Texas Manufacturing Outlook Survey

Texas Manufacturing Outlook Survey

Data were collected Feb. 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?

   	Feb. ’18 (percent)	Nov. ’17 (percent)	Feb. ’17 (percent)	Feb. ’16 (percent)
   Increase	58.6	46.9	57.1	41.6
   Leave unchanged	35.4	42.9	33.0	44.2
   Decrease	6.1	10.2	9.8	14.2

2. Are you having problems finding qualified workers when hiring?

   	Feb. ’18 (percent)	Nov. ’17 (percent)	Feb. ’17 (percent)	Feb. ’16 (percent)
   Yes	69.7	72.7	68.5	66.1
   No	30.3	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.*
   

   	Feb. ’18 (percent)	Nov. ’17 (percent)
   Low-skill positions (typically require high school diploma or less and minimal work experience)	64.7	61.1
   Mid-skill positions (typically require some college or technical schooling)	70.6	66.7
   High-skill positions (typically require college degree or higher)	32.4	30.6

4. If you are having problems finding qualified workers, what are the main reasons why? Please check all that apply.*

   	Feb. ’18 (percent)	Nov. ’17 (percent)	Feb. ’17 (percent)	Feb. ’16 (percent)
   Lack of available applicants/no applicants	72.1	51.4	44.3	37.5
   Lack of technical competencies (hard skills)	60.3	61.1	72.2	82.5
   Lack of workplace competencies (soft skills)	44.1	37.5	45.6	48.8
   Lack of experience	44.1	31.9	44.3	38.8
   Inability to pass drug test and/or background check	41.2	45.8	29.1	28.8
   Looking for more pay than is offered	38.2	36.1	36.7	48.8

5. What, if anything, are you doing to recruit and retain employees? Please check all that apply.

   	Feb. ’18 (percent)	Nov. ’17 (percent)	Feb. ’17 (percent)	Feb. ’16 (percent)
   Intensify recruiting, including advertising, paying recruiting bonuses, utilizing employment agencies, etc.	65.1	67.4	63.5	56.0
   Increase wages and or benefits	53.5	51.7	58.3	46.2
   Offer additional training	43.0	40.4	33.3	40.7
   Increase variable pay, including bonuses	31.4	28.1	30.2	35.2
   Improve working conditions	18.6	24.7	21.9	27.5
   Reduce education and other requirements for new hires	4.7	11.2	5.2	6.6
   Other	7.0	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?

   	Feb. ’18 (percent)	Nov. ’17 (percent)	Feb. ’17 (percent)	Feb. ’16 (percent)
   Yes	45.2	41.6	39.4	32.6
   No	54.8	58.4	60.6	67.4

*This question only posed to firms who noted they are having problems finding qualified workers when hiring.

Special Questions Comments

These comments have been edited for publication.

Chemical Manufacturing

• We are looking into increased automation to counteract the lack of manufacturing personnel.

Plastics and Rubber Products Manufacturing

• We are seeing a short-term activity increase.

Transportation Equipment Manufacturing

• We are not passing on costs yet, but we plan to in the future if we can’t offset with productivity.

Food Manufacturing

• We are in the food processing and manufacturing business in an area not heavily populated by peer or food industry businesses. New markets are opening up for us.

Paper Manufacturing

• We have high turnover at entry-level positions. We have increased our starting pay and are giving increases at the end of workers’ probationary period, but it is still a problem. We increased our prices on several products in January 2018.
• It is becoming increasingly difficult to hire qualified workers who understand that they will have to work.

Printing and Related Support Activities

• Where possible, we are trying to pass along price increases. We are working to replace two plant workers and possibly hire one or two more.

Miscellaneous Manufacturing

• Some of our best and most loyal workers were once convicts or parolees. Stringent rules by other companies have thrown many wonderful workers our way. They are most appreciative of the chance given here. Our demands are quite high and “one strike and you are out.”

 

Texas Service Sector Outlook Survey

Data were collected Feb. 13–21, and 263 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?

   	Feb. ’18 (percent)	Nov. ’17 (percent)	Feb. ’17 (percent)	Feb. ’16 (percent)
   Increase	48.7	47.3	42.8	37.9
   Leave unchanged	40.7	43.7	47.0	43.6
   Decrease	10.6	9.0	10.2	18.4

2. Are you having problems finding qualified workers when hiring?

   	Feb. ’18 (percent)	Nov. ’17 (percent)	Feb. ’17 (percent)	Feb. ’16 (percent)
   Yes	62.9	65.3	61.4	61.7
   No	37.1	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.*

   	Feb. ’18 (percent)	Nov. ’17 (percent)
   Low-skill positions (typically require high school diploma or less and minimal work experience)	45.3	41.6
   Mid-skill positions (typically require some college or technical schooling)	57.2	57.9
   High-skill positions (typically require college degree or higher)	42.8	40.4

4. If you are having problems finding qualified workers, what are the main reasons why? Please check all that apply.*

   	Feb. ’18 (percent)	Nov. ’17 (percent)	Feb. ’17 (percent)	Feb. ’16 (percent)
   Lack of available applicants/no applicants	58.5	61.6	42.8	54.4
   Lack of technical competencies (hard skills)	45.9	45.2	54.4	59.9
   Looking for more pay than is offered	40.9	40.1	33.3	44.5
   Lack of workplace competencies (soft skills)	37.7	37.3	42.2	48.9
   Lack of experience	34.0	32.8	38.9	42.9
   Inability to pass drug test and/or background check	25.2	26.6	29.4	28.6

5. What, if anything, are you doing to recruit and retain employees? Please check all that apply.

   	Feb. ’18 (percent)	Nov. ’17 (percent)	Feb. ’17 (percent)	Feb. ’16 (percent)
   Intensify recruiting, including advertising, paying recruiting bonuses, utilizing employment agencies, etc.	60.9	62.1	54.6	58.5
   Increase wages and or benefits	53.2	48.6	43.8	45.2
   Offer additional training	36.4	34.0	35.4	39.0
   Increase variable pay, including bonuses	34.1	29.6	30.0	28.6
   Improve working conditions	23.6	22.9	23.8	24.1
   Reduce education and other requirements for new hires	7.3	7.9	5.4	5.8
   Other	8.2	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?

   	Feb. ’18 (percent)	Nov. ’17 (percent)	Feb. ’17 (percent)	Feb. ’16 (percent)
   Yes	41.5	40.5	41.1	39.9
   No	58.5	59.5	58.9	60.1

*This question only posed to firms who noted they are having problems finding qualified workers when hiring.

Special Questions Comments

These comments have been edited for publication.

Publishing Industries (Except Internet)

• We will try to pass along increases in costs, but it is difficult to do, so we will look for productivity/efficiency gains to offset costs. Also, we will change the product revision so increases might be acceptable to customers.

Credit Intermediation and Related Activities

• In the rural markets, finding qualified individuals for employment who have adequate social skills to service customers and meet the public is difficult. We will have to develop a strategy for finding qualified applicants.

Rental and Leasing Services

• We have always had difficulty finding and recruiting mechanics to work on heavy construction equipment. We employ over 200 and could hire another 100 if we could find them. But, today we have equal difficulty hiring good salesmen to work on a salary/commission/bonus basis—these are uncapped compensation positions; one can make whatever they work hard enough to make. The younger generation just does not want to work that hard or risk a commission-based living; they want a large salary and no more than 40 hours per week.

Professional, Scientific and Technical Services

• It is a somewhat challenging environment for quality hires. We are able to find folks, but the recruitment process is lengthening, and positions remain open longer.

Management of Companies and Enterprises

• We are passing additional costs to consumers in the way of closing fees and document preparation fees. Our cost per loan has more than doubled over the last four to five years with additional compliance costs and per-loan charges on software vendors for loan document preparation. 

Administrative and Support Services

• Finding people willing to work and experienced is virtually impossible. A person with a "good" driver's license is also impossible to find. Drugs continue to be a problem.
• We need the H2B returning worker exemption.
• We currently do not have enough qualified full-time employees to fill our existing client job orders. In our 40 years of business, we have been down this same road many times; we will continue to work hard and smart as we rectify this particular situation.
• The available work pool of trained staff with technical abilities and product knowledge is limited. Therefore, investment in new talent is critical to the future, but new talent is not looking to work as hard or in the normal 8 a.m. to 5 p.m. structure.
• Price increases are difficult to implement in a competitive environment. We are passing along some of the increases with existing customers and trying to set a higher mark with new customers. However, we try not to lose a customer over price.

Ambulatory Health Care Services

• The blood industry is in a state of flux, with pressure to retain markets while blood utilization continues to decrease. So blood prices have been decreasing for six-plus years. As markets shrink, prices continue to decrease to a point where there is no margin, and many independent centers are losing money or are no longer independent.
• I answered no to “Are you having problems finding qualified workers when hiring?” but the last couple of years we haven't had turnover, so “not applicable” would be a better historical choice. However, we are expanding and will be adding workers.
• We are unable to set our fee schedule. Outpatient imaging is a deflationary business. The government and payers set our fee schedules. We remain very efficient and are profitable, but margins are slim and utilization is very high.
• If revenue continues to improve, my "increase" in employment will first be to change two part-time staff to full time.

Hospitals

• As a hospital, we have very little real-time control over reimbursement due to government regulations and long-term contracts with insurers. We are unable to pass along our cost increases in most cases.

Nursing and Residential Care Facilities

• Our primary payers are federal and state government. At the same time, we are in a major health care worker shortage, which is driving wages up. However, the area wage index for our county actually went down as of the last Federal Rule, resulting in a pay reduction of anywhere from $15 to $30 per day per resident. 

Accommodation

• The labor market continues to challenge our industry. The ongoing discussions on immigration and the "wall" are not helping. I do not believe advocates for stricter immigration rules have thought through all the consequences.

Food Services and Drinking Places

• We are having great difficulty finding people who are educated, can think on their feet or who are even motivated. The educational system has failed us in the last 20 years, and we are now experiencing that result. Employees are often noncaring, not knowledgeable, don't know how the world works and don't appear to be very interested in learning.
• With labor costs increasing, it is inevitable that prices will be increased.

Truck Transportation

• Truck drivers have become impossible to find. We have increased pay 15 percent since Jan. 1, 2018.

 

Texas Retail Outlook Survey

Data were collected Feb. 13–21, and 49 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?

   	Feb. ’18 (percent)	Nov. ’17 (percent)	Feb. ’17 (percent)	Feb. ’16 (percent)
   Increase	44.9	36.4	40.7	24.1
   Leave unchanged	36.7	56.4	50.0	56.9
   Decrease	18.4	7.3	9.3	19.0

2. Are you having problems finding qualified workers when hiring?

   	Feb. ’18 (percent)	Nov. ’17 (percent)	Feb. ’17 (percent)	Feb. ’16 (percent)
   Yes	75.5	76.4	76.4	67.2
   No	24.5	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.*

   	Feb. ’18 (percent)	Nov. ’17 (percent)
   Low-skill positions (typically require high school diploma or less and minimal work experience)	55.6	54.8
   Mid-skill positions (typically require some college or technical schooling)	69.4	66.7
   High-skill positions (typically require college degree or higher)	13.9	21.4

4. If you are having problems finding qualified workers, what are the main reasons why? Please check all that apply.*

   	Feb. ’18 (percent)	Nov. ’17 (percent)	Feb. ’17 (percent)	Feb. ’16 (percent)
   Lack of available applicants/no applicants	56.8	59.5	46.7	53.7
   Lack of technical competencies (hard skills)	48.6	54.8	55.6	63.4
   Lack of workplace competencies (soft skills)	40.5	33.3	46.7	56.1
   Inability to pass drug test and/or background check	37.8	47.6	48.9	48.8
   Lack of experience	35.1	35.7	37.8	31.7
   Looking for more pay than is offered	24.3	38.1	28.9	31.7

5. What, if anything, are you doing to recruit and retain employees? Please check all that apply.

   	Feb. ’18 (percent)	Nov. ’17 (percent)	Feb. ’17 (percent)	Feb. ’16 (percent)
   Intensify recruiting, including advertising, paying recruiting bonuses, utilizing employment agencies, etc.	60.9	66.0	53.1	61.8
   Increase variable pay, including bonuses	43.5	39.6	42.9	30.9
   Increase wages and or benefits	41.3	56.6	49.0	34.5
   Offer additional training	32.6	34.0	30.6	34.5
   Improve working conditions	26.1	24.5	22.4	25.5
   Reduce education and other requirements for new hires	10.9	13.2	6.1	7.3
   Other	4.3	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?

   	Feb. ’18 (percent)	Nov. ’17 (percent)	Feb. ’17 (percent)	Feb. ’16 (percent)
   Yes	36.4	47.9	43.8	44.0
   No	63.6	52.1	56.3	56.0

*This question only posed to firms who noted they are having problems finding qualified workers when hiring.

Special Questions Comments

These comments have been edited for publication.

Motor Vehicle and Parts Dealers

• A lot of the applicants we are getting for accounting positions and IT are older, lower-technical-skilled professionals that are late in their careers. We are finding a lot more recruiting activity for the younger technology-savvy worker in all categories.
• Margins continue to erode as expenses increase.
• The idea of passing increased labor costs on in our business and most businesses I am familiar with is not practical as it will price the product/service out of being competitive, leading to lost sales. In turn, the lost sales will lead to fewer employees needed to handle the business and to attempt to maintain profits.

Clothing and Clothing Accessories Stores

• Finding store associates is only an issue in the major cities like Houston, Dallas, San Antonio and Austin. It is more business as usual as far as hiring in the smaller Texas cities. At our corporate headquarters in a major metro, the competition is much more difficult for well-qualified workers.