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1 BUILDING A SUSTAINABLE WORKFORCE: APPRENTICESHIP IN THE CANADIAN AUTOMOTIVE INDUSTRY The Canadian Automotive Manufacturing Industry at a Glance The automotive manufacturing sector is struggling in the face of challenging economic conditions. Pressure from lower-cost foreign competitors is hitting many of its small- and medium-sized enterprises (SMEs) hard. Given everything they re dealing with, employers may not be giving much thought to the question of apprenticeship training. Yet, one out of every four automotive SMEs is experiencing some form of skills shortage and one in three expects to do so in the near future 1. With many workers set to retire over the next decade and technology rapidly evolving, the sector is going to need an infusion of human capital. Apprenticeship is the key to meeting those long-term human resource needs. While automotive SMEs recognize the benefits of apprenticeship to their firms and to the long-term sustainability of the industry they tend to focus on its cost rather than on the net financial benefits it can bring. Those benefits include access to a range of government incentives for hiring apprentices. The Council for Automotive Human Resources (CAHR) launched the Apprenticeship Training Analysis project to study apprenticeship training in the automotive manufacturing industry. Focusing on small- and medium-sized enterprises, the project was designed to help CAHR address human resource and skills issues (by identifying human resource challenges); develop strategies and recommendations for a highly skilled labour force in the sector; and support collaborative action by stakeholders. 1 Malatest Program Evaluation and Market Research (2008). Apprenticeship Analysis Training. Prepared for the Council for Automotive Human Resources. P. 36. THE CANADIAN AUTOMOTIVE INDUSTRY: Is Canada s largest manufacturing sector, accounting for 14% of manufacturing GDP and 23% of manufacturing trade in Employs 152,540 people in automotive assembly and component manufacturing 3 Ranks ninth among autoproducing nations worldwide Is home to factories of six of the world s leading automotive producers Includes a significant proportion (one fifth) of companies with fewer than 100 employees 2 Council for Automotive Human Resources (2008). Competing Without a Net:Future of the Canadian Automotive Industry. 3 Council for Automotive Human Resources (2008). Competing Without a Net:Future of the Canadian Automotive Industry.

2 Research Approach The Apprenticeship Training Analysis study involved interviews with the owners, business managers and human resource managers of automotive SMEs. In total, the study collected 37 questionnaires from Ontario and Quebec an acknowledgedly limited number that must be considered when interpreting the findings. These most recent findings were compared with those presented in CAHR s 2005 study of skills and training among predominantly larger employers in the sector titled, Running Near Empty: Addressing the Skills Shortages in the Canadian Automotive Industry. Key Findings Current and future staffing trends Findings from the study showed that many SMEs in the automotive manufacturing sector are being affected by contradictory staffing trends. Almost half of the employers interviewed noted a decrease in their number of employees over the last two years. One in five noted a MOST EMPLOYERS AGREED THAT A RECOVERY IN THE INDUSTRY WOULD LIKELY LEAD THEM TO HIRE OR TRAIN NEW APPRENTICES. Change in Number of Employees Compared to 2006 CHANGE NUMBER OF RESPONDENTS Increase - total 12 (33%) Major increase (more than 25%) 2 (6%) Increase (11% to 25%) 7 (19%) Modest increase (1% to 10%) 3 (8%) No change 7 (19%) Modest decrease (1% to 10% decrease) 7 (19%) Decrease (11% to 25% decrease) 3 (8%) Major decrease (more than 25% decrease) 7 (19%) Decrease - total 17 (46%)

3 major decrease (i.e., more than 25% decrease) in the number of their employees since Even though layoffs are a reality for many companies, roughly a quarter of employers indicated they are currently experiencing a shortage of skilled trades people. Current shortages and expected shortages are most prominent for the following occupations: electrical workers, general machinists, millwrights and tool and die makers. About two thirds of employers said they had hired an apprentice within the last two years. More than half said they had hired journeypersons during the last two years. One in five said they were currently looking to hire new apprentices. Given the relatively low number of employers who participated in this study, it is unrealistic to assume that this data reflects the situation of all employers in the sector. The SMEs surveyed indicated that apprentices join their companies either as newcomers to the industry or after having already been formally employed with their firms. Each type of apprentice hire is equally common. As might be assumed, the recent industry downturn has deterred many SMEs from taking on apprentices. More than half agreed that current economic circumstances make it difficult to hire or train apprentices; half of employers said the costs of training and supervision pose a major barrier to hiring or training apprentices. Most agreed that a recovery in the industry would likely lead them to hire or train new apprentices. Few SMEs have specific programs or policies in place to promote the hiring of female or recent immigrant apprentices. Women are under-represented: only 8% of journeypersons and 9% of apprentices in the sector are female. Most employers stated that they hired the most qualified or suitable applicants and did not base their hiring decisions on gender or country of origin.

4 Attitudes towards apprenticeship training Employers identified a range of benefits associated with hiring and training apprentices, and they generally agreed that apprenticeship is essential to the success of the automotive industry in Canada. Those benefits include workers learning companyspecific equipment and work processes, encouraging professional development within their firms and energizing the work environment by adding new ideas and a youthful perspective. Eighty-five percent of employers agreed that hiring or training apprentices is a good way to ensure their firms have a long-term supply of skilled labour, and 60% agreed that the benefits of hiring or training outweighs the costs. The majority of employers said they use wage increases or competitive salaries to protect their HR investment after an internally trained apprentice becomes a journeyperson. Several noted that pay increases were linked to years of work experience within their company. Others spoke more generally of regular performance bonuses and offers of competitive benefits packages. A few noted that recent financial hardships have made it difficult to offer competitive salaries to junior staff. The vast majority of employers indicated they had not shared the responsibility of apprenticeship training with other companies. Several noted that the operations of their companies were unique to their specialized in-house processes: as a result, they saw little advantage in sharing apprenticeship training. Employers appear to be generally satisfied with the quality of apprenticeship training offered at community colleges, although some expressed concerns about the level of hands-on training at colleges and the extent to which college equipment meets industry standards. A different approach to apprenticeship training Employers expressed mixed levels of support for a sector-based apprenticeship rotation-training or sponsorship program. Some employers with more positive attitudes toward the concept suggested it would allow apprentices to learn a variety of skills through work in different companies and work environments. Employer Opinions on Adequacy of Trades Training Programs SOURCE NOT SOMEWHAT VERY DON T KNOW Community Colleges 0 8 (28%) 11 (38%) 6 (21%) 4 (14%) 29 (100%) Private Instructions 0 7 (25%) 2 (7%) 2 (7%) 18 (62%) 29 (100%) (e.g., private career colleges) CEGEPs (in Quebec) 0 2 (7%) 1 (4%) 1 (4%) 25 (86%) 29 (100%) TOTAL

5 Those who were negative about such an approach preferred that apprentices undertake the full duration of their work-based training using the highly specialized equipment and work processes of their respective companies. They suggested that a sectorbased apprenticeship rotationtraining program might also have confidentiality implications, as many aspects of their work processes and technology are proprietary and not shared with non-employees. Employers agree that government support for employers hiring apprentices is insufficient or not well communicated to employers. About half of employers said they were not aware of any specific financial support or incentives available through the government. RECOMMENDATIONS A number of recommended strategic actions for the sector emerged from the Apprenticeship Training Analysis. 1 CAHR and its partners should address the perceived and real costs to employers associated with apprenticeship training. Despite awareness among most employers of the need for apprenticeship training, there is widespread concern among SMEs about the perceived high cost of employing apprentices. Research has demonstrated that over the duration of an apprenticeship there is generally a net financial benefit to the employer. Notwithstanding, employers are required to take on up-front costs particularly during the first years of an apprenticeship which can be challenging. At the same time, there seems to be a lack of understanding surrounding the available tax credits available for employers with apprentices. CAHR and its partners should publicize the proven return on apprenticeship training investment for employers. CAHR and the country s federal/provincial governments should ensure employers are aware of the available financial supports for apprenticeship, including provincial and federal tax credits such as the Apprenticeship Job Creation Tax Credit. CAHR should coordinate meetings with federal/provincial governments to improve upon existing tax credits and funding for apprenticeships. CAHR AND ITS GOVERNMENT PARTNERS SHOULD ENSURE EMPLOYERS ARE AWARE OF THE AVAILABLE FINANCIAL SUPPORTS FOR APPRENTICESHIP, INCLUDING PROVINCIAL AND FEDERAL TAX CREDITS.

6 2 CAHR and its partners should continue to ensure that in-school training remains current with industry practices and technology. Employers generally perceived colleges to be fulfilling their role in apprenticeship and training for the sector. However, some expressed concern that students were sometimes being trained on equipment that was out-of-date and no longer relevant to current industry practices. A sectoral solution to this problem could supplement the financial resources available to colleges for infrastructure. Further research should explore the extent to which college equipment and training is current with industry standards. CAHR should continue to facilitate partnerships between the education system and industry/labour to address gaps in technologies available at colleges. 3CAHR should further assess the feasibility and level of support for a sector-based apprenticeship rotation-training or sponsorship program. More information should be gathered to assess whether such a program could benefit the sector, and how such a system could be developed and implemented. CAHR and its partners should engage in further consultation with industry and labour to examine whether a need exists for such a program. Further research should examine whether a sector-based rotation-training or sponsorship program would help SMEs in the industry with costs borne from employing apprentices. Should there be sufficient need and support for such a program, a comprehensive feasibility study should examine the idea. 4 CAHR and its partners should continue to examine any developing trends related to apprenticeship in the sector. The Council for Automotive Human Resources (CAHR) The Council for Automotive Human Resources (CAHR) collaborates with industry, labour, educators and governments to ensure the Canadian automotive industry has a talented, flexible and innovative workforce. CAHR is funded through the Government of Canada s Sector Council Program. CAHR s Apprenticeship Committee led the Apprenticeship Training Analysis project. Given the rate of change in the industry, CAHR and its partners should continue to monitor whether the apprenticeship system is adequately meeting the needs of employers in the sector. This project is funded by the Government of Canada s Sector Council Program

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