Staffing the comeback

By now most recognize that North America, and the U.S. in particular, is undergoing a renaissance of sorts in industrial production. While it is difficult to gauge the actual extent of the gains, it is clear that North America is becoming much more competitive, and barring another black swan, the long-term demand outlook appears reasonably bright.

I share this outlook, though I’m not nearly as breathless about it as some of our politicians and nearly all of the “mainstream” journalists (yeah, the same crowd who two years ago was astounded that we actually made anything). I have a moderate view because I think that black swan events are probably a lot more common than we would like. But that’s another story. Despite the frequency of setbacks, if the severity of each is containable, then the upward trend should continue. Demand on the regional supply base should increase, and that is very good news indeed.

But what about supply—finding the staff to meet this demand? FABTECH 2014 in Atlanta undoubtedly will have excellent sessions on leadership, training, and related human capital issues. But beyond the formal sessions, I fully expect the conversations in the aisles, bars, and restaurants to focus on what appears to be a current problem: finding enough good people to staff operations.

Every fabricating and machining company I work with or have talked to recently regarding staffing is finding it increasingly difficult to find the right people to meet current and near-term demand. The story is coming from everyone—and all of a sudden. We have a problem, and in the long term, a big one. It’s one that I believe defies quick solutions. The pertinent questions relating to current and future staffing are:

1. Just how many people do we currently need to supply expected demand? Next year? In five years? How should we estimate this number?
2. What are and will be the qualifications needed to work successfully in a typical fabricator or machine shop?
3. What does the available and future potential supply pool look like? Demographics? Culture? Expectations? Education?
4. How much will other industries compete for this pool?
5. How do fabricators, machine shops, and other small manufacturing-related companies attract and retain the people they will need?

This column can’t answer these questions, obviously. But I think the questions themselves help frame the issue.

How Did We Get Here?

Beyond the previous questions, we need to examine where we are and ask why we are where we are in an era of high unemployment. This may help formulate some solutions that make sense in the real world.

The apparent shortage of qualified workers is a result of 30 years (or more) of real and perceived bad news coming from the manufacturing sector itself, and a shameful bias toward reporting the bad news. We have a generation of potential modern industrial workers who have heard nothing but that news. Further, I believe that many have seen people close to them negatively affected—even devastated—by plant closings, restructurings, and offshoring. This has been caused to a great extent by global “free” trade; what I like to call “short term-itis” (like needing to make this quarter’s number); and perhaps most significant, the U.S.’s slide into noncompetitiveness in key, high-employment industries.

Thus, younger Americans and Canadians naturally ask, “Why in the hell would I want to work in manufacturing?” Good question. Until we answer that convincingly for the target audience, we may well face a major constraint on the manufacturing renaissance. My guess: Reversing this opinion among highly qualified young people is a tall order. It’s doable, but it will take time, and it will take results, not just talk and cool ads.

Which results matter? First is pay, a market-driven parameter. The second is stability: a market- and management-driven parameter. Unless these results improve, I think that we may be swimming against the tide when trying to attract not just competent shop floor people, but also qualified, educated professionals. The market eventually will resolve the low-pay issue, but I am not yet as certain about the stability issue at the small enterprise level.

How Many Do We Really Need?

How many people will we actually need? I have seen no convincing answers; most are linear projections based on past data. This issue has a lot of moving parts, and it’s not linear. The number of people needed doesn’t rise or fall in proportion with the rise and fall of production, sales, or profitability. The calculus of how many we need must include:

• A credible demand trajectory.
• Numbers that include the current workforce and projections of what that number will be according to demand trajectory scenarios, if nothing else changes.
• An examination of the changes that are inevitable: people leaving the current workforce due to retirement, and increases in productivity from improving machinery and equipment. This must also include any trends in delaying retirement.
• An examination of the subregional geographies and demographics with respect to business location and demand growth.

Coming up with some answer should not be that big of a deal to a group of PhD candidate types. It’s probably been done. The problem with coming up with anything that will prove to be accurate is advancing technology. Greater productivity from technology causes large changes in the need for people.

Technology will also affect the qualifications of the people businesses need. The current wisdom is that it will require more technically trained workers: fewer workers per unit of output. Maybe—but it could also go the other way: fewer workers, but with even less technical training than required today. They may need to know the basics, but that’s about it.

The Pool

No matter the number of technically qualified people we need, where will we find these folks? Let’s take a quick look at two obvious pools.

First, we need to look to younger Americans and Canadians, including millennials, Gen Y, and whatever generation preceded them. I’m undecided about what I want to be in my next life: an unaccountable weather forecaster or the person who dreams up titles for the generations. What a gig!

It’s pretty obvious that I think the study of the generations in U.S. culture is a little overblown and overwrought. The millennials in particular have been analyzed as if they were extraterrestrials. To people over 40—and parents of any age—all young people are extraterrestrials! This generation, like every one before, is much more like us than the experts would have us believe. They are every bit as rational, and while not created or defined by their environment, they are conditioned by it like everyone else.

Their behavior and tastes reflect that environment: technology, cautiousness in commitments, declining privacy, widening differences between the highly and less educated, and the taught perception of infinite number of opportunities and choices. This is purely rational, because this is the environment we created.

To attract the millennials, it is important to at least understand their behavior and tastes and find ways to appeal to that generation’s considerable talents (more on this in a future column). But in the short term, it is best to quit complaining about “them” and think of ways to attract and keep them. By the way, this is the generation that saw families disintegrate because the manufacturing plant closed. Hiring them into manufacturing will be a tough sell.

Second, we need to look to first-generation immigrants, who have always helped satisfy manufacturing’s staffing needs. They have always been a key part of North America’s industrial lifeblood, and I believe that will continue—if we ever figure out a coherent immigration policy. In the machining and fabrication space, my home base of Chicago is loaded with excellent talent from just about everywhere in the world. (I will have more on this in a later column also.)

The human capital supply side is quite complex, no doubt, but it is an issue that we first must understand before we can solve it—and we will. It will require some realistic planning by management and owners, based on facts. We’re good at that. We have to be.