For almost any worker, retirement represents a long-awaited milestone, the promise of a reward following decades of physical or mental toil.
Without careful planning, however, impending retirement can bring about anxiety and uncertainty rather than joy. That’s true in the case of both employer and employee.
Recognizing that unease, the NEW Manufacturing Alliance conducted a survey this past spring designed to assess workers’ retirement intentions and identify which roles within manufacturing had many workers who were 56 or older.
Ann Franz, director of NEWMA, says the organization decided to undertake the survey following another one it had conducted in 2018 assessing employers’ level of concern surrounding worker retirements. The companies represented in the most recent survey employ more than 30,000, and 272 workers in production, office, supervision and engineering roles participated.
“(The 2018 survey) gave us pause to be concerned, but we really needed to understand more from that person age 56 years and older and learn what they were really thinking,” Franz says.
The results were sobering. Or as Franz puts it, “What we found was, yikes.”
The survey revealed a significant number of workers were 56 or older, including 37 percent of maintenance mechanics, 35 percent of electricians, 33 percent of service technicians, machinists and electro-mechanical technicians, and 30 percent or more in nearly every engineering field.
Age alone, though, doesn’t necessarily indicate when someone will retire. A person may plan to retire in his or her late 50s or keep working until he or she is 70. The survey showed 38 percent plan to retire in six or more years, 28 percent in the next three to five, and 24 percent within one month to two years. The remaining respondents were unsure of their retirement plans.
While the results raise cause for concern, they also leave some room for companies and workers to plan for the effects of a wave of retirements. After all, the largest percentage of workers planned to stay in their roles at least another six years.
Planning and addressing the situation proactively is key to helping both employers and workers prepare for retirements within the industry, Franz says.
Undercurrent of unease
In addition to attempting to identify when workers might retire, NEWMA’s survey assessed workers’ sentiments about the transition and sought to identify any concerns they might have. Workers who stated they weren’t ready to retire said factors such as a desire to earn more money, maintain their income level and health insurance, and save more money influenced their decision and timeline.
Benefits most important to those continuing to work included health care, a 401(k) investment plan, prescription drug coverage and a flexible schedule. The takeaway? A lot of people have questions about retirement and don’t know where to go, Franz says.
Will Robinson, business development manager for Forsite Benefits, a benefits broker, says the uncertainty doesn’t surprise him. Among Forsite’s client roster of Wisconsin-based companies, including more than 250 manufacturers from small- to mid-sized employee populations, he and his colleagues have seen the situation many times.
“Employees have no idea what to do as they’re getting close to retirement age. Some fear losing the comfort of being under their employer’s plan because they haven’t been educated on what the alternatives are,” Robinson says.
Industry and company leaders need to build more awareness and educate their employees about available options, he says, adding that a broker partner can help provide guidance and develop messaging. “Without proper guidance and education, the joy of retirement can quickly become a financial burden,” he says.
Robinson points to Medicare as an area of confusion. Sometimes Medicare-eligible employees stay with their employer’s plan simply because it’s familiar, and that’s not necessarily in either party’s best interest.
The manufacturing environment also can present some challenges when it comes to communicating to employees. It’s not always easy for employers to craft and share a message with employees who might work on one of three shifts and at various locations, from a plant floor to a semi tractor-trailer to a construction site, Robinson says.
Companies must ensure important information reaches all employees and that it’s not getting diluted because it’s coming from different sources, he says, noting that technology can help connect employees wherever they may be.
“Communicating effectively to the right audience offers advantages to employers. Well-informed employees become better benefit consumers, they better utilize claims, and therefore can drive down the company’s overall cost,” Robinson says.
Jeff Daye, a senior wealth adviser with CliftonLarsonAllen, says it can be difficult for employers and employees alike to broach the subject of retirement. Employers might worry about losing experienced and proficient workers. Furthermore, they may want to avoid coming across as ageist or pressuring employees into thinking it’s time to retire, he says.
Employees may have their own concerns. “Fear of the unknown, anxiety about whether they have saved enough or worry about what they are going to do after work can be barriers,” Daye says.
It’s important for employers to put plans in place both for their own sake and that of their employees, Daye says. In succession planning, employers should identify the timeline they are facing, and this can help them prepare accordingly. To help employees with financial planning, employers can ask the financial professional who’s assisting with the company’s 401(k) program to provide financial advice, he says.
Lori Rausch, HR manager for the Great Northern Laminations division of Great Northern Corp., says her company has seen many retirements in recent years and anticipates several more in both one- to three-year and three- to five-year timeframes. While it’s difficult to think of losing skills and knowledge she calls invaluable, she says preparing both the company and employees is vital.
Rausch says she and the company recognize that it can be hard to transition if you’ve been doing something for decades. GNC offers employees approaching retirement the opportunity to meet with a financial planner. Employees and spouses can meet with the planner to assess retirement readiness and whether they have enough saved.
The company strives to give employees the information they need and start conversations early, Rausch says. She and others on the HR team want to convey that they’re “not trying to push people out the door” but instead find out employees’ plans and what needs they may have.
For employees who are leaving, Rausch says GNC wants them to leave with the message, “We appreciate everything you’ve done. We want you to go riding off into the sunset with a smile on your face.”
Replacing the irreplaceable
Most any manufacturer would agree that losing the tribal knowledge of veteran workers is a daunting prospect. With plans in place, however, employers can plan for and mitigate the loss.
Daye says it’s best to begin succession planning two to three years prior to employees retiring. “This provides an opportunity to transfer knowledge and help get retiring employees at ease for when it is time to step away, they are comfortable with the legacy they are leaving behind,” he says.
Rausch says many employees poised to retire from GNC will take with them decades of experience, including an operations manager who’s set to retire at the end of the year after 41 years with the company.
GNC anticipates losing many operators on the floor to retirement. To prepare, the company has created a program designed to help operators build their leadership skills. The company needs operator leaders who can not only do the work but also engage the team, Rausch says.
Ideally, those planning to retire let GNC know at least six months in advance, and this increases the chance of successfully transitioning a successor into those roles, Rausch says. For example, the person who will take over the role of operations manager has been working side-by-side with him.
Vicky Bayer, senior human resources manager for ProAmpac, says her company is most concerned with retirements within its maintenance area. She expects 11 of the company’s 30 maintenance technicians to retire within the next few years. To further complicate matters, the role is a skilled trade, and recruiting new maintenance technicians is competitive, she says.
ProAmpac has turned its focus to upskilling incumbent workers. The company created an apprenticeship program that allows it to promote from within. Apprentices work alongside veteran workers to learn the skills. For operators who are preparing to retire, for example, assistants work with them to train to become operators.
In January, the company will begin an apprenticeship program with Fox Valley Technical College. It also plans to participate in an Earn to Learn program, a collaboration between FVTC and Northeast Wisconsin Technical College, that will begin in spring and pay for high school students’ schooling while allowing them to work part time.
“You need to be creative. Not everybody is college-bound, and if you don’t have the funds available, it’s a great opportunity for a student to get into a trade,” Bayer says.
ProAmpac also is considering less conventional methods to fill the gaps. Bayer says the company traditionally has been rigid in its expectation that employees must work full time, but it’s beginning to explore allowing part-time and flexible arrangements for retirement-age workers who want to remain with the company. This could include on-call roles for people who could fill in as needed.
Rick Recktenwald, president of Walker Forge Inc. in Clintonville, agrees it’s important to consider flexible arrangements. Older workers may not see themselves being retired but also don’t want to work full time. Regardless, of the employee’s age, if the person is talented, the company tries to meet his or her scheduling needs, he says.
“Everybody is looking at the silver bullet for retirement, but there isn’t one,” he says. “Everybody is different.”
Exploring this kind of flexibility is a positive step that stands to benefit employers and employees alike, Franz says. Companies such as Plexus Corp., BPM Inc. and Fox Valley Metal-Tech have also begun creating part-time positions.
Franz says she’s concerned with how few companies offer part-time work, noting the growing number of people who are interested in that type of schedule.
NEWMA’s survey revealed 35 percent of prospective retirees would be interested in working up to 25 hours per week. In addition to capturing that group, manufacturers could attract retail workers, many of whom hold those jobs because they can work part time.
The part-time work message is one the alliance plans to continue to share with its members via its informational emails and its full membership meetings. It’s also formed a talent risk task force, and next year, NEWMA plans to hold a half-day retirement seminar for alliance member companies and their employees. Partners, including Forsite Benefits, and government agencies will present.
Franz recognizes part-time work isn’t logistically feasible for all companies. For those companies that have workers who are interested in part-time work after retirement, NEWMA is looking at creating a hall of fame recognition that would connect interested veteran workers to manufacturers that can offer part-time work. The hall of fame would be similar to NEWMA’s All Star publication that highlights up-and-comers in the industry.
“Why not help them connect with other employers for those companies that are unable to have positions within their own organizations?” Franz says.
When manufacturers need solutions for replacing retiring workers, whether upskilling incumbent workers or trying to tap new ones, they often turn to technical colleges. When it comes to equipping current workers with new skills, leadership and communication skills are among the most sought-after, says Dave Wuestenberg, key account manager in the Business & Industry Services department at Fox Valley Technical College.
The college offers several classes devoted to leadership and communication skills. To learn more, visit www.fvtc.edu/training-services/business-industry-services/product-portfolio.