Tardiness: Help me solve this problem

I am the HR mgr in a manufacturing plant, and our floor personnel are technical and highly skilled in an esoteric field.  Recruiting for these positions is almost impossible, as there are virtually no candidates, but we are fortunate in that we don't have much turnover.  We have a few individuals in these key positions who are chronically late.  They punch a timeclock, so they are paid for the time they are at work.  The culture since the company was founded about 35 years ago is that those who are chronically late get reprimanded, sometimes with a "write-up" in their file.  However, there are really no "teeth" in these actions, and there has always been reluctance to be too drastic with discipline for tardiness, because of the difficulty in filling these positions and the good work that these employees do.  Rarely does their lateness cause any real issue; it's just that the company president wants them to be there on time.  Currently, we are putting lean practices in place, so these employees are being asked to cooperate with change, which they are doing.  Also, like so many companies in this economy, we have had a pay raise freeze in place since February with no end in sight.  The production manager has been told he must do something to address the tardiness issue, but he is at a total loss as to what he can do, because a 3-step progressive disicipline process would do more to hurt than the company than to hurt the employee if, for example, Step 3 were to result in termination.  Has anyone out there dealt with a situation like this?