Visa slowdown crimps tech talent for auto suppliers

Auto suppliers' need for high-tech talent has collided with the red-hot political issue of immigration, complicating the challenge of finding workers to develop cutting-edge technologies.

Suppliers say the Trump administration, as it studies changes to visa policy, has slowed processing of H-1B visas that suppliers often use to bring "specialty occupation" professionals into the U.S. for three or six years.

"There's just a lot of uncertainty," said Christi Downes, vice president for global operations and automotive sales at Harman International. "We have seen a slowing of the process."

A spokesman for the U.S. Citizenship and Immigration Services confirmed that applications are being more strictly reviewed to increase "the integrity and efficiency of the immigration petition process."

The slowdown comes as suppliers play a key role in developing technologies that automakers want in fields such as autonomous driving, connectivity, electrification and cybersecurity. Suppliers say foreign workers on H-1B visas are needed to keep those projects moving.

"These requests for evidence have been in a crescendo," said Ana Ojeda, supervisor for U.S. international mobility at Continental Corp. "This is the norm right now. It's more difficult than it was before."

The tougher approach is in keeping with an administration goal of ensuring visas go to a limited pool of workers. In 2017, President Donald Trump said H-1B visas "should include only the most skilled and highest-paid applicants, and should never, ever be used to replace American workers."

Preston Huennekens, a researcher at the Center for Immigration Studies, a Washington think tank, said the U.S. Citizenship and Immigration Services "has certainly been tightening the H-1B program." The agency, which checks employer applications, has increased requests for evidence and workplace audits, he said.

Huennekens criticized H-1B visas as allowing employers "to pay a little less than you would pay an American." But significant changes to the program are unlikely, he said.

H-1B visas already were a sore point for suppliers. Federal rules cap them at 85,000 a year — a fraction of the applications received in most recent years. Because of the overload, a lottery is held to pick visa recipients after the application deadline each April.

The system makes it hard for employers to plan staffing, Ojeda said: "You don't have certainty that the visa will be provided."

Sandy Schutzler is in the center of suppliers' struggle to find new-tech talent. Schutzler is vice president for client engineering services at Altair Engineering, a suburban Detroit company that provides services and finds talent for suppliers and automakers.

She said increased questioning of visa applications "really puts the auto industry, these employers, on guard." Even before the delays, finding the right employees was tough, she said.

The core difficulty, she said, is that "the auto industry has morphed in terms of job descriptions, but the talent has not. We have these specialized needs, but there are a small number of people who have those skills."

Mary Reardon, Continental's senior manager of talent acquisition in the U.S. and Canada, said staffing up for advanced technology always will be difficult, by definition.

"These are newer technologies, right?" Reardon said. "The supply base of the individuals is going to be less than the demand."

Jackie Chizuk, senior vice president for human resources and communications at Varroc Lighting Systems, a molder that makes exterior lighting, said the problem isn't limited to North America.

"Even beyond the U.S., this having an engineering shortage is true in every region of the world right now," Chizuk said.

Harman sees shortages mostly in mature markets such as the U.S., Western Europe and Japan, Downes said.

The industry also faces a "demographic gap in automotive in the Midwest," said Julie Fream, CEO of the Original Equipment Suppliers Association. Many young engineers who were laid off in 2008 and 2009 left the region and the industry.

"Here we are 10 years later, so they would be 35 to 40, when they would be moving into leadership positions," Fream said. "We don't have enough of them."

The talent shortage extends to hourly skilled workers, as well, she said.

"It is the most significant long-term issue pressing on suppliers right now," Fream said. "Short term, it is waiting for some of the trade issues to settle out, but long term it will become a much bigger issue."

Leo Kempel, dean of the Michigan State University College of Engineering, said workers on visas often are needed to build an adequate staff.

"If you're a forward-looking manager, and you're projecting talent needs for the next couple years, you have to meet those talent needs," Kempel said. "If the domestic supply chain isn't supplying what you need, you need to have an additional supply chain. Those H-1Bs can help."

Use of the visas varies among suppliers. Chizuk said Varroc has only "a handful" of employees on such visas. But Downes said the visa program is "very important" for Harman.

"We have a good amount of our work force on some kind of visa," Downes said.

The Trump administration has not publicized a final plan to modify the visa program, but officials have said they want tougher standards to make sure workers coming to the U.S. meet the criteria of having a "specialty occupation."

"I think being more open with inclusive immigration policies would be better," Downes said.

Global suppliers might shift work elsewhere if they can't hire adequate staff in the U.S. Digital projects can be transferred overseas much more easily than physical manufacturing, and most big suppliers have development centers in multiple countries. Varroc, for instance, opened an engineering center in Poland, after assessing educational and skill levels, Chizuk said.

Lack of talent can cause a supplier to assign a project outside the U.S., said OESA's Fream.

"More and more, what we're seeing is they have to take the work overseas where they have the workers," Fream said. "In order to execute [a project] and get it done, they have no choice at this point."

But suppliers prefer to work on projects near customers — in the Midwest for the Detroit 3, she added.

Continental's Reardon agreed, saying proximity to customers is "a huge factor — there's something to having that face time."

Downes said Harman has an operation in suburban Detroit for that reason: "We need to have talent close to customers."

Suppliers' competition in recruiting new-tech expertise isn't limited to auto-industry rivals. The broader battle for technology talent is "fierce," said Michigan State's Kempel.

"The challenge is that the capabilities for the talent that the auto industry needs are also the skill set for consumer electronics, the aerospace industry and other major parts of the economy," Kempel said.

Suppliers say they have effective ways to market themselves to prospective hires — emphasizing the opportunities in a global company, the stability they provide and projects that improve people's lives.

But even so, they say the limited supply of graduates in science, technology, engineering and math — known as STEM fields — in the U.S. makes it hard to fill all jobs with U.S. citizens. A survey by the World Economic Forum in 2016 showed that China had 4.7 million recent STEM graduates, India had 2.6 million, and the U.S. had 568,000.

"From a U.S. perspective," Reardon said, "we don't have the number of students in STEM disciplines."

However, Huennekens, of the Center for Immigration Studies, said employers "aren't looking hard enough" for U.S. citizens with the needed skills, considering the emphasis on STEM education today. The H-1B program "should be more of a safety net than 'I tried a little and didn't get anyone,'?" he said.

Huennekens also said there is a history in the program overall of employers paying H-1B employees less than U.S. workers: "It depresses wages for white-collar Americans, which you don't often see in immigration policy."

N. Peter Antone, a Detroit-area attorney who frequently handles H-1B applications for automotive employers, disagrees. He said the limit, set in 2004, is artificially low. In prior years, the visas were much more numerous under a cap of 195,000 set by Congress in 2000.

The low cap and resulting April lottery creates uncertainty and delays for employers, said Antone, of Antone, Casagrande and Adwers. Employers also bear the cost of visa applications and ongoing legal expenses.

"It's a big hassle and a big cost and an uncertainty for the employer," Antone said. "I've rarely, rarely seen a situation where the main purpose of getting an H-1B is to find cheap labor. But the rules are made on that assumption."

Suppliers say they are trying various tactics to get more U.S. STEM workers, partnering with colleges and even high schools to woo students. They also are retraining employees in the new disciplines.

But it will take years for such steps to ease the shortage. In the meantime, the search for high-tech specialists remains difficult.

"This kind of talent is hot in the marketplace," said Harman's Downes. "And everyone has a need for technology talent. It's not just Tier 1 suppliers."