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How the nation’s factories are competing for talent in a tough labor market.
Evan Stall, the HR manager for Federal-Mogul Powertrain’s South Bend, Ind., plant, worries about how he will fill 13 foundry operator positions.
The company, which makes automotive parts, primarily aluminum pistons, has just acquired another casting cell that contains the mold that robots fill with molten aluminum to make the pistons. Stall needs eight more workers to run the new machine in four 12-hour shifts.
“The foundry operator is responsible for looking for defects and keeping [the machine] going,” Stall says. “I’m not looking for people with big muscles who can pump aluminum all day. I’m looking for people who possess problem-solving skills.”
However, those individuals are increasingly hard to find—even in South Bend, which has a solid history of manufacturing that dates back to when the Studebaker brothers’ blacksmith shop was founded in 1852.
In the manufacturing arena, recruiting employees is harder now than at any time during the past nine years, according to the Society for Human Resource Management’s monthly Leading Indicators of National Employment (LINE) reports. In fact, one-third of HR professionals in manufacturing have said in recent months that they can’t fill an open position.
The reasons are threefold. First, more than 75 percent of manufacturers report a moderate to severe shortage of skilled workers. Second, a significant portion of the manufacturing workforce is nearing retirement age. And, third—and perhaps the most serious recruiting challenge—is manufacturing’s negative image among young people.
“Back in my parents’ and grandparents’ day, manufacturing was considered to be a great job, a great career path for people,” says Stall, who is 27. “Now people view it as a lower job in society in general. ... The stigma is a huge issue.”
The heightened challenges are prompting HR professionals to take more-creative approaches to finding and keeping workers, ranging from holding community events aimed at improving public perceptions about manufacturing to developing a more worker-friendly culture inside the plant.
“Manufacturing today is modern and high-tech, and it is important for HR to catch up with that and be as modern as the industry,” says Brent Weil, senior vice president of The Manufacturing Institute.
Over the next decade, there could be a shortage of 2 million manufacturing employees. That’s because there just aren’t enough workers with the skills and training needed for modern manufacturing, according to a report released earlier this year by Deloitte and The Manufacturing Institute. (About 2.7 million workers are expected to retire in the next 10 years, while 700,000 new jobs are projected to result from business growth.)
Seven in 10 manufacturing executives surveyed by Deloitte report shortages of workers with adequate technical and computer skills, while 69 percent say applicants lack problem-solving skills. And it takes time—an average of 70 days—to find and recruit skilled production workers.
The business impact of such lengthy vacancies is significant. The average U.S. manufacturer stands to lose 11 percent of its annual earnings, or $3,000 per existing employee, due to the talent shortage, according to a 2014 study by Accenture conducted for The Manufacturing Institute. Those figures include overtime, downtime and production-cycle time.
Yet many manufacturers are still using the same HR tactics that were used 10 years ago, the Deloitte study noted. Many HR professionals in this sector focus on talent development and succession planning for their salaried workforce, at the expense of most of the workers on the factory floor. “There are equal, if not more pressing, challenges in the hourly workforce—the technician-level workers that are so essential to daily operation in manufacturing,” Weil says.
If manufacturing has any hope of attracting workers, it must deal with its image problems. At a recent high school career fair, parents pulled their teens away from the “manufacturing” table, recalls Eric Isbister, CEO of GenMet Corp., a metal fabrication company in Mequon, Wis.
That’s how strong the negative perceptions of manufacturing are. Only 1 in 3 parents said they would encourage their child to pursue a career in the industry, according to the Deloitte report, and manufacturing ranked last as a career choice among Generation Y, ages 19 to 33.
“You don’t have to have a very long memory to know that, since roughly 1974, manufacturing has been in decline in America,” says Anthony P. Carnevale, director of the Georgetown University Center on Education and the Workforce in Washington, D.C.
Parents remember factory shutdowns in the ’70s and ’80s that left manufacturing-dependent communities looking like ghost towns. While some jobs sent offshore have been brought back to the U.S., others have been permanently lost through factory automation.
“We’ve reduced the [manufacturing] workforce to less than one-third of what it used to be and produce twice as much,” Carnevale says. It’s hard to generate enthusiasm about manufacturing because everybody’s waiting for the next layoff, he adds.
To change that mindset, Isbister and others among his 60-employee workforce at GenMet spend a lot of time at the local high schools, community colleges and technical schools. With 27 of his 60 employees over the age of 50, he realizes he can’t afford to sit back and hope that young workers come to him.
“We hire teachers for two-week stints in the summer. We want teachers to go back to their schools and tell [students] why they need math,” Isbister says.
He also works to dispel the myth of manufacturing work as only “dirty, dumb and dangerous.”
More than 250 students toured the GenMet plant on National Manufacturing Day last year. “When they come in, they see automated equipment and computers,” he says. “My employees know it’s their job to make students aware they can be successful here.”
In addition, he takes younger employees to career fairs so they can show students that the manufacturing industry offers viable careers.
The company also participates in a state-run high school apprenticeship program, bringing in teens a few hours each week and rotating them through each department. They are exposed to careers that they likely didn’t know existed. These outreach efforts take time and cost money, but Isbister says the company can’t afford not to invest in developing its future workforce.
Meanwhile, companies are competing vigorously for the high-skilled employees already in the workforce.
“Candidates have so many choices, so we are working to make the better sell up-front to get them to the door,” says David “DJ” Alice, a corporate recruiter for Auto Truck Group near Chicago. He recruits mechanics, welders and other hard-to-find skilled workers for the company’s 11 locations in seven states. “It’s my job to be creative in how to grab that attention. The usual job boards just don’t do it anymore.”
His company needs 50 mechanics nationwide, and the competition for workers is tougher in some areas than others. For example, he noted that CareerBuilder.com recently listed some 1,000 job openings for mechanics in the Denver area, but only 140 job candidates could be found in the website’s resume database.
To get people in the door to hear more about what his company offers, he held open houses at the company’s plants in Denver and Bartlett, Ill., near Chicago. He invited potential applicants to tour the facilities and set up instant meetings with hiring managers.
The Bartlett open house attracted 30 people, and the company hired 12 of them. “That’s a huge win,” Alice says. He wasn’t seeking to draw huge numbers: He wanted his hiring managers to have good options.
Because of the heated competition for workers, companies are offering greater incentives. One company needed people to work weekend shifts so badly that it promised four days of pay for two 12-hour days of weekend work.
Not the Auto Truck Group, though. “We don’t work weekends, so that’s one of our perks,” Alice says.
Many companies also are expanding their candidate pools by targeting veterans, women and the long-term unemployed.
EJ Ajax Metalforming Solutions, a small but growing company with 75 employees in Minneapolis, has hired close to 20 veterans in the past five years. The company created a state-approved apprenticeship program that permits veterans to work full-time and use their military education benefits to attend college part-time.
The manufacturer also partners with three fast-track training programs at local community and technical colleges and has hired 15 of the graduates, including 10 who are still in the company’s four-year apprenticeship program or have attained journeyperson status.
With unemployment in the Minneapolis area under 4 percent, finding employees with the math skills and the right soft skills has become more difficult.
“We really don’t believe in poaching talent from our competition—that never works out—so we really have to get creative in finding talent in unusual places,” says Erick Ajax, the company’s co-owner.
He partners with state and county programs that help the long-term unemployed, single parents or those who were incarcerated for mistakes they made when they were younger. “Probably most companies are not willing to do that,” Ajax says. “They’re the ones complaining and whining about not being able to find workers. We work hard at it.”
To attract and retain younger workers with the right skill sets, some manufacturing companies emphasize that they offer more than just a job. “It’s readily apparent when you walk into the facility what kind of culture exists there. And smart companies invest in their workers,” says Weil of The Manufacturing Institute. “Smart companies help their workforce, even hourly workers, understand their career growth and what opportunities can be there for them when they apply themselves in their positions.”
Ajax and HR Manager Curt Jasper want employees to see clearly how they can move up in the company. They post a skills matrix on a large bulletin board where all employees can see it and list all the machines and tasks required within a specific department along with each employee’s skill level.
“It’s human nature for a supervisor to put someone with [related] skills on certain jobs instead of having to go out there and train the greenhorn to do it,” Ajax says. “But if somebody doesn’t train the greenhorn, it’s never going to get done. The board puts all of that cross-training for God and everybody to see on a daily basis. And the supervisor can ask the line manager, ‘Why aren’t your team members getting the cross-training?’ ”
Other manufacturers can learn from the Minnesota company’s approach. “We only have careers here at EJ Ajax. We don’t have jobs where you just come and collect a paycheck. We’re looking for men and women who can work with their minds and their hands, who have a high aptitude for engineering and science,” Ajax says.
Once companies find skilled workers, they want to ensure that those workers stay. So some are turning to programs and practices that aren’t often associated with hourly employment.
Flexible work schedules and paid leave policies are popular among the 430 employees at Globe Manufacturing Co. LLC, based in Pittsfield, N.H., which makes apparel for firefighters. First-shift employees are allowed to choose from start times between 6 a.m. and 8 a.m.
“Our employees actually love that,” says HR Manager Gayle Troy, SHRM-SCP. Although more than 80 percent ended up choosing the 6 a.m. start time they previously had, “they feel better about it. It’s about giving them a choice,” she says.
In addition, the company now offers a more flexible vacation schedule. Previously, the plant shut down and everyone took off for two weeks in July. Now, each employee gets 22 days of paid time off each year for the first 10 years of employment, which he or she can use for vacation, personal appointments or illness. Employees are compensated at the end of the year for any unused time.
Employees also appreciate that the company avoided layoffs in 2008 by scheduling four-day workweeks from Mondays through Thursdays. Employees who met their weekly goals were paid for half a day on Fridays and allowed to use paid leave to make up the difference.
Flexibility also is a key retention tool for the 9,000 employees, including 6,000 hourly workers, at Chicago-based USG Corp.’s numerous locations around the globe. At open enrollment each year, employees of the building materials manufacturer can buy from or sell back to the company up to a week of vacation time. More than 40 percent choose to do so.
“It’s one of the most widely used benefits that we have. People love time off,” says Shelly Green, USG’s senior vice president, HR operations, building systems and L&W Supply.
In addition, many of USG’s plants allow employees to have some input into when to schedule the company’s 10 allotted paid holidays. For example, workers at factories in Utah and Pennsylvania chose to take a day off at the beginning of hunting season. Some plants also allow shift-swapping so parents can attend a child’s school event. Plant managers can also recognize an individual’s contribution by giving the worker an additional day off.
The 500 workers at Taco Inc., based in Cranston, R.I., value their consistent workday schedules and the opportunity to continue their education onsite during and after work, says Kyle Adamonis, SHRM-CP, an HR executive consultant and former senior vice president of HR and legal at Taco, which develops and manufactures components for heating and cooling systems. The company boasts a low turnover rate of less than 2 percent annually. That compares with an estimated industry average of more than 20 percent.
The company hosts family events, such as awards banquets and scholarship dinners, and provides tickets for staff and family members to attend cultural events such as theater performances. Taco also sponsors summer art and oceanography camps for employees’ children, who ride to work with their parents and are transported by bus to and from camp. While at Taco, they can see where their parents work, Adamonis says.
Of course, competitive pay is also a good retention tool. Federal-Mogul Powertrain is one of the better-paying manufacturers in the South Bend area, Stall says. But that alone isn’t enough. Employees want to know they’re appreciated. They want opportunities to advance. They want good management. They want their ideas to be heard.
Ultimately, Stall says, retaining those prized skilled workers “comes down to one basic thing—and that’s how you treat your people.”
Dori Meinert is senior writer/editor for HR Magazine.
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