January 30, 2014
Metal fabricators can’t find the right manufacturing talent. Customers are more demanding. The current workforce is overworked. How can fabricating companies keep up? The FABRICATOR’s Editorial Advisory Board has some suggestions.
How times have changed. It was only a little over five years ago that most metal fabricators left in the industry were looking around and questioning, “How are we going to survive?” Today they are asking, “How do we keep up?”
The latter is the question The FABRICATOR posed to its Editorial Advisory Board members at a meeting that occurred during FABTECH® in Chicago last November. These representatives of the metal fabricating industry joined more than 40,000 other attendees for what was the largest event in its history, covering roughly more than 650,000 square feet. Metal fabricators are looking for production equipment, manufacturing services, and control and design software to help them keep up, and it gets harder by the day as customers expect more and lead-times continue to shrink.
What follows is an edited transcript of a conversation with The FABRICATOR’s Editorial Advisory Board about sustaining manufacturing momentum while being unable to find the right skilled employees who will work for the wages and opportunity being afforded them.
The FABRICATOR: How are your organizations and customers dealing with the realities of a robust metal fabricating marketplace?
Charles Caristan: We supply consumables to customers, so when we serve them, we see what they’re doing. We see a shift in how they operate and what they do. And this is not just “Well, maybe Congress is going to vote on this or that, and then we can proceed with investment.” Companies are moving ahead. We are looking at decisive changes in materials and big changes in processes.
Subramaniam Manivannan: We see the same thing. We see the sales growing, and we continue with the execution of our plan—doing things differently. More lean introduction and activities, so we can handle the growth. We make investments in people and new machinery. We keep moving.
As a side note, since I’m living in Detroit, I read this fall that the German OEM Volkswagen came to Michigan to look at the tooling and fabrication capacity. They’re kind of concerned because they are reading the headline news. The market is picking up, and they want to see if there’s any kind of capacity in Detroit. That clearly indicates a bright future. The company is here to see if U.S. companies can supply the tooling it needs.
Jim Poe: The companies that are doing it right are really growing. They can’t get the people they need, and they’re pushing their available capacity to the limit. People are coming to them wanting good product. One company I’m working with can’t do enough. Its customers keep coming, wanting them to supply more parts and components all the time.
Another company I work with is in the agriculture industry. It has evolved toward more of a focus on taking care of the people they currently have. You go through their plant and everybody is smiling and having a good time—enjoying their work. And we’re talking about a medium-sized company. People want to work there, and its business is growing by leaps and bounds. They can’t keep up with the demand.
The FABRICATOR: Can you provide an example of how that company supports its employees beyond typical benefits and compensation?
Poe: For example, some companies have done away with set breaks. If they want a cup of coffee, they go to a coffee machine in the break room. It doesn’t cost them anything. If they want a can of pop, they come and get one. Companies are moving toward supplying more of the soft benefits—it’s just the way they treat their people.
The CEO has a desk in the plant. That’s where his workplace is, which has changed their whole atmosphere.
Matt Gehman: That’s so huge, because going into a lot of these plants, there is that perception of a dark and dirty work environment. But there is a reason that stereotype is there. Not every facility is a great place to work.
Now from our point of view, we’re really busy, and in our region, there’s been so much uncertainty for so long, that uncertainty has become the new certainty. A lot of companies manufacturing in the western New York area are just deciding to move forward regardless of the outlook. Eight out of 10 manufacturers in town are looking to hire people and are being largely unsuccessful. So there’s this pent-up demand for services that’s continued since 2009. We came out of it pretty fast, but then 2012 took a little dip. But now it’s going back up again.
I think people recognize that the time to invest is now or a bit past. Things are starting to pick up with so much speed so quickly, at least where we’re from, they’re having a hard time catching up. Unfortunately, some of the base isn’t there anymore. The support structure, the educational systems, and technical schools haven’t been able to keep up with demand.
The FABRICATOR: As you’re looking to make the most of these new opportunities, how has it been finding new employees?
Gehman: We have had struggles integrating people into our business, because it’s not something where you can pull somebody from off the street and have them do what we do. It’s this constant mindset of needing to get people in the pipeline and bring them through. What we’ve found, unfortunately, is that one out of 20 survive the hiring. They can’t show up to work on time or don’t have the basic soft skills. So you have to go through this enormous amount of front-office time and burden to screen these people to get them through, and once you get them, you have to do everything you can to hold onto them.
The FABRICATOR: Does anyone see similar struggles elsewhere?
Poe: The two areas everyone is concerned about are welders and machinists. Companies tell me that all the good people have been hired. The people coming through the door now don’t have the technical skills and soft skills that will get them in the door. Everyone continues to struggle to find the right people with the necessary skills and keep them.
Manivannan: In Europe, it’s the same situation. As an example, look at Germany. I was talking to my German colleague, and he shared that in his country, there is a low unemployment rate and it’s very difficult to get people in the door.
Caristan: I concur. It is tough to find skilled labor. They are all employed, or many others decided to go to nursing school or some other place when the recession hit. I don’t know where they are, but I can’t find welders, for example.
On the other hand, for new hires we have a special program to recruit new people interested in an engineering career, not necessarily to get an MBA or a management position. We have to deal with Generation Y, and they think differently. The program takes students right out of school with no professional experience. They have a different mentality. They have to learn to deal with people like me, people on the other side of 50, and we’ve been quite successful working with them.
We’re going to have to find a way to work with that new generation and make them perform as well. There are ways, and they have capabilities. But you have to find a way to exploit it and bring it to the surface. That is a challenge, but there is no other alternative in terms of workforce.
The FABRICATOR: If everyone is busy and struggling to find additional help, how are these companies staying on top of demand?
Gehman: We’ve definitely resorted to doing something we’ve never done before, and that’s turning work down. We used to always find a way to get it done. You can cherry-pick the jobs you really want to do and those that offer higher levels of profitability.
We are a lean, mean operation now. We’re bare bones, but this year will probably be the most profitable year for the company in its entire existence, even though our staff levels are 25 percent reduced from our high point in 2008. We’re doing what everybody is doing nationally, and that’s figuring out how to do more with less. Productivity is way up there compared to what it used to be, and that’s how we’re getting by.
On the negative side, the workforce is worked hard. That’s the constant battle. I think I had that same thought two years ago when we talked about this issue. You reach a point where the core group of people you constantly rely on start getting burned out. We’re working on creative ways to reduce that stress level. We’ve incorporated rest days that are nonpaid days off instead of extra vacation days. They don’t have to be scheduled. At management’s discretion, when a guy’s been working out in the field for two straight weeks, when he gets back he gets three to four days off in a row to get his family issues squared away or his personal life in order.
Poe: The companies that I work with are maxed out. One thing we’re seeing on the engineering side is that some of the small companies in the rural communities are having a very challenging time getting engineers. Some of the more progressive companies are starting to open engineering offices in the metropolitan areas where the graduates want to be. For example, a couple of companies have opened engineering offices in Ames because that’s where the engineering students are.
Iowa State’s engineering college is growing by 10 to 15 percent a year. Young people are flocking to engineering. The university is challenged to keep pace with the buildings or facilities to keep up with the influx.
Manivannan: Lean manufacturing principles can help as well. Just to give you an idea, to increase capacity and reduce lead-time our facilities focus on decreasing setup time on machines. So we keep doing kaizen events and focusing on continuous improvement.
The other one is cross-functional training. Instead of hiring new people in shipping, for example, the shipping person can learn machining skills or other skills. Then when you have a second shift or weekend shift, he can come in and operate a basic CNC machine.
As for getting new workers with an interest in manufacturing and with the corresponding skills, you might want to look into the Focus:HOPE program in Detroit. It’s great. They are getting the young kids involved. They are getting basic skills and getting an associate’s degree. It works very well and is very successful in Detroit.
Gehman: We’re starting to see this interest in supporting manufacturing in the Buffalo area right now. The governor of New York promised western New York $1 billion for infrastructure improvements for manufacturing called the Buffalo Billion. A large portion is dedicated to starting a manufacturing institute. The program is called Advance Buffalo. It starts in the high schools through the Dream It. Do It. program, where these charter schools encourage students to look at manufacturing careers.
The state Department of Labor is also going to become a “skills broker,” where they are currently pairing manufacturing companies that are in a pilot program with unemployed people with certain skills. And they’re reimbursing 90 percent of the new worker’s wage for the first six months, which is huge.
The FABRICATOR: What type of training is taking place within organizations you’re familiar with or work for to keep up if there’s no additional labor?
Manivannan: Management needs to make it happen. That’s part of the lean practice. The cross-function matrix is key. Focusing on the cross-function is easy; there is no big investment.
Poe: The real progressive companies reach out to organizations like ours [Center for Industrial Research and Service]. It’s a very small percentage, which is unfortunate because there are great resources that can help them in any area relative to manufacturing they would like assistance with. But most don’t know about the programs available to them.
Gehman: What’s working for us is this pilot program that I alluded to earlier. The fact that I can bring somebody on and the state is paying 90 percent of their wage for the first six months allows me to do 100 percent on-the-job training. I can send him with a mentor to the job, and the biggest challenge is convincing the customer that he’s not paying for two people, one of whom is usually just standing there watching. But that way it takes some of the stress off the company from a financial aspect, and it gets that real-time training that’s really required to see if somebody’s going to make it and continue to put in the effort.
We have a 90-day probationary period when we try to figure out if they’re going to survive or not. After 90 days, we will know if the basic skills are there and if they’re trainable. That’s when we really kick in and say we’re going to start really dumping some money into this employee for advanced training.
This program has been in development for 18 months, but the financial aspect just started kicking in. We have three employees currently taking advantage of it. We float 40 to 50 employees.
With this program, it’s a very easy application process—literally three pages—and they help you apply because these state agencies have a vested interest in their district.
Caristan: One of the things I’ve observed, as it pertains to the training question, is that over the past two years we have doubled if not tripled the number of student interns we have every year. Every February or March we have to plan on what we will do with our summer interns that we receive. That doesn’t guarantee that most will eventually come back and work for us, but the volume has increased significantly.
The ones that seem to offer the brightest prospects are cherry-picked to make rotations throughout various divisions and departments of the entire company, even internationally. That is part of their full-time training for two years before they eventually anchor somewhere. They represent the future leadership and workforce of the company.
Manivannan: One thing I wanted to explain a bit further is the need for standard work instructions. Let’s say you have a workforce with a special skill set, and when they retire, will that skill set leave with them? You need to document everything. You film it. You take photos. Then you have complete documentation of the setup, in-process inspection, or whatever process that might exist. So when someone retires, you bring new people onboard and train them in this special skill set with the standard work instructions.
Also, when the older workforce retires, you can keep them on a part-time consultant basis. People love to do that, and when the new people come onboard, they can participate in some on-site training with the more experienced worker.
The FABRICATOR: Is automation really changing the way people are doing their jobs and how parts are being made?
Manivannan: It depends on your lead-time and setup time. It’s not always necessary to invest millions. You can invest in new tooling and fixtures sometimes and make a real impact. It depends on the scenario.
Before you consider making any kind of investment, however, you need to go through your current state and find out where you want to go. It’s literally a walk-through, looking at what’s being done and seeing if lead-time can be reduced or if multiple operations can be combined. That provides the case for justification of any investment and helps to determine the return on investment.
Poe: At a previous job in which I was the engineering manager for all the company’s factories, we were very aggressive in automation. We automated everything we could with the idea to reduce our costs and to be competitive in the marketplace. This also assisted the company in increasing throughput without the need to add labor.
That’s the mentality I go out to plants with when they ask how they can increase throughput.
What’s puzzling to me is when I go into the plants that have concerns about not being able to find welders, they’re welding standardized product day in and day out and there’s not a weld robot in the facility. It doesn’t make sense. One robot will weld faster than two or three welders put together. It’s challenging to understand this thought process.
I don’t think some manufacturers really recognize how easy it is to perform some of these functions like setting up and programming welding robots. One does not need to be a welder to program them. You need to know the path and some basic parameters.
Manivannan: Interestingly enough, that skill set for programming the robot seems to be attractive to young people.
The FABRICATOR: What are some things you see that help to get employees to buy in and participate in new programs or initiatives aimed at boosting production efficiency to keep up with increasing customer demands?
Poe: One key is whether the people think the company has their best interests at heart. If they feel the company is truly taking care of them, they are a great asset to making improvements. As an example, when a person can come into the plant in the morning, walk through the break room, and grab a sack of popcorn, a cup of coffee, or a soft drink, people appreciate it. They have an incentive to assist that company to improve the manufacturing processes, which in turn will aid the company’s long-term growth.
Manivannan: Our plant in Mexico has been voted the best place to work for the last six years. It has 1,000 employees. One thing that works well there is an employee program that gives employees a reward—not necessarily a bonus and money, but a gift certificate or something—for good ideas. That’s something we embrace as part of lean. That’s all a part of employee engagement. It’s a real morale boost.
The FABRICATOR: What is your advice for a metal fabrication operation looking to get a bit more out of its current workforce?
Poe: My first piece of advice is talk to the people. The best resources for how to improve an organization are the people on the floor. If you can garner their support, they can probably deliver another 10 to 15 percent in production throughput.
Through good communications with the people, they are a great asset for improving an organization.
Gehman: What I would have liked to have heard when I got into business was know your customer base and know where you can make money. Sometimes you might have to say no on a single job if the ongoing relationship and profit potential aren’t there for the long term. The customer isn’t always right. When a company can’t keep up with customer demand, you have to know where you’re going and where the potential is and stay on that path. When things loosen up, you can dabble back and forth and pick up some of these odd jobs that are still profitable and that you’d like to do because they diversify your customer base. But when things get tight resource-wise, you have to stay on that path where the relationship and growth potential are.
We’re starting for the first time to turn work away. We never would have done that before. We thought, “It’s an electronic, small world out there. This guy’s going to get on a web page somewhere and say we didn’t take care of him.” We always wanted to make sure everybody was happy to the best of our ability, and that meant, don’t say no. If you can’t do it, broker it. But we had to get away from that, because it was really taking our focus away. We had 2,000 active customers, but only 10 were where the real growth potential was. It’s a major shift change, and a lot of it’s been dictated to us because of our inability to fill some key positions in the front office and the shop.
Caristan: I like what he says. You really need to know your strengths and your weaknesses limits, of course, and not be afraid to be bold. However, the difference between his company and maybe a larger corporation is that sometimes management of a larger corporation doesn’t have those limits within their own targets criteria. In other words, they don’t have that same luxury of being able to turn down some customers. So in that case, as Goethe said, “Where there is much light, the shadows are deepest.” The philosophy should be to focus on select top items that you can really change and look deep into them to find the inefficiencies and fix them, rather than trying to unilaterally demand the same thing from everybody. Sometimes that’s where you can break what is already working well and end up with overall averages rather than excellence. That’s what I would recommend.
Manivannan: Having management walk the shop floor is the only way to have initiatives pushed from the top down. Go and see employees in their cross-functional teams. In our Mexican plant, every morning they have a production meeting at the back end of the plant. The purchasing managers have to attend, so they have to walk through the shop to get to the meeting. Even in small shops, the scheduling guy and purchasing guy are always on the phone or computer, and the production floor doesn’t see them. This is why they have the meeting in the back of the building. The front-office personnel have to walk through the shop floor and talk to the operators.
The other thing they are doing in Mexico is to hire a third party to do a survey and talk to the people. You might have all the best lean practices and provide good salaries, but sometimes if you don’t have a good cafeteria, good toilets, or good closets, that could be a real problem. So it might not matter about good money or good benefits; if you don’t have some other factors, you won’t get the most out of them.
When we are looking at quality from a supplier, my top manager used to say, “Every time you visit the supplier, when you first drop by, if possible, walk to the back and look through the toilet. Look for cleanliness. In five minutes you will know how they keep up the plant.”
If you think you might be interested in joining The FABRICATOR’s Editorial Advisory Board, please send a note to email@example.com. The time commitment is not huge, but the responsibility is pretty important. The Editorial Advisory Board is the business and technical source for advice when the editors receive questions from the publication’s readership. If you have knowledge about punching machines, press brakes, welding, or software systems used in the industry and wouldn’t mind being a resource for other metal fabricators, let us know.
The FABRICATOR compensates its Editorial Advisory Board members for travel and lodging expenses to attend every FABTECH tradeshow held in Chicago. The only requirement is that the board members attend a roundtable, like the one featured in this story. It not only presents an opportunity for the editors to exchange thoughts about the magazine with its advisers, but also provides a wealth of information for others in the metal fabricating industry to absorb.
The FABRICATOR® is North America's leading magazine for the metal forming and fabricating industry. The magazine delivers the news, technical articles, and case histories that enable fabricators to do their jobs more efficiently. The FABRICATOR has served the industry since 1971. Print subscriptions are free to qualified persons in North America involved in metal forming and fabricating.