Worker ShortageIndustry groups gear up to address problem

It may be a surprising scenario to many, with unemployment at the high level it is, but manufacturers can’t find enough workers. Manufacturing is experiencing a situation that is likely to

become worse as millions of Baby Boomers approach retirement.As many as 600,000 jobs are unfilled, according to estimates

by The Manufacturing Institute’s 2011 Skill Gap Report. In addition to open positions, the Department of Commerce reported in May 2012 that manufacturing had added almost 500,000 jobs since 2010.

What is causing this disconnect? One factor is the common perception among young people that manufacturing jobs are physically difficult, repetitive and mindless. The actual fact is that many high school graduates lack the basic skills needed to work in today’s plants.

Manufacturing jobs built and sustained many a local economy in this country. Despite automated processes relieving much manual labor, this employment has come to rest lower on the social scale than the more desirable clean hands and mental labor of white-collar jobs.

There are misconceptions here because many so-cal led “blue col lar” jobs require advanced technical skills and specialized learning. Many manufacturing jobs are among the highest paid in a number of places – witness the auto industry and paper making.

Modern manufacturing, in

actuality, has evolved into a highly technical industry dependent upon productivity and innovation. Despite the loss of millions of manufacturing jobs moving overseas in the last decade, the United States is still the largest manufacturing economy in the world, responsible for 20 percent of worldwide production.

Manufacturing sup-ports one in six private sector jobs, and the aver-age annual wage is $74,447, 15 percent higher than average earnings outside the industry, according to the National Association of Manufacturers. Benefits are better, too. Three out of four manufacturers provide both health care and retirement plans, compared to 55 percent of other sectors.

Growth and a critical need for employees are taking place in the pharmaceutical, medical device, aerospace, defense and metal fabricating sectors, according to the Society for Manufacturing Engineers.

The most critical work force shortages are in skilled produc-tion, engineering and scientists, according to participants in the Skill Gap study. These positions are reliant on what is called STEM education – degrees and advanced learning in science, technology, engineering and mathematics.

The skill shortfall is affecting many critical areas, including

A common perception among young people is that manufacturing

jobs are physically difficult, repetitive and mindless. But the actual fact is that many high school graduates lack the basic skills needed to work in today’s plants.

See Worker Shortage insideI n s i d e

I n s i d e

Fall 2012➜Be sure background

checks are thorough

➜Steep fines now in place for violating trucker driving limits

A financial and management bulletin to manufacturers from:

100 Second Avenue South, Suite 600, St. Petersburg, Florida 33701 | (727) 821-6161 | www.gsscpa.com

Worker Shortage continued from page 1innovation, quality improvement, productivity and produc-tion levels, the Skill Gap said. So-called soft skills are lacking, too. Many manufacturers are focused on redesigning and streamlining production, and as a result, problem-solving skills are a key need.

Industry associations are focusing on reversing the skills shortfall and boosting manufacturing’s profile among young people. The National Association of Manufacturers has funded the Skills Gap and public perception studies through its Manufacturing Institute. From that work has come a

concrete plan to certify 500,000 workers over the next f ive years.

The certification plan builds layers of “stackable credentials,” starting with core courses in personal effectiveness, basic academics, workplace skills and industry-wide technical compe-tencies. Working with partner

associations, the National Association of Manufacturers has so far developed technical certif ications in welding, production technician, machining and engineering technology.

Other courses are in development. The curriculum is offered through state technical college systems, and 17 states are currently participating. A 16-week fast-track program, Right Skills Now, has been designed and is available in Minnesota.

The U.S. Manufacturing Pipeline is an online employment site providing assessments and links to jobs and education.

The National Association of Manufacturers plans to target unemployed veterans and, thinking 20 years into the future, is also creating programs to improve early childhood education in key skill and personal development areas.

The Society of Manufacturing Engineers has made work force development an industry focus area, and has educational offerings ranging from company-based training to individual certifications.

ToolingU, created by the Society of Manufacturing Engineers, is an online training site that can be customized to fit specific training curriculums. Industries served include aerospace, machining, automotive, heavy equipment, medical parts and energy.

T he Fabr icators & Ma nu fac t u rers Associat ion International is also taking a leadership role in addressing work force issues. The mission of its foundation, Nuts, Bolts & Thingamajigs, is to “engage, nurture and excite individuals of all ages in the pursuit of careers in manufacturing.” The foundation offers scholarships, camps and contests as well as education and career information.

The Manufacturing Institute’s public perception study revealed that over 80 percent of Americans agree that manufacturing is important to our economic prosperity and standard of living, but only 33 percent would encourage their child to pursue a manufacturing career.

The efforts of industry associations to promote production jobs and education as interesting, challenging and viable could not be more timely to our country’s future. – Elizabeth Penney, M.B.A. ❚

Industry associations are focusing on reversing the skills shortfall and

boosting manufacturing’s profile among young people.

A termination meeting with a potentially violent employee is one of the most dangerous things most managers

will do. But careful preparation can greatly reduce the risk.The planning process for all termination meetings

should include an assessment of the employee’s potential for violence.

Consider disciplinary history, history of threats, intimi-dation or acts of aggression, criminal history, mental health or substance abuse problems, and whether the employee has a strong support network – close family and friends.

If any of the above give you reason to pause, have security present but out of sight during the meeting. The ideal situation is to have closed-circuit television or a panic button in the room that is monitored by security.

Have two managers present in the meeting – the immediate manager and either that person’s manager or someone from human resources. If there has been a lot of friction between the employee and direct manager, have the other person present the news of the termination.

Following are some guidelines for the meeting:❋ Keep the discussion general and brief. The employee

should have received feedback about performance long

before now. This meeting is not about teaching or changing the employee’s behavior. It is about ending the relationship. For example, say “We don’t think the job is a good fit for you. We think it would be best all around if you found something that suited you better.”

❋ Be respectful, and keep your feelings to yourself. Don’t gloat. Conversely, don’t say how bad you feel or how hard this is for you. This is not about you.

❋ Don’t ask employees being terminated how they feel. You don’t want them to focus on their emotions but rather on making plans for getting on with their lives.

❋ Tell the employee about any termination benefits and give details in writing. This could include some severance pay and continuation of healthcare benefits so the employee doesn’t end up in crisis before finding another job.

❋ At the conclusion of the meeting, both managers should help the employee gather personal belongings, and escort him or her out of the building.

There is no way to prevent an employee from becoming violent during a termination meeting, but steps such as these will reduce the likelihood and will minimize damage if it happens. – Jeff Van Pelt, Ed.D., SPHR ❚

The most dangerous 15 minutesMinimizing the risk of violence when terminating employees

Fall 2012 Inventory Counts2

It’s becoming increasingly common for companies to require background evaluations of prospective employees. As an employer, be sure not to shortchange this process.

Failing to perform a thorough evaluation may have larger repercussions than not performing one at all.Legal Considerations

Whether organizations screen potential applicants them-selves or seek the services of an outside agency, the process should be given careful attention. Employment laws vary by state, as do what the states themselves report as arrests and criminal convictions. Another consideration is adverse actions or civil rights violations at the federal or state level.

Whether you perform this service or retain assistance, the same legal obligations apply to human resource professionals as apply to the organization or individual responsible for actually screening the individuals.Choosing Your Source

There’s no shortage of companies in today’s marketplace who advertise they can run inexpensive, instant background evaluations for your organization.

For less than $10, it’s easy to find companies that will provide “national background searches.” It’s critical to know where these organizations are obtaining their information, how old it is and the legality of its use. Choosing the wrong company could bring false assurance, which could prove disastrous in the long run.

Criminal background evaluations can also be completed through direct fingerprinting using an agency approved by the government. These may prove more accurate, but they will take longer and cost more to conduct.Search Differences and the Risks Involved

Unfortunately, there is no truly comprehensive national criminal history database in the United States that is publicly accessible. Proprietary online databases capture their data in a variety of ways. Further complicating this, all state and local jurisdictions don’t report the same infractions to these services. So, when searches are run, your results can vary widely. For example, some counties will report felonies and not misdemeanors or arrests pending adjudication.

Most searches of databases use name matches that could produce information that is not applicable to the subject that is being examined. To rely on this type of information for hiring decisions could prove disastrous.

Hiring someone with a violent record that wasn’t discov-ered could place your organization or personnel at risk. Likewise, not hiring someone because of what the background evaluation produced could also pose a problem. A “false positive” could irreparably harm a person’s reputa-tion. If this criterion was used in your hiring decision, not disclosing the result to the applicant could fuel legal action.

Some states do not allow certain types of convictions to enter into the employment hiring process. This information may not always be disclosed by your screening provider.

The Fair Credit Reporting ActThe Fair Credit Reporting Act is federal legislation that

also regulates the background screening industry. It requires that adverse information found in a background evaluation disqualifying someone from employment can’t be used unless the information is first verified as accurate and is the most up-to-date and available publicly held information.The Screening Process

Whether someone is applying for permanent employment or a volunteer position, organizations today, more than ever, must perform their due diligence. The background screening process should be a multifaceted approach and can include:

❋ Comprehensive signed applications that conform to your applicable state’s employment regulations and include authorizations to conduct background screen-ing, credit checks and motor vehicle reports

❋ Resume from the applicant❋ Face-to-face interview❋ Reference checks from prior employers and co-workers❋ Confirmation of academic credentials❋ Credit check❋ Drug testing and motor vehicle report❋ Internet search❋ Comprehensive criminal background evaluationThe check should involve a Social Security trace that veri-

fies the applicant’s history of previous addresses, etc.; national sexual offender search; national, state and local criminal records search; and search of the Office of Foreign Assets Control.International Background Checks

If you need to perform an international background evalu-ation, contact the embassy of the person’s nation here in the United States to find out if its government has public criminal records. If it doesn’t, don’t hire an online database search firm. Rather, retain a private investigation firm that works in the country where the person of interest is located. Interpreting Results

Almost as important as collecting accurate, timely infor-mation is how to read it and what to do with it. Businesses should have a defined set of pre-established basic criteria.

A detailed listing of criminal or other offenses can be predefined that may preclude an individual from being retained for your organization. The process by which you communicate these results should be documented. This is especially helpful if your hiring decisions are decentralized or performed by numerous individuals. Proper care must be exercised not to unfairly discriminate against the applicant based on what was discovered through your searches.An Ounce of Prevention

Spending some time and money at the beginning could prevent headaches and costly litigation after the fact. If you’re unsure of the process, consult with professionals to provide the appropriate guidance to avoid potential damaging issues from arising. – James Marasco, CPA, CIA, CFE ❚

Be sure background checks are thorough

Fall 2012 Inventory Counts 3

For the second time in eight years, the Federal Motor Safety Carrier Administration has created new hour-of-service rules in an effort to reduce long-distance truck driver fatigue and associated crashes.

Regulations regarding on-duty time and definition of violations went into effect on Feb. 27, 2012. The remaining new rules go into effect July 1, 2013.

There are several changes that will impact costs and operations of trucking. Total costs – including the training, programming and other changes to company operations – are estimated at $200 per driver, bringing total industry impact to $320 million. Violations are steep.

Allowing a driver to exceed the 11-hour limit by more than three hours could result in an $11,000 fine. The 11-hour day driv-ing limit and 14-hour maximum work day remain unchanged. After long study, the agency decided that a drop to 9 or 10 driving hours would be too costly with other changes being implemented.

To reduce driver fatigue, the agency limited use of the 34-hour restart period to one per week. This reduces maximum work hours per week from 82 to 70. The restart period must also include two night periods of 1 a.m. to 5 a.m.

Truckers who work less than 70 hours per week, even if they

work more than five days, are not subject to the restart. Long haul truckers paid by the mile will be most affected. The rules affect all companies that use commercial motor vehicles (CMVs) in interstate commerce. CMVs include vehicles that:

❋ Weigh 10,001 pounds or more or have gross combination weight of 10,001 pounds or more

❋ Transport hazardous materials intrastate or interstate❋ Transport 16 or more passengers without compensation or

nine or more passengers with compensationAlso changed is the definition of on-duty time, which formerly

meant all time not spent in the sleeper cab. Excluded now is time resting in a parked vehicle and two hours before or after eight hours in a sleeper cab.

Time spent waiting for a truck to be loaded or unloaded still counts as on-duty time. To further reduce fatigue, break rules were changed. Drivers can’t be on duty for more than eight consecutive hours after their last off-duty period of at least 30 minutes.

That doesn’t mean they must wait eight hours to take a break. In a 10-hour day with two hours loading and eight hours driving, it may make sense to take a break before getting behind the wheel. The break periods count as part of the 14-hour day allowable. – Elizabeth Penney, M.B.A ❚

Steep fines now in place for violating trucker driving limits

The technical information in this newsletter is necessarily brief. No final conclusion on these topics should be drawn without further review and consultation. Please be advised that, based on current IRS rules and standards, the information contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty assessed by the IRS. © 2012 CPAmerica International

Inventory Counts

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