Let’s rethink the infamous “skills gap” that is almost as common in conversation in our machining clan as “the fiscal cliff.” Maybe the skills gap is partly a “pay gap.” Perhaps manufacturers who pay McDonald’s wages get McDonald’s employees with comparable turnover.
McDonald’s pays $14 an hour for a shift manager. They can get almost unlimited applicants for that job. Job shops think they can hire skilled workers for $14 and keep them, but they can’t. A shift manager at McDonald’s has a title with more cache and has more potential for advancement than most trainee CNC operators at Mac’s machine shop.
Adam Davidson, one of the smartest financial writers around, wrote a piece about this in the November 20, New York Times. He interviewed several people who argued that the skills gap was a function of the crappy wages being paid in manufacturing. I tend to agree with this thesis and have tried the idea out on several people in field who also agree.
Labor is a small component of the total expenses for most manufacturing businesses, but it is an absolutely crucial factor for success. Consider the possibility of losing your best workers for $5 per hour more than you presently pay them? Could you hire a comparable worker in a relatively short amount of time for the same money? If your health insurance costs rise year after year you probably pay it because you need it to keep your good people, yet most of us keep a tight rein on wages.
Over the years the most successful operators I’ve dealt with have been proud of their people and how long they have stayed. The marginal guys always bitch about their ungrateful employees. Successful companies have loyal employees. Others usually have unions.
Davidson’s point in the article was that smart companies will fill the skills gap by training their own people, keeping the good ones, and rewarding them well. This was the compact that made America the leader in manufacturing after World War II and it is the way Silicon Valley works today. My son-in-law Scott works for Google. They pay well for the talent they need and they do their utmost to retain it. There is no “free lunch,” but at Google lunch is delicious and free for employees.
After I bought out my brother at Graff-Pinkert in August I raised the salaries of the key shop employees because I wanted them to know that I valued them highly, and because I knew that I did not want to lose them.
Skills gap? Maybe. But it might evaporate if people were paid more.
Question: Would the skills gap shrink if shop employees were paid better?