The malaise of American manufacturing is the shortage of skilled workers.
Every few days, I hear the familiar lament, “I just can’t find good people.” If this is the epidemic of the machining industry in this country, we are long overdue to find the cure.
I am both a participant and an observer in this area. Graff-Pinkert has a small staff of factory workers involved in cleaning, painting, and refurbishing primarily screw machines. Our approach to the skills shortage is no panacea for a big machining company, but it is a practical one for us. “Pay people what the larger economy says they are worth, and trust them as the intelligent, skilled folks they are.” I really do not care what McDonald’s and Wendy’s are paying down the street. They are irrelevant.
Let’s be realistic. A young high school graduate who learns how to install a furnace and solve air conditioning problems is going to make $30 to $35 per hour after graduating from a two-year tech school. Or, a person could choose between learning CNC programming or apprenticing to a plumber. As a plumber, that person could be making $100,000 annually in a few years.
We wonder why we cannot find good young people to work in our factories? Lousy pay is the number one reason.
You may think those heating and air conditioning wages are absurd for the machining world. I doubt it in a period of reshoring to North America.
When I discuss this issue with people in manufacturing, they admit that labor costs are generally 20% to 30% of making a part. They also tell me that in an inflationary period, price increases are there for the asking. I hear more and more folks tell me that as the competition thins out with Baby Boomers retiring or dying off, they can take a hard-headed attitude toward raising their prices.
The notion that the work will all move to China is yesterday’s thinking during the period of the hostile Xi regime. Mexico is a legitimate and growing competitor, but the prevalence of the drug games make it problematic too. India is still in its infancy as a viable player in machining, and Taiwan is threatened by China.
As a machining firm, the main competition is other machining firms facing similar issues.
Training is a long-term cure for the problem, but the opportunities take time and money to develop.
Gig workers are a very useful approach to fill holes. Graff-Pinkert uses former employees and retired machining specialists who want to work three days per week, quite effectively. I think the machining industry is going to see more and more independent specialists who will travel, filling in where full-time people are no longer justified.
Companies will become more prepared to wait for the high priced expert to come in from Cleveland or Sioux Falls, and people will graduate toward those jobs and advertise with websites.
When a prime suspect as a potential hire tells you they want $40 or $60 or $100 per hour, do not laugh. Consider the potential value the person brings, not the amount that you used to think was absurd. Looking at the bigger picture, they might well be worth it.
Question: How would it impact your business if wages were 20% higher?