Skilled Labor Shortage: The Role of Tool Accessibility

Current State of the Skilled Labor Market

The skilled labor market is currently experiencing significant demand, with nearly 400 tradespeople working on a single Amazon project. Microsoft is collaborating globally to predict labor market shifts and develop training programs. Caterpillar's assessment indicates a need for 73,500 heavy equipment technicians in North America over the next five years.

"Nearly 400 men and women in the skilled trades are currently working on the project." --- (AMZN, press release, 2024/05/22)

"I alluded to it before, but we're working with governments across the world and companies, etcetera, to leverage this data that we have, which is, hey, here's how we think the labor market is going to transition and shift over the next decade to help create training programs in countries or work with governments to ensure that they have access to the skills that are necessary for their country to be successful in an AI revolution." --- (MSFT, conference, 2024/06/06)

"AEDF's recent skills assessment of the gap in the North American market for technician labor shows an anticipated 73,500 heavy equipment technician positions will be needed over the next five years." --- (CAT, press release, 2024/06/11)

Industry-Specific Challenges in Tool Accessibility

Industry-specific challenges in tool accessibility include supply chain disruptions (CAT), the need for technological upgrades (DE), and the necessity for improved tooling and maintenance (BA). Additionally, increasing awareness and leveraging existing technology are seen as solvable opportunities (MMM). Efforts to enhance technical skills in underserved schools also aim to address these challenges (CAT).

"S, but even here in the United States. So one of the challenges for us is going to be increasing awareness and talking about I think this is an addressable solvable set of opportunities and the technology does exist." --- (MMM, conference, 2024/05/15)

"We continue to work to minimize supply chain challenges that may impact our ability to meet customer demand." --- (CAT, sec filing, 2024/Q1)

"Josh Jepsen: Yes, Rob. The one thing I would add is I think the other -- the piece that gives us confidence as well is no matter where the customer is in that ladder, whether they're the first owner or the fifth, there's a strong desire to keep upgrading technology, become more productive, more efficient and be able to execute those jobs in tighter time frames." --- (DE, earning call, 2024/Q2)

"Actions are being taken across all of our factories, and areas of focus include: training, particularly on the job, taking advantage of our slowdown and adding hundreds of hours of training for each of our manufacturing employees; tooling, more of it and improve maintenance; work instructions, simplify, simplify, simplify; compliance checks, discipline; traveled work controls, don't travel work; incentive structures; employee listening; and maybe above all, culture improvement." --- (BA, earning call, 2024/Q1)

"It is also focused on strengthening the industry's future by improving programs offered to students across U.S. high schools and technical schools considered underserved in the technical skills space." --- (CAT, press release, 2024/06/11)

Impact of Technological Advancements on Tool Accessibility

Technological advancements are enhancing tool accessibility by improving capital efficiency (INTC), offering AI-powered skill development and internal mobility solutions (ORCL), providing free AI-powered learning resources (MSFT), integrating disruptive technologies into workflows (ADBE), and driving innovation in key growth areas like hybrid cloud and digital transformation (IBM).

"The world will benefit from this work for decades to come. Capital offsets provide a powerful tool to address the geo gaps, but also improved capital efficiency. As we move past 5 nodes in 4 years, as our EUV fleet is" --- (INTC, event transcript, 2024/04/02)

"This gives employees full transparency into the expectations from their leadership and delivers AI-powered recommendations on specific tasks, skills, and training needed to meet key business needs. Innovative Internal Mobility: Enables business leaders to maximize internal mobility and discover the right talent faster by incorporating role guides into Opportunity Marketplace, an internal talent marketplace within Oracle Cloud HCM." --- (ORCL, press release, 2024/05/08)

"New courses are free and available for everyone to use through July 8. Additionally, our new AI-Powered Coaching in LinkedIn Learning helps learners find the content they need to grow their skills faster, with greater personalization and guided conversational learning. For career advancement." --- (MSFT, press release, 2024/05/08)

"And so we're always convinced that when you have this kind of disruptive technology, the real benefits come when people use interfaces to do whatever task they want to do quicker, faster, and when it's embedded into the workflows that they're accustomed to because then there isn't an inertia associated with using it." --- (ADBE, earning call, 2024/Q2)

"are driving the operational efficiencies of productivity so we could create the investment flexibility in driving innovation in core areas of growth that we still see very strong, hybrid cloud, Gen AI, digital transformation, automation, application modernization and that's where our focus area is." --- (IBM, conference, 2024/05/20)

Influence of Automation on Skilled Labor

Automation is expected to grow significantly, reducing the complexity of operations and potentially decreasing the need for skilled labor. Companies like Rockwell Automation and Tesla are integrating advanced automation into their processes, addressing the skilled labor shortage by enhancing efficiency and reducing dependency on specialized human labor.

"And so we expect to see automation growth kind of at a higher rate as we move forward 3% to 5% growth." --- (ROK, conference, 2024/06/11)

"So first, RHEL has got its place as the primary place that people want to deploy, OpenShift as a platform for both containers and virtualization, Ansible and HashiCorp helping increase automation and reduce the complexity, we think all of this plays in." --- (IBM, earning call, 2024/Q1)

"Lars Moravy: Yes, sure. I mean, in short, yes, I mean, like the on-box manufacturing method is certainly great and revolutionary, but with it comes some risks because new production lines and not, but all the subsystems we developed, whether it was powertrains, drive units, battery improvements in manufacturing and automation, thermal systems, seating, integration of interior components and reduction of LV controllers, all that's transferable, and that's what we're doing, trying to get it in their products as fast as possible." --- (TSLA, earning call, 2024/Q1)

"And we talked about warehouse automation, for example. That actually has softened out and is improving and we actually increased our guide, our expectations for the year." --- (ROK, conference, 2024/06/11)

"Secondly, and this is a really big, I think, area of focus for customers is the combination of inflation and labor rates as well as the just lack of access to the skilled labor that they need to operate their plants is a really big area of focus for companies." --- (ROK, conference, 2024/06/11)

Role of Training and Education in Skilled Labor

Training and education play a crucial role in addressing skilled labor shortages by providing reskilling and upskilling programs, enabling workers to transition to new roles, and aligning coursework with employer demand. Initiatives like Cisco's Consortium and IBM's SkillsBuild certificates ensure that learners acquire relevant skills for future job opportunities.

"The Consortium will leverage its members and advisors to recommend and amplify reskilling and upskilling training programs that are inclusive and can benefit multiple stakeholders – students, career changers, current IT workers, employers, and educators – in order to skill workers at scale to engage in the AI era." --- (CSCO, press release, 2024/04/04)

"Together, we are paving the way for Louisiana to emerge as a national leader in these rapidly growing sectors, ensuring our talent is prepared to navigate the challenges and seize the opportunities of the future. In an increasingly dynamic economy shaped by fast-evolving technology, employers, learners, and workers need nimble and trusted ways to acquire and validate skills that will lead to quality jobs of the future," said Joel Vargas, Vice President of JFF's Education Practice." --- (IBM, press release, 2024/07/22)

"And it's hard, I feel like I have a responsibility and a duty to help the world for folks in those jobs understand like, hey, your job can be automated and let's help you find the skills you need to move into a different job." --- (MSFT, conference, 2024/06/06)

"The Consortium is catalyzed by the work of the U.S.-EU Trade and Technology Council's (TTC) Talent for Growth Task Force, with the goal of exploring AI's impact on ICT job roles, enabling workers to find and access relevant training programs, and connecting businesses to skilled and job-ready workers." --- (CSCO, press release, 2024/04/04)

"Self-paced, experiential learning across all levels helps effectively prepare learners for potential job opportunities such as junior information security analyst, network security technician, data visualization specialist, and entry-level marketing analyst. Developed together with academic and industry experts: Jobs for the Future (JFF) and a coalition of industry experts contributed to and validated the new competency-based IBM SkillsBuild certificates to align coursework and learnings with current employer demand as well as trends and expectations in the market to maximize job opportunities for students upon completion." --- (IBM, press release, 2024/07/22)

Government Policies and Economic Factors

Government policies and economic factors, including U.S. government funding risks and geopolitical issues, have significantly impacted productivity and financial results across sectors like defense, aerospace, and automotive. These influences indirectly affect skilled labor availability and tool accessibility, highlighting the interconnectedness of policy, economy, and labor markets.

"See also the discussion of U.S. Government funding risks within “Item 1A, Risk Factors” included in our 2023 Form 10-K. Geopolitical and Economic Environment We operate in a complex and evolving global security environment and our business is affected by geopolitical and security issues." --- (LMT, sec filing, 2024/Q1)

"These factors have reduced overall productivity and adversely impacted our financial position, results of operations and cash flows." --- (BA, sec filing, 2024/Q1)

"We expect to have periods when we will be above or below this amount due to: (i) future cash flow expectations, such as for investments in future opportunities, capital investments, debt maturities, pension contributions, or restructuring requirements, (ii) short-term timing differences, and (iii) changes in the global economic or operating environment." --- (F, sec filing, 2024/Q1)

"See also the discussion of U.S. Government funding risks within “Item 1A, Risk Factors” included in our 2023 Form 10-K. Geopolitical and Economic Environment" --- (LMT, sec filing, 2024/Q2)

Employer Initiatives and Responsibilities

Employers are implementing various initiatives to address skilled labor shortages. Amazon's efforts include career advancement support and an independent board committee to engage with employees. Microsoft and IBM focus on productivity and innovation investments, while GE partners with suppliers to mitigate supply chain constraints.

"While my colleagues and I struggle to support our families due to Amazon's low wages, unstable work schedules, and lack of job opportunities, the company promotes a different version of itself. Amazon talks a lot about supporting employees in their career advancement, but I've seen coworkers repeatedly apply to open positions and then be denied without explanation." --- (AMZN, event transcript, 2024/05/22)

"With some challenging hiring environment. With some of those initiatives described here, do you feel like you can still grow the business in with that environment as a backdrop?" --- (MSFT, conference, 2024/06/06)

"Given our ongoing productivity initiatives and investment in innovation, we expect to see about a point of segment profit margin expansion in both of these segments." --- (IBM, earning call, 2024/Q1)

"It's a clear challenge that we are facing head on, accelerating the use of FLIGHT DECK in partnership with our suppliers as we work to solve the ongoing supply chain constraints.Last quarter, we shared that the common denominator impacting growth across both services and new engines is constrained material supply with 80% of material input shortages tied to nine suppliers across 15 supplier sites." --- (GE, earning call, 2024/Q2)

"Such a committee should be empowered to meet with employees and other stakeholders. As Amazon maintains a leading role in developing and deploying artificial intelligence technology, we believe that appointing an independent board committee is warranted Constance Ricketts" --- (AMZN, event transcript, 2024/05/22)

Future Outlook and Predictions for Skilled Labor and Tool Accessibility

The future outlook for skilled labor and tool accessibility is promising, with companies like Amazon and Microsoft enhancing productivity through advanced tools. General Electric highlights ongoing supply chain improvements, while Google and Tesla predict significant advancements in AI-driven tools and robotics, respectively, indicating a rapid evolution in tool accessibility and its impact on skilled labor.

"And the two most important things for those customers are the compute that they use to train their models and then run predictions or inferences and then also having services that make it much easier for them to build those models." --- (AMZN, event transcript, 2024/05/22)

"So we're seeing a lot of going momentum there. But across the entire suite, we really lean in to ensure that we could help our members be more productive and successful through these tools." --- (MSFT, conference, 2024/06/06)

"So the supply chain topic is still relevant. I suspect we'll be talking about it again for the foreseeable future, but I'm very encouraged by the progress that we're making. We just need to make a whole lot more." --- (GE, earning call, 2024/Q1)

"For example, Discover Financial has begun deploying Gen AI-driven tools to its nearly 10,000 call center agents to achieve faster resolution times for customers." --- (GOOG, earning call, 2024/Q1)

"So, but I think, like, next year, my prediction is next year we'll have over a 1000, maybe a few 1,000 Optimus robots working at Tesla. And things are going to scale up very rapidly from there." --- (TSLA, event transcript, 2024/06/13)