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?
More than happy to pay the higher wage if people have the skill. My problem is finding dependable people who actually have the skill they say they have.
The skill they say they have is actually the skill they think they have because at other places, someone trained them for ‘that’ skill and convinced them they are qualified. Without an accredited diploma from a trade school, most of it will be OJT (on-the-job training) and you get what you agree to. My practice is to give them a trial period with an agreed upon price. If in 30 days they don’t meet the criteria, then don’t raise them to the price you both agreed upon. I understand it’s a risk but the reward is justified for both. Also, keeping your word and establishing trust goes a long way. If you unjustifiably renege, then hope is lost and you’ll be stuck with an employee who’ll be looking always and will be discontent in their position. I did this and the promise was great until the owner showed up and squashed the whole thing. The owner has to have an overwhelming belief ingrained within that his employees ‘ARE’ his/her greatest asset. Also, trainig is essential! If training is lacking and you are dependent on the employee to solve their training needs, then you’re at the bottom still. It is a great investment, whether the employer is on board or not. I train regardless and if the employer won’t pay them what they are worth, then another employer will. In this day and age, we have to train and hope for loyalty and support. As a manager, I am stuck in the middle…trying to keep and train good employees and convincing the employer that they are worth the raise.
Manufacturing automation efficiency requires high level skills and motivation. A highly skilled technician is likely to double the output of a lesser skilled tech, have less machine crashes, make a better quality product, and meet delivery schedules timely. How anyone can afford cheap labor in this manufacturing world we live in is beyond me. The dollars going out for the biweekly payroll of our 200 employes scares me sometimes, but not nearly as badly as the likelyhood that cheap employees would ruin our reputation and drive off our best customers.
Spot on, Mr. Good.
Well written Lloyd!
Here’s the approach we use, don’t look for the skilled employees, find the garbage truck driver who would like to do something different, the bagger boy at the local grocery store who looks ambitious or the truck mechanic that is bored at his current job. People are all around you, just look around, pick one, then train them, teach them the skills they need and pay them enough so they can’t afford to quit your company. Have a work environment they enjoy and I guarantee you will have a low turnover rate, if any for that matter. Out of the 12 employee’s we have, only 2 had prior machining experience, the one was a fabricator. We had 2 retired dairy farmers, chicken farmer, construction workers, heavy equipment operators (excavation), tractor mechanic, stone masons, etc. My point is, it’s not the skills you are looking for, it’s the person, you shape that person into what you need and pay them according to what they need to make a decent living, that varies depending on your location.
Regarding getting and retaining work, here’s our problem and yes it is a problem, we have more work then we know what to do with, literally, we turn down work from existing customers. And no, we never advertised, word of mouth is our only reference. The key? Just do quality work, there are millions of jobs out there that need quality work. If you have customers that just whine about your price? Drop them, there are other jobs that pay better. If you can deliver quality, on time parts, work will come, but it takes effort to build and run a company where you can do this, I learned this overtime and you should alway learn something new every day, if you don’t it wasn’t a good day. On the flipside, there are no bad days, if something blows up, due to feeding a tool to fast, etc. Well, you learned that doesn’t work! LOL! Ok I better shut up before I get hate mail over my rambling.
Well said, jay.
Jay, I agree half my crew are tool makers and machinists the other half had other careers and we trained them. We have very low turnover.
I have not had to look for someone in quite a while, but now I am in need.
Because we have not had to look for someone in quite a while, I’m torn.
I have been advertising for the skill I need and the candidates that are applying. I’m worried if they are actually qualified or if they are the correct fit personality wise, or will I need to overpay.
I’d rather find the correct fit, no matter the skill and train them.
I guess I don’t know how to find that type of person anymore, the any career right fit person.
how do you look and find that person?
You ask about worrying about “Overpaying.”
Does that mean you are concerned about paying above the “market price” for someone good?
Or does it mean paying too much for someone mediocre?
So many good points. It IS the PERSON you are looking for.
That said, I’m a believer in the idea of the book “Range” by Daniel Epstein. The premise is that people who have experience in one job can transfer the essence of many of their skills from that job to the new one.
The construction worker, stone mason, welder, or even the chicken farmer, likely did develop skills at their former job, be they physical or mental, that make them learn the new trade in the shop more easily. The same author wrote a book called the “Sports Gene,” which had a similar premise about world class athletes from one sport switching to a new one.
As for your comment about doing good work and you will get as much business as you need, I’m glad that you included the importance of being selective of the work and being smart about it.
Business and life unfortunately do not work out just by doing exceptional work. They only work out if you do that exceptional work smartly. Works has to be found in the right way, like you do by word of mouth (serendipity) and learning something new every day. I do that too.
Can’t wait for our next interview, and to find out about the G200!
Biggest concern is overpay for the mediocre, obviously you could move on from them. (sometimes easier said)
That’s if you have someone else to replace them, or you are back to looking and I don’t have a lot of time to keep looking.
Paying above market price for a good one is definitely not as painful to cope with!
Jay fascinating comment.
How long before the chicken farmer was a productive person?
Do employees tend to stay with you quite awhile?
The chicken farmer has a couple foul up’s but before long he straightened up and flew right.