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Texas Manufacturing Outlook Survey

Special Questions

November 27, 2017

Texas Business Outlook Surveys

Results below include responses from participants of all three surveys: Texas Manufacturing Outlook Survey (TMOS), Texas Service Sector Outlook Survey (TSSOS) and Texas Retail Outlook Survey (TROS).

Data were collected Nov. 13–21, and 378 Texas business executives responded to the surveys.

  1. Do you expect your firm to increase employment, leave employment unchanged, or decrease employment over the next six to 12 months?
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Increase 47.2 46.9 39.0
    Leave unchanged 43.5 43.1 43.8
    Decrease 9.3 10.1 17.2
  2. Are you having problems finding qualified workers when hiring?
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Yes 67.3 63.4 62.9
    No 32.7 36.6 37.1
  3. If you are having problems finding qualified workers, in which categories are you experiencing difficulty? Please check all that apply.
    NOTE: This question was added to survey in November 2017.
    Nov. ’17
    (percent)
       
    Low-skill positions (typically require high school diploma or less and minimal work experience) 47.2    
    Mid-skill positions (typically require some college or technical schooling) 60.4    
    High-skill positions (typically require college degree or higher) 37.6    
  4. If you are having problems finding qualified workers, what are the main reasons why? Please check all that apply.
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Lack of available applicants/no applicants 58.6 43.2 49.2
    Lack of technical competencies (hard skills) 49.8 59.8 66.8
    Looking for more pay than is offered 39.0 34.4 45.8
    Lack of workplace competencies (soft skills) 37.3 43.2 48.9
    Lack of experience 32.5 40.5 41.6
    Inability to pass drug test and/or background check 32.1 29.3 28.6
  5. What, if anything, are you doing to recruit and retain employees? Please check all that apply.
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Intensify recruiting, including advertising, paying recruiting bonuses, utilizing employment agencies, etc. 63.5 57.1 57.8
    Increase wages and or benefits 49.4 47.9 45.5
    Offer additional training 35.7 34.8 39.5
    Increase variable pay, including bonuses 29.2 30.1 30.4
    Improve working conditions 23.4 23.2 25.0
    Reduce education and other requirements for new hires 8.8 5.4 6.0
    Other 6.7 9.8 8.4
  6. If labor costs are increasing, are you passing the cost on to customers in the way of price increases?
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Yes 34.5 33.8 31.7
    No 50.0 49.5 52.2
    Not applicable 15.5 16.8 16.1

NOTE: Survey respondents were given the opportunity to provide comments. These comments can be found on the individual survey Special Questions results pages, accessible by the tabs above.

Texas Manufacturing Outlook Survey

Data were collected Nov. 13–21, and 99 Texas manufacturers responded to the survey.

  1. Do you expect your firm to increase employment, leave employment unchanged, or decrease employment over the next six to 12 months?
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Increase 46.9 57.1 41.6
    Leave unchanged 42.9 33.0 44.2
    Decrease 10.2 9.8 14.2
  2. Are you having problems finding qualified workers when hiring?
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Yes 72.7 68.5 66.1
    No 27.3 31.5 33.9
  3. If you are having problems finding qualified workers, in which categories are you experiencing difficulty? Please check all that apply.
    NOTE: This question was added to survey in November 2017.
    Nov. ’17
    (percent)
       
    Low-skill positions (typically require high school diploma or less and minimal work experience) 61.1    
    Mid-skill positions (typically require some college or technical schooling) 66.7    
    High-skill positions (typically require college degree or higher) 30.6    
  4. If you are having problems finding qualified workers, what are the main reasons why? Please check all that apply.
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Lack of technical competencies (hard skills) 61.1 72.2 82.5
    Lack of available applicants/no applicants 51.4 44.3 37.5
    Inability to pass drug test and/or background check 45.8 29.1 28.8
    Lack of workplace competencies (soft skills) 37.5 45.6 48.8
    Looking for more pay than is offered 36.1 36.7 48.8
    Lack of experience 31.9 44.3 38.8
  5. What, if anything, are you doing to recruit and retain employees? Please check all that apply.
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Intensify recruiting, including advertising, paying recruiting bonuses, utilizing employment agencies, etc. 67.4 63.5 56.0
    Increase wages and or benefits 51.7 58.3 46.2
    Offer additional training 40.4 33.3 40.7
    Increase variable pay, including bonuses 28.1 30.2 35.2
    Improve working conditions 24.7 21.9 27.5
    Reduce education and other requirements for new hires 11.2 5.2 6.6
    Other 5.6 5.2 8.8
  6. If labor costs are increasing, are you passing the cost on to customers in the way of price increases?
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Yes 37.8 35.8 27.4
    No 53.1 55.0 56.6
    Not applicable 9.2 9.2 15.9

Special Questions Comments

These comments have been edited for publication.

Fabricated Metal Product Manufacturing

  • We have to work smarter, as it is very difficult to increase priced received.

Chemical Manufacturing

  • We have our largest plant about an hour north of a major industrial area, so we have no trouble attracting and retaining workers due to the commute distance. If I were answering for our smaller plant, which is in the midst of an industrial area, I would answer much differently as retaining employees is a problem due to the multiple opportunities in that area.

Machinery Manufacturing

  • Our market is very price sensitive, forcing us to find other ways to cut costs because we have not been able to reduce wages for labor.

Furniture and Related Product Manufacturing

  • There is a large gap in both skills and work ethic among the applicant pool. It is very hard to find applicants who actually want to work—most just want a job.

Printing and Related Support Activities           

  • Our challenge has been filling production floor positions that require some specific machine operator competencies.

Paper Manufacturing

  • It is becoming increasingly more difficult to find and hire people who want to work and are willing to work for a fair wage. I think our education system has failed, and I think our society has slipped, especially as it pertains to work ethic.

Food Manufacturing

  • Our biggest issues are in finding competent accounting staff.
  • Hiring is our biggest challenge, not only in our Texas plant, but others as well.
  • Our products are commodities that fluctuate in value daily, so passing on increased costs is hard to do.

Texas Service Sector Outlook Survey

Data were collected Nov. 13–21, and 279 Texas business executives responded to the survey.

  1. Do you expect your firm to increase employment, leave employment unchanged, or decrease employment over the next six to 12 months?
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Increase 47.3 42.8 37.9
    Leave unchanged 43.7 47.0 43.6
    Decrease 9.0 10.2 18.4
  2. Are you having problems finding qualified workers when hiring?
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Yes 65.3 61.4 61.7
    No 34.7 38.6 38.3
  3. If you are having problems finding qualified workers, in which categories are you experiencing difficulty? Please check all that apply.
    NOTE: This question was added to survey in November 2017.
    Nov. ’17
    (percent)
       
    Low-skill positions (typically require high school diploma or less and minimal work experience) 41.6    
    Mid-skill positions (typically require some college or technical schooling) 57.9    
    High-skill positions (typically require college degree or higher) 40.4    
  4. If you are having problems finding qualified workers, what are the main reasons why? Please check all that apply.
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Lack of available applicants/no applicants 61.6 42.8 54.4
    Lack of technical competencies (hard skills) 45.2 54.4 59.9
    Looking for more pay than is offered 40.1 33.3 44.5
    Lack of workplace competencies (soft skills) 37.3 42.2 48.9
    Lack of experience 32.8 38.9 42.9
    Inability to pass drug test and/or background check 26.6 29.4 28.6
  5. What, if anything, are you doing to recruit and retain employees? Please check all that apply.
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Intensify recruiting, including advertising, paying recruiting bonuses, utilizing employment agencies, etc. 62.1 54.6 58.5
    Increase wages and or benefits 48.6 43.8 45.2
    Offer additional training 34.0 35.4 39.0
    Increase variable pay, including bonuses 29.6 30.0 28.6
    Improve working conditions 22.9 23.8 24.1
    Reduce education and other requirements for new hires 7.9 5.4 5.8
    Other 7.1 11.7 8.3
  6. If labor costs are increasing, are you passing the cost on to customers in the way of price increases?
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Yes 33.3 33.0 33.5
    No 48.9 47.3 50.4
    Not applicable 17.8 19.7 16.2

Special Questions Comments

These comments have been edited for publication.

Data Processing, Hosting and Related Services

  • The result of fewer talented candidates in the market and higher health care costs is making us decide to cover more of our employees' health care premiums and hire fewer people. In addition, we have subcontracted high-skill tasks to part-time experts outside of the Texas market.

Credit Intermediation and Related Activities

  • We are near full employment of the employable.
  • The market is not supportive of price increases at this time. We are having to look at reducing other variable expenses, e.g., advertising and business development.

Securities, Commodity Contracts, and Other Financial Investments and Related Activities

  • Our businesses are very competitive; therefore, the ability to pass on increased labor costs is difficult.

Insurance Carriers and Related Activities

  • We need customer service representatives with some commercial background to be able to learn our process but yet be able to talk commercial insurance with potential clients.

Real Estate

  • Education, particularly in math and organization, is a big hurdle.

Professional, Scientific and Technical Services

  • We are in a squeeze between the increasing cost of engineering labor and tight pricing pressure from clients, making it difficult to pass along the full increases in labor costs. As a result, we must look at reducing other expenses, including our own capital and internal development projects.
  • As a professional services firm, we pay at the top of market for talent necessary to deliver high-quality service to our client base. We have a strong reputation in Texas so have little difficulty here, although at times, the pool of applicants is thin. Outside of Texas can be more challenging—both in identifying and then attracting. Again, paying at the top of market helps.
  • I am a sole proprietor and do not have any employees. With essentially no work, I do not expect to hire anyone.
  • We are generating more business revenue so we do not have to increase costs. Since we are a technology software company, we have minimal fixed production cost.

Administrative and Support Services

  • We are finding it difficult to pass along labor and insurance increases in several segments such as restaurant and some real estate environments.
  • Staff employees are interested in benefits programs; agents want marketing and increased commissions.

Ambulatory Health Care Services

  • In the health sector, as businesses, we are limited to revenue on the contract we have with Medicare, Medicaid and also insurance contracts. Therefore, the shortage of labor and increased cost of human resources (which tends to be 65 percent of the operating cost) tend to be absorbed by the business entity, leading to wrap-up or consolidation in all service areas of health care. In addition to quality metrics improvement, technology is also eliminating significant lines of services (medical transcription, call centers and entry-level IT staff), discouraging folks. The long-term career aspect of health care appears to be no longer valid.
  • We are a deflationary business. Our expenses increase while our reimbursement always gradually decreases. We have learned to be very efficient; we work very hard. As I told a patient, we are good, we are fast, and we are cheap. Try to get that engineered.

Hospitals

  • In the health care system, there are not enough qualified nurses and bilingual nurses.
  • Most pricing is fixed per contract or government regulation, so there is little opportunity to pass along labor cost increases.

Food Services and Drinking Places

  • We will be opening a new store in McAllen in 2018. There will be no change in staffing in existing stores. 
  • We have not had high increases in the cost of wages. Increases have been hovering just below 2 percent for over a year. Wages for some of the more skilled positions (e.g., cooks) are now climbing at a somewhat higher rate. Our average rate increase has not moved above 2 percent for the simple reason that waitstaff (tipped employees) have not received any increase in base pay (although the higher sales volume is definitely leading to higher income for them), and they are a very substantial segment of our workforce. Benefits have been the biggest cost driver in this segment of the profit and loss statement. We definitely have factored those costs into our calculations in the price increases we have taken.
  • With labor costs increasing, we are trying to maintain customer pricing but will eventually be forced to increase pricing to the customer.

Personal and Laundry Services

  • We need to increase the number of employees by an additional 10 to 15 percent to cover all shifts for two new locations. We are not receiving applications for licensed stylists and barbers, so we are currently offering $300 signing bonuses, $150 employee referral bonuses and higher-pay commissions. We are actively advertising but not receiving any applications.    

Texas Retail Outlook Survey

Data were collected Nov. 13–21, and 55 Texas retailers responded to the survey.

  1. Do you expect your firm to increase employment, leave employment unchanged, or decrease employment over the next six to 12 months?
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Increase 36.4 40.7 24.1
    Leave unchanged 56.4 50.0 56.9
    Decrease 7.3 9.3 19.0
  2. Are you having problems finding qualified workers when hiring?
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Yes 76.4 76.4 67.2
    No 23.6 23.6 32.8
  3. If you are having problems finding qualified workers, in which categories are you experiencing difficulty? Please check all that apply.
    NOTE: This question was added to survey in November 2017.
    Nov. ’17
    (percent)
       
    Low-skill positions (typically require high school diploma or less and minimal work experience) 54.8    
    Mid-skill positions (typically require some college or technical schooling) 66.7    
    High-skill positions (typically require college degree or higher) 21.4    
  4. If you are having problems finding qualified workers, what are the main reasons why? Please check all that apply.
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Lack of available applicants/no applicants 59.5 46.7 53.7
    Lack of technical competencies (hard skills) 54.8 55.6 63.4
    Inability to pass drug test and/or background check 47.6 48.9 48.8
    Looking for more pay than is offered 38.1 28.9 31.7
    Lack of experience 35.7 37.8 31.7
    Lack of workplace competencies (soft skills) 33.3 46.7 56.1
  5. What, if anything, are you doing to recruit and retain employees? Please check all that apply.
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Intensify recruiting, including advertising, paying recruiting bonuses, utilizing employment agencies, etc. 66.0 53.1 61.8
    Increase wages and or benefits 56.6 49.0 34.5
    Increase variable pay, including bonuses 39.6 42.9 30.9
    Offer additional training 34.0 30.6 34.5
    Improve working conditions 24.5 22.4 25.5
    Reduce education and other requirements for new hires 13.2 6.1 7.3
    Other 5.7 10.2 5.5
  6. If labor costs are increasing, are you passing the cost on to customers in the way of price increases?
    Nov. ’17
    (percent)
    Feb. ’17
    (percent)
    Feb. ’16
    (percent)
    Yes 42.6 39.6 37.9
    No 46.3 50.9 48.3
    Not applicable 11.1 9.4 13.8

Special Questions Comments

These comments have been edited for publication.

Motor Vehicle and Parts Dealers

  • The current Senate version of the tax bill with the 30 percent business interest deduction limit will lower profits, if any, to levels that would limit or even eliminate our ability to subsidize and offer training to help hire available applicants.
  • Most of the issue for us is product related; while it is improving, it is still a limiting issue.

Questions regarding the Texas Manufacturing Outlook Survey can be addressed to Emily Kerr at emily.kerr@dal.frb.org, and questions regarding the Texas Service Sector Outlook Survey or the Texas Retail Outlook Survey can be addressed to Amy Jordan at amy.jordan@dal.frb.org.

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