Our Hiring Mess

By Lloyd Graff

A good client of mine is trying to buy a company to get the employees. The firm is not making money, but he is so desperate to hire workers near his main operation in Ohio that he is willing to overlook the financials because he believes acquiring the firm will enable him to bring in his own lucrative work to make the transaction pay. 

How did the machining world get into this pickle? It is not new, but rarely has it been this acute.

I have studied it as a participant in the industry with skilled and semi-skilled employees, and as an observer. I am curious if you agree with my opinion and observations.

The industry has grown up over the last 100 plus years in America, first under the leadership of people with Western European ancestry. Then it evolved over time to include a lot of Eastern European ethnicities. These owners and managers have tended to attract employees with similar backgrounds. Some companies became almost like small tribes and families through the years, reflecting their ownership. They often were passed down from generation to generation, and fathers, sons, and cousins often took on similar jobs over decades. 

Unique skills developed. The best companies tended to prosper and go on for generations. It was an effective system as long as enough workers, primarily male, landed in the industry.

The financial system, often local banks, provided capital for growth. American businesses liked doing business with folks who looked like their managers, and it became increasingly useful to work with the small and medium-sized businesses, which provided very palpable skills and economically convenient pricing. Then one day, Big Business decided price was everything and started to send work out of America, primarily to Asia.

Everything started to get more complicated for American machining firms. Immigration of Europeans to the US slowed dramatically. College education became more available with loan programs. It also became more desirable with great numbers of white collar jobs available and diminishing opportunities in machining as Big Business increasingly looked to China for cheaper pricing. The US government encouraged offshoring during the Nixon-Kissinger days to develop a counterforce to a bellicose Russia. 

China became a highly valued trading partner for the United States.  Machining businesses continued to bump along, protected by defense and aerospace spending and the ingenuity of generational firms, which still had funding from domestic lenders.

Eventually recessions, merging companies, and lack of capital devoted to training and recruiting sapped the traditional family businesses. Wages were not raised enough to bring in the numbers of young people needed to keep businesses healthy long-term. Hispanic males gradually replaced the European tribes to some degree in larger cities.

One thing that stands out is the small number of women attracted to work on the factory floor. Machining does not appear to excite women as a career, though there is no premium on physical strength in today’s machining environment. 

The field also seems to have little appeal in the African American community, male or female. The machining industry and the tribes within it are not reaching out to them, and when they have in the past the reception has been tepid.

Another major factor is the rise of Amazon, Costco, and other major firms, which have raised their wage structure and provide health insurance benefits. They have effectively changed the traditional minimum wage and made it obsolete. They have also eliminated the rationale for Unions, which we saw in the recent Birmingham election. Only in government situations, where the opponent has little incentive to fight them, have Unions managed to thrive. 

Graff Pinkert customers who can’t hire, moan that clients like Caterpillar allow them no pricing power, yet they buy CNC machines and robots, so they clearly have both capital and pricing power. 

If there were no options to hire, we would have no customers, yet we are very busy at Graff Pinkert right now. Machining companies are managing to deal with the people problem. 

How are you approaching it today?

Question: How do you usually find new employees?

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8 thoughts on “Our Hiring Mess

  1. Stephen

    Yah, I been on several interviews for CNC machinist and operator positions here in metro Boston area; most employers say same thing; good help hard to find. I been in industry since mid – later 1970s, Lloyd, and always worked with folks who”d rather be somewhere else doing something else. But while there, they did the work and what was expected of them. Young people today, different mindset. They think company owes them for just showing up for work. Then the “me” factor erupts in process; everybody gotta kiss their butts for them being them. It’s all about them, and f#*& me! Teamwork? Co-operation? Congeniality on the shop floor? None of those in their vocabulary. They bring thug and gangsta mentality right into the workplace, and who wants to work with and around that.? Shop floors need prison guards more than foreman now. Convict mindset doesn’t work in business and industry setting. Sincerity, willingness to co-operated with fellow employees, care about company and safety of others as well as oneself, that makes for an attractive place to work and spend a shift of time. With time, the turbulence on the street and in society reflects on the shop floor. It requires clever and skillful management to control it, perhaps repel it from their workplaces. Until then, they’ll fall victim to the force on the street.

     
  2. brawlerman

    Lloyd, I agree with what you said, Also I believe you did not put enough emphasis
    on the merging of companies and the venture capitalists. I can not tell you how many companies they have bought in the oilfield machining business in Houston, some that have been around for 50-70 years, mostly family business’s, then first bump in the road the close the business and put it all on fire sale

     
  3. Bill Badura

    How do I find employees? disappointing usually.
    In the late 90’s, I worked at a shop that had about 50 employees normally.
    As the production manager, one of my duties was to interview and hire replacement
    machine operators. This shop was clean, had decent equipment, fully paid health
    insurance (single or family), a 401k plan with generous company match, etc…
    No matter how thorough I was in the interview process, only about 1 in 3 of my hires made it through probation. They would usually quit after a paycheck or two. Like now,
    the good hires had the most options, and there was some competition for these people.
    I guess my point is, I believe that hiring good people has always been hard.
    Much harder now.
    Personally, I’ve been trying to find younger partners for a couple of my endeavors.
    I can offer a deal that I would have taken in a heartbeat 30 years ago; but no luck.
    It seems they like the idea of owning and running something, but still want to be
    treated like an employee; basically business ownership with no risk.
    Lloyd, maybe the people that are buying machines and robots are doing it to avoid hiring.?

     
  4. Lloyd+Graff

    Bill, the guy looking at the plant to get the people gave up on the deal. Price became totally unrealistic. Not financeable. His strategy now is to buy new Fanuc robots and cobots to load parts and eliminate the need for people. He recently placed an order for 20 new robots. The payback in reduction of employees will be in 12 to 18 months, plus nice depreciation. And he is buying used screw machines and Hydromats where they fit. Scrapping the crappy ones.

     
  5. Hale Foote

    I own a stamping plant, not a machine shop, but I bet the hiring issues are similar. We have had excellent luck recruiting and retaining new employees, using some common-sense tactics. (1) advertise on Facebook Jobs. That’s where your youngest candidates are looking for work. (2) Craigslist cost $75 per listing but has generated lots of leads (and a hire from Mexico!) for us. (3) sign up with your local universities and community colleges via the free Handshake program (https://joinhandshake.com). Great exposure to smart kids. (4) our local community colleges (we have 26 campuses here) sponsored an online job fair that led to an immediate toolmaker hire. (4) I was in line at a sandwich shop and marveled at the multi-tasking person behind the counter. I slipped her my card with a note “we’re hiring, call me” and she did, trading an erratic 32-hour a week schedule for full employment with fixed hours, full benefits, and a chance at career advancement. Stress what manufacturing employment can offer!

     
  6. PETE REBAR

    Thanks Lloyd-a well written and insightful article. “The US government encouraged offshoring during the Nixon-Kissinger days to develop a counterforce to a bellicose Russia.”. This was my favorite sentence. It shows what huge repercussions two politicians strategizing (possibly over martinis) can have! Easy for them-their livelihoods were not directly impacted.

     
  7. Joe

    I recall the Sunday paper want ads BN- Before NAFTA- columns upon columns of print just for screw machine jobs. Seems like guys took up other careers like driving truck, and machinists around my age (late 50’s) are very rare. Another observation, for S&G checked out local screw machine houses hiring; the pay for some cam & gear offerings was below the proposed $15 min wage. Adjusting for COL and inflation, those wages are way below $10/hr operator jobs from the 90’s. Yikes.

     
  8. John Ribic

    I keep telling our HR Manager that he has his work cutout for him. We have hired a lot of very good workers over the last few years, but we have had to weed through a lot of bad ones to get there. Unemployment in our county is 4% and there are help wanted signs everywhere. We are working on creating production incentives that will reward our employees when they achieve or exceed daily production goals. We are hoping that this will help to attract the hardest working employees.
    It is a shame that we did away with so many of the great manufacturing programs in our high schools 20-30 years ago. Can you imagine where we would be today if we kept the drafting, wood shop and metal shop programs in place and combined them with the advances in computers?
    I am on the board of a local organization, Alliance for Working Together (AWT), our mission is to promote rewarding careers in manufacturing to our youth. We just had a group of 5th and 6th graders visit our shop this week. It is going to be a long process to undo our mistakes of the past, but we are trying.

     

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