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November 1, 2008

STAYING POWER

As baby boomers retire, a lot of institutional knowledge will go with them. Keeping them on the payroll might be the best option.

When Howard English decided to retire from O’Neal Steel Inc. in 2003 after more than 35 years in the business, “I just reached a point that I was ready to go, and you kind of know it.”

He was one of three purchasing directors at the Birmingham, Alabama-based service center company and was asked if he would come in and help out one day a week. “I thought it would last about three months. Now it’s five years later,” English says.

One day a week wasn’t enough, either. Now, the 64-year-old averages 2½ days a week at O’Neal Steel. As purchasing project manager, he handles “things we want to accomplish project-wise, and things others don’t have time to do.”

The company was eager to keep him because of his “extensive experience that can only be earned by years of doing what he has done,” says Bill Jones, O’Neal’s president and CEO. “It’s like having a consultant, but that consultant knows our company very well, so there is no learning curve.”

O’Neal Steel is far ahead of the curve when it comes to recognizing the need to retain baby boomers and their wealth of expertise and knowledge. The generation of employees born in the 20 years after World War II is an invaluable resource that will not be replaced easily. Still, few metals companies—or those in any industry, for that matter— are prepared for the shortfall as boomers begin to retire.

A survey of 1,000 U.S. employers by Milwaukee-based employment services company Manpower Inc. last year found that 78% were not using a specific strategy to recruit older workers. Only 28% had a strategy to retain workers past traditional retirement age, and just 18% had plans to recruit older workers.

“People really aren’t going to get it until they start feeling the pain,” says Melanie Holmes, Manpower’s vice president for work solutions. That pain will include not only the drop in the sheer number of potential employees, but also a critical loss of experience and institutional knowledge.

At O’Neal, Jones estimates that at least one-third of employees are over the age of 50. “The retirement of baby boomers could be like a tsunami,” he says, “and the group behind is really going to be stretched.”

The U.S. Census Bureau shows there are approximately 77 million baby boomers today. Baby boomers typically are considered to have been born between 1946 and 1964, making them now between the ages of 44 and 62. In 2015, the number of baby boomers will drop slightly, to about 74 million, and will be between the ages of 51 and 69.

While government offices don’t necessarily bundle worker statistics in neat little packages with labels like “baby boomers,” a look at the numbers gives a good idea of how many workers in that age group are active in the workforce.

The Bureau of Labor Statistics showed 153.1 million people aged 16 and over in the civilian workforce in 2007. Of that number, 56.4 million were between the ages of 45 and 64, accounting for nearly 37% of the workforce.

In 2015, the workforce is expected to reach 163.3 million. At that time, the bureau projects there will be 50 million workers between the ages of 50 and 69, accounting for 30.6% of the workforce.

Job Sharing and Flex-Time

One company taking a novel approach to the problem is Denman & Davis, a metals service center based in Clifton, New Jersey. Of the company’s 110 employees, about one-third are baby boomers, says Marketing Manager Dylan Altieri. They work in all departments, from the majority of senior-level managers to the operations floor.

In 2006, company executives began to discuss their concerns about mass retirements. They started to hire new employees immediately, and “not necessarily waiting to hire until people leave,” Altieri says. That means the old-timers have plenty of opportunity to train newcomers. It also gives new employees “time to get up to speed, even if we’re a little overstaffed. We think it’s worth the investment.”

Despite those preparations, “there’s definitely going to be a transition time period,” Altieri says.

One place where the transition already has begun is inside sales. Although Carol Stanton, a 50-plus-year-old, has no plans to retire any time soon, she is helping train her daughter Lindsay to take her place when that day comes. Lindsay spent her college summers working part time at Denman & Davis, and since graduating has worked full time. The two Stantons carpool and sit one desk apart at work. Lindsay will be the third generation of the family to work in the metals industry.

Denman & Davis also has permitted inside and outside sales people to reduce their working hours rather than retire. One inside sales representative worked two days a week, and another, who retired to Florida, commuted to New Jersey one week a month to visit his long-standing customers and continued to service his clients by phone.

Such arrangements allow the company to “still be able to utilize [retirees’] knowledge,” while “helping them if they want extra cash flow,” Altieri says.

The older sales representatives also introduce young hires to customers and teach them about processes, products and sales techniques. With that kind of mentoring, the new hires “seem to come up to speed a lot quicker than they would if they were thrown out there,” he says.

Staying on past retirement age to mentor younger workers might be more doable in office jobs than on the shop floor, says Gerald Dickey, spokesman for United Steelworkers.

Because of the physically demanding work, “I don’t think workers in the steel industry are going to be working longer. If they make it to 62, they’ll hang up their spurs.”

Because many young people aren’t being schooled in the trades, steel companies and the union have responded by setting up in-house career development opportunities, ranging from offering computer laboratories to small engine repair instruction, Dickey says.

Knowledge Base

Certainly, finding ways to pass on baby boomers’ knowledge is going to be important.

At Olympic Steel, based in Bedford Heights, Ohio, longtime employees write training manuals for various types of machinery. Jerry Stech, firstshift supervisor at Olympic’s Minneapolis facility, has helped create a training manual for levelers and a recently completed manual for overhead crane operators. The leveler manual details the step-by-step operation for each of the company’s three machines.

Those manuals are then used as guides to determine areas in which younger employees need more training and to make sure each employee follows the proper steps. One of the leveler operators involved in drafting the manual has been in the business for more than 30 years.

In mid-2007, Olympic’s human resources department began to develop a knowledgetransfer program to add to the informal mentoring relationships already in place.

In 2008, it launched Olympic Steel University, bringing together old and new talent to discuss Olympic’s culture and history, exchange knowledge and build relationships, says Human Resources Director Tom Clevidence. Mentoring became a more formal process.

“The leadership at Olympic Steel believes that in order to be effective in your position, you need to be committed to learning and understanding your company and the metals industry,” Clevidence says. “Olympic Steel University assists employees with gaining knowledge and building relationships that will help them grow in their careers and be more effective professionals for the company.”

One company that is relying on the wealth of experience that retirees bring is Marmon/ Keystone Corp. in Butler, Pennsylvania. Robert Kaniecki, former executive vice president for administration, has stuck around well past traditional retirement age. He retired in 2005 at age 71 and now averages two days a week as a consultant for the company. In his former role, his responsibilities included rehabilitation of existing facilities and new construction. Now, he consults on facilities management, jetting around the country to work on projects in places such as Wisconsin, Texas and South Dakota.

During his career, Kaniecki worked on more than 30 buildings, and no one at the company had the experience he did. Now he is grooming his successor, a baby boomer in his 50s, to deal with things such as construction and equipment costs, plant layout and staffing.

“I like to use the capacities that I have, and I don’t like to sit idle,” says Kaniecki, who has been in the metals industry nearly 40 years.

He jokes that he’ll continue “until they fire me.”