The Machinist Gig

By Lloyd Graff

How much would you pay for a bottle of clean water if you were thirsty and could not find drinkable water? How much would you pay for a room if you had no place to sleep?

How much would you pay for a programmer for your CNC machines if they were down there was nobody to hire?

We are apparently in a period, or on the cusp of one, in which there are almost no skilled machinists available. In such an environment the logical thing to expect is that men and women with skills that the market demands will begin to auction their expertise to those who will pay the most. We may be entering the “gig economy” for machining people with quantifiable expertise. Smart entrepreneurs will develop websites that sell manufacturing skills by the hour or by the day. Businesses have employed freelance specialists for many years, but today’s Google economy is empowering more individuals than ever before.

The machining world has thrived in the land of the reliable and predictable—long-term clients, machinery that lasts for decades, dedicated employees who spend a career with one firm. It has worked pretty well for both employers and employees in a period of employment stasis.

Ten years ago, some companies in the machining world would have extra workers paint the floors when there was no production work. They had core people who they believed in and who believed in them. Today, life is quite different. Skilled people who dutifully worked loyally for humane owners have retired or died in many cases.

Private equity firms with professional managers own many medium sized manufacturing firms and are acquiring more every day. Their mission is to pay off debt, build equity and sell the businesses to the next firm in line. They have a short-term horizon which affects their view of employees. I would think that they would buy into the idea of a gig economy where employees auction their services, if that was necessary.

Traveling Knife Sharpener in Paris.

I think the gig economy has plenty of negatives for both employers and workers. I write this as somebody who has hired many gig workers for both Graff-Pinkert and Today’s Machining World. Paying for hotels and rental cars for the pricier freelancers can bite.

For workers, shifting to new work environments is scary and can wreak havoc with family life and relationships. Stable businesses with long-term employees develop community and rapport. Gig people are often not accepted easily in that milieu.

I think we have a real predicament in the machining world in late 2018. There’s lots of business, but not enough skilled people in the wings to hire. Owners and managers have a logical reluctance to upset the status quo by hiring new people for $10-$50/hour more than steady, loyal current workers. Meanwhile, they see contracts for the plucking or projects running late or unfulfilled.

Silicon Valley has lived with this dilemma for a long time. Workers have been drawn to the riches of the Valley, but the side effect has been sky-high housing prices and cost of living. The buses on Highway 280 and 101 are filled with folks who commute long distances for the wages in Palo Alto and Mountain View.

Most of the manufacturing in the Bay Area has moved to Nevada, which is causing a similar mini-inflation in Reno and Vegas.

For the moment, I expect a significant bump up in wages in the machining world. It will be hard to stomach for employers, who are dealing with tariffs and escalating metal prices. The result may be more work heading to Mexico and possibly China and Europe. But American manufacturers are extremely resourceful. They have weathered 20 years of headwinds. They will train young people, get by with fewer workers and hire the pricey experts when absolutely necessary. We will see the machinist as entrepreneur in isolated situations, but I doubt it will become the norm in the near future.

Question: In the future will more skilled machinists quit full time jobs to become freelancers?

SHARE THIS

Share this post

12 thoughts on “The Machinist Gig

  1. jake lau

    Not as likely as one might think. A machinist at one place where they make a widget is not the same as where the skill is different to make a larger widget. There is always a learning curve when a machinist changes jobs. Hiring temp individuals will cause more scarp and be less efficient. If one becomes a long term temp then they can improve and be profitable for an employer. Short term would only work on lessor skilled jobs.

     
    1. EG

      I could not disagree more.

      Right talent hired for the right job beats trying to solve all the problems on your own. This is true especially for highly complex parts that require highly skilled resource.

       
  2. Mark B

    You keep pounding away at the increase in tariffs. I would like to know how a 25% increase in steel costs reflects in the actual overall cost of producing the part AND what the steel increase price is as a % of the selling price of the part. Why is no one asking this question? Is it because it actually reflects a small overall increase in cost when compared to the selling price; but gives the supplier an excuse to raise the price of the part?

     
  3. Albert Cervera

    I understand what you are saying. I have been a machinist for 58 yrs. and still working. The machining trade has been under paid for ever. Most other trades get higher wages then machinist. A good machinist in a job shop has to be able to make any part that comes in out of almost any material at a profit to the shop. The skilled machinist is very under rated and under paid.
    I became a subcontractor because I could make more money working in my basement then at a job working for someone. The knowledge a good machinist has takes years and years to learn and you wouldn’t find it books.

     
  4. Michael

    Lloyd, you have opened up quite the can of worms here.
    The answer to your question likely depends on what those machinists are paid now, how well they are treated and what their employment alternatives are.
    From my personal experience, wages for technical manufacturing workers (managers, engineers, toolmakers, programmers, machinists, operators, etc are at an all-time low. Based on multiples of local minimum wage, I see posted California jobs paying 1/2 to 1/3 of wages in the South in the 90s and in Chicago in the 2000s. For those employers who wish to compete for employees (to run their VERY expensive equipment) with retail and basic labor employers . . .
    Good luck staying in business.
    My experience working my way through engineering school as a skilled weldor, machinist, CNC programmer and sheetmetal fabricator showed that the difference in performance between top and bottom-level producers was more than double, with far less required oversight. The difference in pay? Generally as little as 20%.
    If employers want to squeeze wages for the resources that generate the value in their companies . . .
    Good luck staying in business.
    I have been welding since 1984, machining since 1985, programming since 1988, engineering since 1996 and toolmaking since 2004 (and taught classes at Triton when they still had a program). The time required to produce people who know how to cut and think their way through profitable process planning takes many, many years. Short-term financial planning to maximize return on investments is not conducive to producing chipmakers. Just cheap mouse-clickers and button pushers with low or negative productivity levels. Get enough people like that on your payroll, and your company is now going backwards.
    Good luck staying in business!
    I have interviewed at a number of large local Aerospace machine shops (100+ direct reports) to run their operations only to find out their compensation in raw dollars is less than I made as a salaried engineer in Chicago 15 years ago. I would see things like
    * no consistent catalog of machining processes and parameters
    * no consistent training of employees on new techniques
    * no oversight whatsoever on cycletimes or process efficiency (and by extension profitability)
    * $200,000 in CATIA software going unused
    * $2 million+ brand new machining cells sitting idle for over 6 months because of either purchasing spec or installation errors
    * $250,000 in scrap over the previous 2-4 months due to a complete lack of setup and process control.
    I wish those shops my best wishes in staying in business.
    “Price is what you pay, value is what you receive”

     
  5. Mark J.

    I see the demand for Machinist /C.N.C. Machinist in the area getting better in the last 3-4 years. But the wages are the same as in the mid 90’s. Most of the Machinist I know now work at less demanding jobs for same or better pay than Machining. The young ones that I know took fork truck, Light maintenance jobs out of high school at $6-$10 a hour more than the machine shops are paying. If this doesn’t change why would anyone work in the machining trade? Don’t get me wrong I am a machinist with 35 yrs. in the trade and it is a trade I love and enjoy. I have made a living and raised a family on. I don’t know about GIG machinist we will see.

     
  6. Miles

    Interesting take on a critical issue. I would respond with the mirror image solution / problem eliminator. The creation of a two tier wage or compensation model. A wage that is competitive for the market for “workers.” And a second tier wage or deferred compensation package for those professionals that add far greater measurable value than just satisfactory task completion. In law firms these are often made partners; I think that in our shops we will identify the two or three or four REALLY key players and some how align them to our firm with golden handcuffs to 1) keep them from leaving- thus eliminating the premise of your scenario, and 2) assuring them, the enterprise, and our customers of the sustainability of our “personal economies.”

     
  7. Lloyd GraffLloyd Graff

    I love the comments. This is what I really hope for in doing these blogs. I am close to this particularly issue being an employer and journalist. As a capitalist I am a “value” purchaser of services. I pay my key people well by industry standards including 90% of medical insurance, but it is not my humanitarian largesse at work but a calculation that a talented hardworking core of people who are pleasant to work with is a “big win” for me over the long run. I am not just working for the money at the age of 73. If I like what I am doing it makes the work with doing. But I am not afraid to hire “free agents” when I need them. They are usually people that I need temporarily and I pay them lots of money to fill in the holes in my staff. This is a model that may expand, perhaps a lot, in the coming years. Health insurance issues will affect it. We need a good alternative for individually purchased medical insurance.
    I look forward to more thoughtful comments.

     
    1. Michael

      Lloyd – thank you for providing this forum and for the many things I learn from it, you, your son and the other contributors.

      Permit me a few more observations:
      1) Many companies would rather fail than address their issues and change accordingly. While this is anecdotal on my part, none of the companies I have worked for the last 20 years still exist (except mine). This includes businesses with over 110 and over 60 years of history to provide two examples.
      2) The inability for a company to find suitable employees is the labor market telling that company their conditions for employment (compensation package and environment) are unacceptable. Raise your pay, clean up your facility and treat people with dignity and you might be amazed what shows up.
      3) If you stop feeding the golden goose, it will eventually stop laying golden eggs, so to speak. From first, second and third-hand sources, it appears that the profits generated since the market recovery and the capital retained from the last tax cut have gone largely to executive compensation, stock buybacks and investor dividends. Not so much upgraded labor or revenue-generating assets. Those now facing internal backlash from their pay practices over the last decade deserve what they get.
      4) Companies might well consider the “golden handcuffs” philosophy mentioned above, whereby employees are paid VERY well and held to VERY HIGH standards. Quite likely their total labor costs, headcount and required management oversight will drop and total productivity will rise, and they will have the basis for a resilient, flexible organization capable of sustainable profits.

       
    2. EG

      Lloyd,

      Thanks for starting this discussion. From my experience as a CAM/CNC/CAD consultant, the demand is extremely high. As complexity of parts, machines and software solutions increase, most shops struggle to keep up. Bringing in an outside expert for a few projects is a good way to catch up. Yes, they are expensive. But sometimes, one good engineer is worth 10 average ones.

       
  8. Paul Huber

    Truly skilled machinists with common sense quit because they see much better career options in related fields. I did it, at age 26, doubling my salary accepting a job as manufactruring engineer without diploma!
    Why should they try to freelance seeking cients in the precision machining field who are looked in a cut-throat pricing race which does not allow them to provide salary and benefits equal or better then other high technology employers.
    Skilled laborers fill college parking lots in the evening and on Saturday’s getting the education needed to fill a much better paying job.

    Paul Huber
    COMEX®

     

Comments are closed.