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Executive Roundtable: What can be done about the looming skilled-labor shortage?

One question we put to the Roundtable participants in light of the recession and halting job growth in the U.S., was “Do you see jobs coming back in the plastics industry?” Perhaps of more concern to all involved, such that the topic rose organically in both sessions, is the looming shortage of skilled labor in the U.S. manufacturing base, and what, if anything, can be done about it. Here’s the conversation.

One question we put to the Roundtable participants in light of the recession and halting job growth in the U.S., was “Do you see jobs coming back in the plastics industry?” Perhaps of more concern to all involved, such that the topic rose organically in both sessions, is the looming shortage of skilled labor in the U.S. manufacturing base, and what, if anything, can be done about it. Here’s the conversation.

(In March, PlasticsToday invited 15 industry insiders to discuss the state of the plastics industry. Highlights of the wide-ranging conversations were presented in a webinar on June 22 (which is available for download). In a follow-up series of articles, we're presenting in-depth accounts of the discussions that took place on various topics: partnering; jobs and skilled labor; onshoring; and the end of "good enough." You can also read our June article on the sessions here (which includes a list of concrete suggestions on what processors need to do to be world-class competitors in the post-recession environment), and our initial NewsFeed report here.




Roundtable participants, from left to right—back row: Christof Heisser (Sigma Plastics); Bill Goldfarb (Universal Dynamics); Thomas Benson (Thermal Care); Miyuki Matsumine (Asaclean-Sun Plastech); Jeff Lewis (Slide Products); Eric Bullivant (Plastrac); Dave Lange (DME); Gregory Lewis (Matsui America); front row: Bruce Catoen (Mold-Masters); Mark Sankovitch (Engel North America); David Preusse (Wittmann Battenfeld); John Chalmers (Processing Technologies International); Mark Malloy (Progressive Components); Larry Doyle (The Conair Group). Not pictured: Tom Worcester (Günther Hot Runner Technologies).
Rob Neilley (PlasticsToday): Unemployment in the manufacturing sector, the loss of jobs. We need to bring back jobs. Are we going to be any kind of engine for creating jobs? We’ve been losing manufacturing jobs since long before China started opening up their economy, losing manufacturing jobs in the U.S. since the ’70s. I don’t see any sign of that changing.

Christof Heisser (Sigma Plastics): There’s just a natural process. I grew up in Europe and am in the U.S for the last 15 years, and I see a lot of what happens now or in the last 10-15 years with regards to increasing productivity and all those things, and yes, there’s less jobs in manufacturing, and all that happened before in Europe, and I think one reason is that until the 1970s literally America was an island. They could sustain themselves.

Over 90% of the products consumed in the U.S. were made in the U.S. And now it’s like, what, 60% are maybe made here, who knows, but it was a different scenario. There was no world trade. You could have two or three people stand on a molding machine, and now we have one guy who runs two or four machines. We’re still making the same amount of stuff, we just don’t employ as many people anymore.

Just like farming in 1860, 92% of  the American population was employed in farming and now its 2%, and those farmers could feed the world if they would get paid for it. They make way more stuff. But who survives in that? These are the mega companies or the biofarmer who sells an apple for three times as much as you could buy it al Wal-mart. Everyone in between doesn’t really make money.

We see the same thing in manufacturing. One comment to the loss of jobs, we have to differentiate between the job losses due to productivity increases and the temporary job losses that come from going from three shifts to one, and once production ramps up I hire those guys back. We’re seeing companies who reduced their workforce by 30%, but every week they are hiring back people, because it depends on production. The more I make, the more I need to hire. Those people will get their jobs back. Two aspects, productivity increase, which is permanent, and the temporary, which will partially recover.

Jeff Lewis (Slide Products): We lost a lot business because of overhead, your cost of manufacturing a pen or fork or whatever, a cost in every part. That’s why a lot of it left, our cost of manufacturing. Do we want to get back to the adjustment where some countries pay their people $1 an hour for something like that? No, that’s not the type of recovery we’re looking for. We’re looking for going lean and making a better product, and we’ve got to be cohesive to get that business back, we can’t compete with what other nations are paying. That’s the slide we’ve been on a long time. Fortunately we’re getting it back because we’re earning it back. Overhead is a big thing.

Dave Lange (DME): One of the things that’s concerning to me, I think, is the skilled nature of moldmaking and what we continue to see is a contraction of the labor pool that is skilled in that trade in North America and you can go to an awful lot of shops, visit a lot of business owners who, for many generations, promoted the opportunity to someday own the business, and be a partner in this business, and that pool is shrinking. If we want to manufacture mfg tooling technology, not molds that open and close and spit out a part, but we want to manufacture, we’ve got to develop at a grass-roots level again, and bring on a whole new generation of people who see it as a glamorous opportunity to be part of a manufacturing capability—an engineering capability that makes world-class products.

People that go to school to become electrical engineers, they go to school to go for an MBA, to someday “be like my dad in marketing” perhaps, but no one’s going to school today to manufacture molds, and maybe if that’s too specific then it needs to be broadened to manufacturing world-class products that are a combination of plastic parts, a combination of metal, a combination of thermoplastics and elastomers, that are two-shot. We’re going to develop the next pitcher that now that no one else has manufactured in the world, and to do that we need a university that stands out in the middle of the country that holds the engineering talents and the marketing talents, and creates glamour behind an industry again.

Because at a grass-roots level, AMBA is working diligently and very hard to try and generate the next new labor pool of skilled manufacturers that build molds. They’re having a difficult time. What’s the glamour in going and working and turning a lathe? Well, it’s not turning a lathe anymore. So I think that’s still a dilemma, a significant one for us, from the standpoint of molds that are manufactured here in the States and should continue to be for high-end products.

We’re always going to be jeopardized with the ability to sell commodity tooling, and that’s always going to be perhaps shipped offshore, but if we want to be the developer of the next new alterative energy industry, we need people that come from a lot of different disciplines and some of that’s going to require manufacturing—pulling numerous things together—and I think we’re too singularly focused on moldmaking, not bringing along the next new moldmaker. So that’s a dilemma.

Rob Neilley: What we’re talking about is making anything, isn’t it?

Heisser: Who provides the education? Universities don’t teach you how make a good mold or a good part. They give you the basics, and the associations who used to have classes, they’re cutting back on this. We actually see suppliers taking over things. I just had a discussion with RJG for instance, they provide sensors and all those things, and I’m wondering why do you provide all those classes like injection molding 101? And they’re saying, “nobody else does it anymore.” And I’m thinking, “You’re not all that big, you’re not GE.” But okay, we have to educate the industry.

Bruce Catoen (Mold-Masters): So maybe we can’t point to the universities to do that, maybe we have to think about it more ourselves. If you go to Europe, the apprenticeship programs there are massive and they get their future labor pool through the apprenticeship programs. I don’t see anywhere near that level here.

Are they subsidized in the Europe? I mean are they government subsidized?

Heisser: No, actually they’re not. Obviously the apprentice does not make as much money as a regular guy, the guy who even sweeps the floor, you’re talking like sometimes they just get $1000 or $1500 a month, or sometimes less—it covers your living expenses and sometimes they just live at home. Usually it’s a three-year program, sometimes shorter sometimes longer, and companies see it as an investment and usually companies educate or have more trainees or apprentices than they actually need, and they hire 75% or 50% of them so they can pick the best. But if you say you were an apprentice at Mercedes then you bet you find a job at another company.

Catoen: They start making the easy parts, the generic parts, the square blocks and then they gradually move up to the more complex things and it builds in a whole succession-planning model within their business. It gives them sustainability over generations.

Eric Bullivant (Plastrac): I think a lot of workers fall into plastics. It’s not their goal. You see it with operators, maintenance people—a lot of them are there by default. Not that it’s bad, but it’s not necessarily their goal.

Heisser: The thing is, providing apprenticeships, there’s obviously a cost factor. So if you see it as an investment, you say how much money do I invest? And obviously with training it’s a little dragged on. You don’t get a return in the first six months. You probably don’t get a return for three, five, or 10 years, but eventually you get a very good return on investment because you’re the one with the skilled labor force that’s way more competitive.

However, if your business provides you only with say a profit margin of somewhere between 2% and 7%, and you don’t really have the financial means or the credit. Do you have the cash flow to do this? It always starts with your productivity or your profitability. If you have an unprofitable business there’s no way you can spend money on investments and eventually you will be uncompetitive and you will fail. And un-competitiveness is not only caused by not investing in new tools, new dies, and new technology, but also in the education of people and a skilled labor force. 

Yeah, you can do this for 15 or 20 years, but this is the biggest danger of American manufacturing: If we lose the skilled labor, it’s just a train wreck waiting to happen. Unless we import people—so, essentially, immigration.

Lange: A lot of companies are averse to putting much into training because they’re at great risk of losing that trained employee….either losing that trained employee to someone around the corner, which years ago when there was a large labor pool was okay, because they could rebound pretty quick, but they could invest two years into the training of an apprentice and before you know it he/she leaves and they’re working next door, or they’ve decided they’re just not interested in it. And talking with some of the shops, it’s a struggle to even be going down the path, especially when cash flow is tight, they don’t have the monetary resources to invest. If it’s not going to pay back quick…

Rob Neilley: Do we know major companies in the US that are running apprentice programs in this area?

Bullivant: You mentioned RJG, I know that they get for training programs, they get a lot of federal or state money to put those people through the RJG programs. But they’re mostly current employees

Lange: We had a couple scholarship programs that ran for a couple yeas, and we weren’t getting a lot of hits…the selection process became difficult. We couldn’t believe there wasn’t a demand and we advertised it as we were making sales calls, we had flyers, poster boards, and it wasn’t just for apprenticeship programs, it was for any kind of training to be used in the area of plastics. And that was a pretty broad brush we used to allow a lot of people to come in, and it was pretty surprising that we didn’t get the turnout. I would’ve thought they’d have been lined out the door.

Bill Goldfarb (Universal Dynamics):
A lot of the education will come from the supplier relationship where there are broad scopes, webinars and things, to present new technology, but the characteristics of individual sales have changed for capital equipment purchases, where you’re not thumbing through catalogs and picking equipment, they’re asking questions like “What’s your all-in price?” meaning the installation, the end-use price, and then, “What’s my two-year and five-year-out price to operate this piece of equipment?” Very detailed. We found by helping them, working with them, providing models, nearly every large equipment purchase now is supported with an energy payback analysis, to allow them to evaluate the equip on a wholesale basis.

The other part of the challenge is that our industry is becoming older and older to the point of where is this young group of engineers that are excited about manufacturing in North America? If you look at this in the big picture, I’m concerned not so much about today, but five and 10 years out, where are the people that we’re teaching how to do these things, that are going to be on the leading edge of the understanding of the engineering that keeps this engine of this entrepreneurship we have here in the U.S. moving forward? I don’t see that, and that’s the scary part. We’ll overcome the recession, what’s happening today. What’s scarier to me is where are we going to be in eight-10 years, are we going to have this young group that comes up? That’s very challenging. That’s not the discussion today, but we will have this discussion five, six, seven years out.

Mark Sankovitch (Engel North America): The universities have good programs, but the kids aren’t going to the programs. Penn State is a good example: We’ve got machines in there, we’ve helped them out, and there are some great engineers that have come out of there over the years. But you talk to the professors and stuff, there’s no volume there. If there’s no volume, the kids aren’t excited.

I think we just had one government program, for example, that almost sort of lends itself in that way, we’ve got all this high unemployment yet there was this one initiative to put new windows in homes and basically there’s very little money that’s been spent because we don’t have the skillset of the people to put the windows in. Yet we have  double-digit unemployment and we can’t put these people to work because we’ve got the wrong skillsets for what this country needs.

Tom Worcester (Günther Hot Runner Technology): Well manufacturing is almost a dirty word in the marketplace anymore. You say “I’m in manufacturing,” and that’s not really well accepted out there. It’s either a service-oriented industry or financial. To put a carrot out there for someone to go out and really pursue manufacturing, as they do in Europe, we just don’t have it over here. Whereas in Europe, they have the formal training, it’s a six-year program—you go through your apprenticeship you go to university. and you come out a full-blown engineer, and it’s a good good relationship between the owners of companies and the employees.

Sankovitch: They have it set up—it’s a good career path. Over here we had the dot-com bubble: “Oh man, if I’m going to make money why would I want to go into manufacturing?” Then we get this financial bubble: “Oh man, why would I want to go into manufacturing?” My son’s in college and he’s saying “I’m not going to make any money there.” We’re kind of marketing to our youth to go after the all-mighty dollar and unfortunately that’s short lived because that bubble will burst, and then what are you left with? I have a lot of people who have very good financial credentials but can’t find work.

It’s a challenge for us as an industry in manfucturing because we have the right government, the democracy that we have, to foster entrepreneurship, that lends itself very well to the be the creative group that we should be—creative from the standpoint that America, I think, has always been at the leading front of technology, the things that we have. We’re not maybe the best at mass producing manufacturing, but we have the creative juices here in the democracy to foster that, and if we give it up, it’s scary to see the path that we’ll go down and become service oriented and then we’re beholden to everyone else in the world, and we’re not grabbing hold of that. It’s almost like with the financial bubble when it burst, manufacturing should have gone to all these finance people and said, “Let’s train you to get into manufacturing because that’s a good field to get into and it’s stable,” but we didn’t. Did we lose that opportunity? Time will tell.

John Chalmers (Processing Technologies International): I would think that we recognize the thinning out, if you will, of in-plant process engineering guys, project engineering guys, probably before the recessionary period, and that really accelerated it, because when these guys are looking to get leaner and trim costs, that seems to be the area of manufacturing that took a pretty big hit. I know we’ve all had these guys we like to work with, the champion of the project, and he’s your inside guy, and he can make people move around, and get excited about trying new things, and those fellows don’t seem to be in the plants anymore, to the same extent they used to, which gets back to the point of relying on us much more to provide these turnkey services, these full-package solutions and being compensated for it. That’s the toughest thing because these guys are saying “We didn’t pay you for that in the past, and we don’t really have the perception that you’re giving us a bigger package than what you used to, although we don’t have this same internal staff that used to carry part of the load.” And I think that’s really going be a challenge in the plastics industry.

Lange: You can’t drop the engineering entirely. If some of it switches to us then we’re going to have to have bigger engineering forces.

Sankovitch: The challenge is can we create jobs? We can create jobs. But are there skill sets out there that fit the jobs we create? A lot of the people we’ve lost, they’ve gone and found jobs elsewhere. I think we will create jobs, but do we have the right skill sets here to fill the positions?

Worcester: Some of the people though that have been cut have started up their own small businesses. So now you’ve got an underground business that’s taking place for services that perhaps we may desire but do not have the in-house staff for, we’ll go to these small entrepreneurs now. And that’s a good model. Because that can generate a whole lot of business from the lower aspect where they’ll start generating jobs. So, there’s two sides of it. John Clark
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