29 November 2022
A shrinking labor force but a growing industry.
The MRO sector needs to address its growing talent shortage now, before it begins to significantly impact its ability to service growing global demand for aircraft maintenance.
A long time in the making
The Maintenance, Repair & Overhaul (MRO) sector has long been facing a labor challenge. The existing workforce is aging into retirement, while newcomers are not entering the sector at a sufficient rate to replace them, let alone cover expected growth in demand. COVID-19 briefly upended this equation as demand for MRO services collapsed and the maintenance workforce was downsized in response. Normal service is now resuming and the labor challenge has resurfaced, exacerbated by effects of the pandemic.
Global demand for MRO services is expected to recover to pre-pandemic levels by 2024 and to continue to grow through the end of the decade, according to industry consultancy, Oliver Wyman, albeit at a slower rate than had been anticipated before the disruption caused by COVID-19.
Workforce challenges could further depress growth, as the labor pool is ‘potentially too small to support aviation’s anticipated growth’, the consultancy said in its 2022-2032 forecast. Yet the industry is yet to fully confront the problem, despite it looming large on the horizon. According to its Pilot and Technician Outlook 2022-2014, Boeing forecasts the industry will need 610,000 new maintenance technicians over the next 20 years: North America alone will require 134,000; China (124,000) and Europe (120,000) also face significantly higher need for mechanics.
Near-term demand for maintenance workers is also expected to be high as aircraft are brought out of storage and put back into service. More aviation technicians are needed for ‘inspecting, repairing and restoring [aircraft] to airworthiness’, Boeing said, with each aircraft requiring ‘extensive checks, maintenance, and cleaning, [which] can occupy each team for several weeks per aircraft’.
Meanwhile the rate of new entrants into the sector – already lagging before COVID-19 – was impacted by the pandemic. The Federal Aviation Administration (FAA) in the US reported a 30% drop in individuals obtaining their FAA mechanic certificate in 2020. Meanwhile, the damage suffered by the industry during the pandemic may continue to put off those who might otherwise consider entering or re-entering the sector.
One immediate effect of all this is wage inflation. Respondents to Oliver Wyman’s 2022 MRO Survey placed labor/material cost management second in this year’s list of top disrupters – just behind the maintenance technician labor shortage. More than 40% of respondents expected labor cost inflation to hit more than 5% in the next year; in North America that percentage grows to 59%. And more than half of respondents reported the lack of labor was already constraining growth.
A final caveat to the challenge is the post-COVID onshoring of supply chains. This has been seen across many industries as companies look to avoid stranding assets and essential goods abroad in the event of a crisis. The conflict in Ukraine has only brought home the fragility of globalized supply chains. Airlines are therefore likely to shift to MRO services that ‘cannot be taken out of the mix by trade wars or sudden travel restrictions,’ concluded Oliver Wyman. This means a shift to domestic maintenance providers, and thus an increasing reliance on local workforces.
Boeing forecasts the industry will need 610,000 new maintenance technicians over the next 20 years
Needed in NORTH AMERICA
Needed in CHINA
Needed in EUROPE
No quick solutions – but there are solutions
If the challenge is clear, so are the solutions – they are just not particularly easy. The industry must attract more talent into the MRO sector; it must also utilize emerging technologies to work smarter.
On the first of these, the MRO sector should not be a difficult sell. Wages are generally good and getting better. This may be a challenge for MRO balance books, but should make the sector more attractive to potential newcomers.
Dive into the demographics of the current workforce, and opportunities to expand through diversity also become apparent. According to the Aviation Technician Education Council (ATEC), in the US just 2.57% of certificated mechanics are women. This is growing – but at a painfully slow rate: a decade ago it was only fractionally lower at 2.17%. As one female industry executive said back in 2018: ‘We have to break down the image of a highly traditional industry. We need to review and take a different approach to the qualifications we are seeking for positions.’
And here might prove to be the silver lining to COVID-19, since the pandemic provided an enforced testcase for a more flexible training framework and virtual learning. This has led to the development of new virtual tools and resources for technical training that will, according to industry training body, ATEC, broaden our reach to communities previously underserved [and] proved that, in many instances, virtual learning can produce positive outcomes for students’.
ATEC has also begun to work with high schools in the US to pilot an aviation technical curriculum through its Choose Aerospace Foundation. The foundation brings together a cross-section of aerospace industry stakeholders to address future workforce needs. Again drawing on virtual learning, the programme aims to make an aviation technical curriculum available to high schools that would otherwise be unable to offer it due to costs and lack of resource.
Virtual learning is just one of the new technologies that will be available to the industry. For more on these emerging trends, check out our article: New technologies that are disrupting the MRO sector
According to the Aviation Technician Education Council (ATEC), in the US just 2.57% of certificated mechanics are women
How can the insurance sector help?
The loss of so many experienced mechanics during COVID-19 has brought to a head existing challenges to the MRO workforce. The repercussions for the sector are potentially serious. With flight numbers returning to pre-pandemic levels, new maintenance staff need to be recruited and trained to keep up with the recovery and onward growth. But this will not happen overnight. In the meantime, pressure on the existing workforce to keep up with contractual requirements will continue to mount. This raises the risk of mistakes in maintenance provision – with obvious impacts for safety.
Innovation will provide some help but is not a panacea in a sector that remains hands-on. It also brings its own risks and challenges, not least in terms of hiring and training workers proficient in these new technologies and techniques.
From a more positive perspective, the MRO sector should not be a hard sell. It pays well. It is high profile. And it holds a critical role in the global economy. The industry cannot ignore the scale of challenge any more, but must play to these advantages to aggressively build its talent pool. This should include the adoption of more progressive recruitment and training practices to broaden and diversify those who consider aviation maintenance a viable career.
Whether you are an MRO, airline or other player in the aerospace sector, engaging early with a specialist aviation insurance broker, such as Gallagher, can help improve risk assessment and management, and ensure coverage adapts and remains adequate amid the change. With one of the largest aerospace and aviation insurance brokerage teams in the world, Gallagher is well placed to ensure your business and assets have the protection they need.
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