Skilled Worker Shortage Costs Equipment Industry Billions Yearly

WASHINGTON (January 21, 2016) – The United States heavy equipment distribution industry loses at least $2.4 billion each year as a result of dealers’ inability to find and retain technically skilled workers. The figure, based on an estimated 9 percent of earnings foregone by American dealerships represented by Associated Equipment Distributors (AED), was included in a report released on Jan. 20 by The AED Foundation (AEDF).

The foundation, established in 1991 and directed by AED members, focuses on professional education and workforce development issues specific to the equipment distribution industry. AEDF commissioned a team of public policy researchers from the College of William and Mary to analyze the industry’s technician shortage based on a summer 2015 survey of AED’s members in North America.

“This report provides a window into the current state of our industry’s workforce,” AED President & CEO Brian McGuire said. “Distributors have known for far too long that finding the right people is tough and it’s getting tougher. A report like this tells policymakers this isn’t just an anecdotal or local problem, it’s a national crisis.”

According to the report, the equipment distribution industry is suffering badly from the mismatch between the capabilities needed to fill technical roles and the skill possessed by prospective employees. This “skills gap” has been the focus of much analysis across the broader economy and observed by AED members struggling to replace retiring workers and grow their companies while overcoming biases against technical careers and trade schools.

The report found that a lack of “hard skills” is the most significant challenge dealers face in their struggle to hire for technical positions. Equipment distributors also have a job opening rate three times the national average and vacancies remain open for extended periods. Time, resources and economic opportunities are squandered as positions go unfilled because the right candidates are not available. Without training and resources to develop practical competencies, American students are simply unprepared to maintain the machines that build and maintain the nation’s infrastructure. The anticipated increase in building activity associated with the new 5-year highway authorization law recently passed by Congress is expected to exacerbate the problem.

“In the equipment distribution industry, the skills gap is real and it adversely affects businesses,” the report said. “These effects appear in the form of decreased expansion potential, lost revenue and lost wages, among other detriments.”

The report provides a series of recommendations including improvements to federal workforce policy and steps to strengthen community-based relationships for recruiting and developing talent.

“The problem is daunting, but there are solutions,” McGuire said. “Congress will consider a host of workforce and education-related policy issues this year, including Perkins Act reauthorization.  We hope this snapshot of how the nation’s skills gap affects just one industry will serve as a wakeup call on Capitol Hill and help lawmakers understand that the future health of the U.S. economy depends on tackling the skills gap head on.”

To view the full report, click here.