August 2008 Edition

workforce management

Old myths, new realities

As retirements near, firms scramble to fill skilled worker positions

By Peter B. Alpern, Associate Editor

When automaker Toyota announced its plans to open a new plant with 2,000 jobs in San Antonio two years ago, its human resources department was inundated with more than 100,000 applications.

But the task of filling 200 technician positions at that same location proved far more problematic. Applicants with the requisite sophisticated skill sets were all but impossible to come by. Eventually, the automaker lowered its goal and hired 120 technicians, many which were acquired from other manufacturers or by luring workers from other states.

Toyota’s tale is a common one today, highlighting the challenge companies are facing with greater frequency. The lack of skilled workers — especially those that are young — is perhaps the single biggest issue facing the manufacturing sector today.

Companies have had to adjust rapidly, reinstituting policies that had become long overlooked, such as apprenticeships, while collaborating with local governments and schools to initiate a new workforce. Some have opened their own universities, while other manufacturers are offering workers $1,000 bonuses to workers who recruit technicians.

There really isn’t much time.

One of the foremost changes manufacturers have made has been the return of a lost method of development: apprenticeships.

As numerous industrial jobs have relocated to emerging powerhouses such as China, Mexico and Brazil, precision manufacturing remains a critical piece of the United States economy, one that is stretched thin and chronically understaffed.

That shortage of skilled workers is likely to get worse for the United States as forecasts call for 40 percent of the manufacturing workforce to retire over the next decade.

A 2005 survey by the Washington, D.C.-based National Association of Manufacturers reported that 81 percent of respondents were experiencing a shortage of qualified workers, a gap that threatens to widen in the coming years. The average employee in the industry is 55 years old, says NAM spokesperson Laura Narvaiz.

"I haven’t been to a community where this isn’t a problem," says Steve Mandes, executive director of the National Institute of Metalworking Skills, which provides national standards and third party objective assessments to the metalworking industry. "It’s everywhere. And it’s going to get more severe as we approach the Baby Boomer retirements."

Image problem

Although the times have changed, the images associated with manufacturing jobs haven’t — at least in the public’s eye.

"Someone once told me, when it comes to manufacturing, people still think it comes down to the Four D’s: dumb, dangerous, dark, and dirty," says Frank Quijano, chair of the Industrial Automation and Engineering Department at Palo Alto College.

Never mind that an industrial technician averages about $51,585 a year, according to manufacturing industry figures. By comparison, mean income for full-time U.S. workers last year was $40,690, according to the U.S. Department of Labor. Still, surveys show American youth see manufacturing as a one-way career track toward poor wages.

Debate rages about how this public perception came to pass. The common reason cited is the influence of parents, who dissuade their children toward pursuing education in the manufacturing trades. More and more public schools have cut funding for shop programs.

But Keith McKee, the director of the Manufacturing Productivity Center at the Illinois Institute of Technology, offers another compelling reason: for a long time now, manufacturing has sold itself as the job for anybody, regardless of intelligence.

"This mystique has come about and it isn’t a good thing," McKee
says. "Manufacturers have done themselves a great disservice because for a long time, they kept saying they could hire almost anybody. Most of those people will never become skilled workers because they’re dumb as rocks. If you take a rock and train it, it’s still just a rock."

Restoring a lost tradition

One of the foremost changes manufacturers have made has been the return of a lost method of development: apprenticeships.

Apprenticeships have been around since the Middle Ages, when master craftsmen employed the young as an inexpensive form of labor in exchange for formal training in the craft.

As time went on, companies — both large and small — that viewed the programs as unnecessary expenses did away with apprenticeships.

"Anything that wasn’t producing an effect on quarterly earnings got cut at a lot of big companies," says Jack Schron, president of Jergens, a Cleveland-based manufacturer of tooling components and workholding products. "We brought ours back a few years ago, but only now have we begun to really emphasize how important they are."

Jergens has four apprentices in its program, which mixes their hours between working with mentors, attending a local college, and taking online training.

"When the recession occurred in 2000 and 2001, most companies, even the major ones, shelved their training," says Mandes, of NIMS. "When they did that, they not only lost their training staff, but also their institutional memory of how they did it. Only now, slowly, are they bringing it back."

NIMS partnered with the U.S. Department of Labor to establish competencies that are required as performance baselines in apprenticeship programs.

"You don’t necessarily know if all those apprentices are all going to make it as workers," says Schron. "But it puts them on a path where you’re training them and teaching them how things run the right way. That’s an invaluable resource."

Collaborating

Each time Erick Ajax strolls into work each morning, he is reminded of what his company is facing.

Ajax, owner of E.J. Ajax & Sons, a producer of metal brackets and latches for household appliances and industrial machinery, has made workforce stability a hallmark of his company. More than half his workers have been with E.J. Ajax & Sons for over 10 years. But now that workforce is aging at a rapid rate.

"Many of [my workers] are over 50 years old and will be retiring within the next decade," Ajax says. "It is now critical that I begin to identify and tap into a pipeline of capable workers who can replace them when they leave."

Ajax is one of the leaders in a consortium of local businesses in Minnesota that has attempted to train low-income workers, who initially might have modest skills, into sophisticated laborers in the manufacturing sector.

The "M-Powered" Project brings together the local Precision Metal
forming Association, Hennepin Technical College and HIRED — a local support service for individuals seeking jobs. The project offers job seekers a two-phased training program that prepares them for careers in metalforming. Trainees take part in a 12-week industry-specific course at the technical college, and receive career counseling, mentoring, and job placement assistance.

The Chicago Manufacturing Renaissance Council took another innovative approach. It launched a project with the help of local government programs and industry associations to establish what many in metal fabrication have yearned for: a school to educate a new breed of manufacturer.

Austin Polytechnical Academy, a public school on Chicago’s North Side, was launched this year with 140 first-year students. The school has more than 70 local manufacturing companies serving as partner organizations that provide summer internship programs and related support. Most importantly, says Dan Swinney, chairman of the council, "The school provides a kind of ‘pre-engineering’ program that takes students through the big-picture processes [of modern manufacturing]."

Ultimately, some manufacturers took it upon themselves to train their own employees by building company-run universities

The school covers the fundamentals behind metal fabrication and metalworking, so much so that students will depart with at least two NIMS credentials by the time they graduate. Combining shop skills with creative thinking, Swinney says, is a key to the school’s success. The goal, he added, is for these students "to become highly skilled manufacturing workers, and even eventually owners of local manufacturing companies."

The "Dream It. Do It." program, founded in early 2006, seeks to educate and train local residents to fill manufacturing jobs in 11 different states. The campaign targets two populations of young adults, 18-34 year olds and 10-17 year old students, as well as their parents, teachers and guidance counselors.

The campaign also seeks to better clarify industry needs with educators.

"We’ve really concentrated on getting the educators and industry folks in lockstep," says Dwayne Probyn, executive director of the Nebraska Advanced Manufacturing Coalition, which supports the state’s ‘Dream It. Do It.’ campaign. "I think for a while, educators and manufacturers weren’t working in tandem."

A new approach to learning

Observers saw the problem as not just the age of workers leaving and those replacing them. It was also the quality. Young workers were either inadequately trained or simply didn’t have the competency skills to run sophisticated machinery.

Ultimately, some manufacturers took it upon themselves to train their own employees by building company-run universities.

In 2000, Jergens launched Tooling University as a means of training its own employees to enhance their basic skills and knowledge of metals-based manufacturing. Within two years, it was opened to the public, with large corporations such as Caterpillar, General Electric, and SGS signing up employees for online classes.

Machine builder Mori Seiki had a similar approach in 2006 when it opened Mori Seiki University to develop the job skills of its own workers. But the more Rod Jones, chief learning officer at MSU, interacted with customers, the more he saw a gaping industry-wide need for knowledge.

Mori Seiki’s online program Education on Demand uses advanced computer graphics to teach users how to operate manufacturing equipment.

"It’s given us an opportunity to not replace our existing training, but certainly to augment it," Jones says. "We can reach thousands of customers and get that first 30 to 40 percent of training done. It’s the next best thing to having your hand pushing the buttons on the post generator on a control panel."

When Toyota agreed to build an assembly plant in Tupelo, MS, back in February, part of the $293.9 million incentive package the company received from the state included the costs for building a training center at University of Mississippi to train students for manufacturing.

The tide hits everybody

Boeing’s manufacturing manager, Tommy Small, spends nearly half the year on the road visiting college campuses and attending various symposiums and expos. The company name on his shirt all but assures he’ll have no shortage of attention.

Students closing in on college graduation are eager to learn about employment at the nation’s largest manufacturer of commercial airplanes and aerospace and integrated defense systems.

But even Boeing hasn’t been immune to the workforce crunch.

According to Boeing spokesperson Cindy Wall, the average age of the company’s manufacturing worker at the beginning of 2008 was 47.

If name recognition assures a heavy stream of young graduates eager to join the company and makes recruiting from rival manufacturers easy, it’s hardly an end-all solution.

"The fact is, most of the precision work in our industry is done at second, third, and fourth tiers," says NIM’s Mandes. "That’s where the skill problem is. If you assemble everything at tier one, all the critical components are still manufactured in the supply chain — and that’s happening at the smaller companies."

‘The fact is, most of the precision work in our industry is done at second, third, and fourth tiers. That’s where the skill problem is. If you assemble everything at Tier I, all the critical components are still manufactured in the supply chain — and that’s happening at the smaller companies.’ — Steve Mandes

Many have begun offering retirees, who already are pulling down a pension, additional work on either a part-time or limited basis. But such measures are merely short-term answers to long-term problems.

How to change with the times is something the Tooling & Manufacturing Association has been mulling for years. The Chicago-based 1,250-member organization of precision manufacturing and supplier companies has long devoted itself to advancing manufacturing to young people.

But enrollment in the program is lagging. TMA President Bruce Braker says despite efforts to modernize, over the last 40 years enrollment has sunk 93 percent. In the late 1960s, the apprenticeship program had 1,500 students. Now it has 100.

"One of our major problems is that high schools are not as committed to manufacturing-related technology education," Braker says. "Anything that can correct the perception that manufacturing is dying is a good thing. Manufacturing isn’t dying. It’s changing, and we need to change along with it."
Toyota Motor Sales USA Inc.
National Institute of Metalworking Skills
Jergens Inc.
E.J. Ajax & Sons Inc.
Mori Seiki Co. Ltd.
Boeing Co.,
Tooling & Manufacturing Association

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