firstly, automakers need to sustain the health and availability of their current workforce by ensuring that strong safety systems and tools are in place to empower their employees to effectively detect and manage risk in the working environment. Workers need to have easy access to real-time data that help them identify and assess task-related risk and support effective decision-making on how best to control their exposure on-the-job. They also need simple, intuitive tools to help them report issues that they cannot resolve themselves, which will help management resource and prioritize actions to resolve issues quickly.

It’s no surprise then that we’re seeing massive interest from automotive firms for mobile-enabled EHS applications to assist their front-line workers complete critical safety activities, including reporting events, conducting risk assessments and inspections, and even sourcing information they need to do their work more safely. 

It’s important to remember that the key to successful worker adoption of mobile tools is simplicity: the solution needs to be simple to use, intuitive, and offer a user experience that’s personalized for that worker. By empowering the front-line with these tools, automakers can accelerate their data collection efforts, and leverage this information to make better decisions on where to focus their efforts to maximize safety results. 

Related: Improving Safety Culture: Where to Focus Your Attention for Maximum Impact

2. Fill the skills gap

Secondly, automakers need to recognize that rising demands to meet production build targets, longer working hours, and the introduction of new workers onto assembly lines create ideal conditions for a spike in injury rates (and costs).  As a result, auto companies across the global supply chain need to be intently focused on how to upskill new workers to ensure they can work productively and safely. Unfortunately, pandemic-related restrictions have made it challenging for employers to use traditional models, like instructor-facilitated classroom learning, to ensure workers receive the necessary skills training they need.

Fortunately, EHS software providers are expanding their platforms to provide employers with more flexibility in meeting worker training needs. Purpose-built training solutions with extensive content libraries, as well as the ability to integrate EHS platforms with third-party learning management systems offer businesses expanded capabilities to deliver safety training in a more individual, virtual learning environment. These solutions can be coupled with mobile microlearning apps to allow front-line workers to consume training content in small digestible chunks at times that are appropriate for them. This shift in safety training will likely only continue to accelerate, considering the preference of younger workers to this type of self-directed, DIY style of learning.

3. Create a reporting culture

We mentioned that during periods of economic decline, workers may be reluctant to report injuries, out of fear that doing so may cost them their jobs. But learning when things go wrong is critical to prevent future incidents and detect gaps in our defenses against risk.

Our ability to detect risk or gaps in our controls is contingent on the willingness of employees to report when things go wrong. And the way an organization measures safety success, and in turn, how it responds to failure, can greatly influence whether workers are willing to bring issues forward in the first place. Yet organizations who see the ultimate measure of safety success as the absence of incidents may be unknowingly discouraging the reporting they need to improve their safety performance. 

Rather than emphasizing what they don’t want, automakers can build the reporting culture they need to reduce injury rates by instead measuring their capacity to control risks and recover from failures. But that shift in thinking requires a likewise shift in what they measure. By selecting the right leading indicators to measure this capacity, they’re more able to directly affect the things that allow injuries to occur.

In this sense, auto firms might select indicators that measure things like training completion, the number of task observations completed, the number of proactive equipment inspections conducted, or even the days to close corrective actions. All these indicators are directly influenceable and help employers identify gaps in their safety capacity that, if not corrected, may create the conditions for injuries to occur, and ultimately determine their safety success.

Common examples of leading indicators used in workplace safety programs

Advances in business intelligence features within EHS software are making it easier than ever for automotive firms to monitor the key leading indicators needed to build their capacity to control risk. Leveraging data visualizations, EHS leaders can easily assess key safety data at a glance, enabling them to benchmark performance across business units, and selectively drill down to understand the local context that may be influencing their safety results.

4. Explore your data “crystal ball”

Better prevention is predicated on better prediction. How can you use your collected data to anticipate where problems might develop, and take proactive steps to address causal factors before these issues can emerge? Shifting your safety approach from reactive to preventive (and predictive) is powerful, since it helps organizations more intelligently assess priorities and allocate resources for maximum effect.

Related: [Upcoming Webinar] How to Shift to a More Predictive Prevention Strategy

By consolidating EHS data into a single platform, businesses can now leverage advanced analytics tools and data models to quickly identify trends and produce intelligent insights that can help leaders anticipate problems and initiate interventions before those risks can materialize.

These tools, powered by features like machine-learning AI and natural language processing, are enhancing the user’s ability to quickly draw insights from their collected metadata to support faster and more adaptive decision-making. Platforms are emerging where a user can simply input a query into the analytics engine, which scans all available records and curates data to give users an immediate and holistic picture of where risk is growing and where it could result in an event if not properly mitigated, allowing for more targeted and efficient intervention.

Just as you might say: “Hey Google, show me the restaurants in a 5-mile radius from my house”, these solutions allow EHS professionals to ask things like “Show me all root causes linked to my incidents” to help them drill down to the most important issues to tackle next.

This flexibility is particularly important considering that normally, reporting and analytics workflows are designed with distinct end-points in mind. But we don’t really know today what unique questions we’ll have tomorrow, or the data will need to answer those questions. In this way, natural language processing provides that needed flexibility in querying data and insights without needing to have the foresight on what those endpoints might be. And most importantly, these features offer massive enhancements to our ability to decipher the real causes and influencers of our safety incidents, helping us focus on the things that matter most to prevention.

Final thoughts on automotive industry safety performance

The automotive industry accounts for up to 7% of annual global GDP, supports millions of jobs, and is a center of research and innovation that produce benefits far beyond the industry itself. It’s in everyone’s interest to ensure this sector remains viable.  Improving the safety of their operations is one way in which automakers can get, and keep, the best minds in the world they needed to remain productive and profitable.

Learn more

To learn how your organization can strengthen how it manages operational risk across the supply chain, reduce the costs that incidents and non-compliance can wreak on your people and products, and build stronger public sentiment through an EHS digital transformation, read this eBook.