Labor pains

Manufacturers see positives ahead — except for one looming hurdle

Posted on Jan 16, 2017 :: Feature
Sean P. Johnson
Posted by , Insight on Manufacturing Staff Writer

ALMOST ALL THE SIGNS are positive for manufacturers in Northeast Wisconsin.

Whether it’s a healthy balance sheet, plans to expand or modernize facilities or an increase in projected sales, manufacturing companies in the New North region say they will be producing more, selling more and growing in 2017, according to the Northeast Wisconsin Manufacturing Alliance 2017 Manufacturing Vitality Index.

This is where the almost comes in, though, and it’s a big one. Because manufacturers in the region see growth ahead, they have aggressive plans to hire in the new year, with one in three saying they will begin hiring new staff in the first quarter of the year. About 42 percent plan to hire more workers before the year is out, an increase above the past few years. 

Planning to hire is not the same as hiring, and those same manufacturers also express worry they will not find the people they need to sustain the growth they see in their future. More than three-quarters expect to have difficulties finding qualified workers in 2017, according to the survey.

“I think what we are seeing right now is a short-term bubble caused by the retirement of the baby boomers,” says Mike Kawleski, public affairs manager for Georgia-Pacific and chairman of the Alliance’s communications committee. “We are just hitting the cusp of that wave.”

Kawleski pointed out that many area manufacturers have reported a record number of retirements the past few years. At his own company, for example, retirements spiked to more than 200 in 2016, creating a challenging loss in both numbers and job expertise.

“It’s a huge amount of knowledge to try and replace,” he says.

One of the short-term solutions is to bring those employees back where possible, the Vitality Index recommends. Retirees still interested in working part-time can not only help manufacturers overcome the labor challenges, they can be used to train incoming employees, passing on that institutional knowledge and modeling proper work behavior.

Though the next year or two could be challenging, Kawleski says those anticipated labor challenges could be part of what is driving the growing interest in plant expansions and modernizations.

In the 2017 edition of the Vitality Index, 68 percent of manufacturers reported they planned a plant modernization in 2017, up from 60 percent in 2016 and well above the 46 percent that reported planned modernizations five years ago. About 30 percent of manufacturers responded they planned an expansion in 2017, according to the survey.

“Companies are investing in capabilities and technologies that will allow them to produce with fewer people in the plants,” Kawleski says.

While the demographic blip of baby boomer retirements poses challenges for the immediate future, Alliance members are confident the efforts of the past several years to change the image of manufacturing and fill the talent pipeline will eventually ease the difficulty and enable the sector to continue its growth.

While not part of the Vitality Index, those results indicate a much brighter future than the one manufacturers faced when the Alliance was first founded, says Bill Bartnik, vice president of manufacturing at Sargento Foods.

“In 2005, the technical schools graduated 193 welders,” Bartnik says. “In 2015, we were up to 835. Meanwhile, membership in the Alliance itself has grown to more than 200.”

Additionally, the relationship between manufacturers and educators has improved through a variety of partnerships and investments in technical education on all levels. Participation in internship and co-op programs has also seen steady increases.

While technical positions such as CNC operators and welders still top the list of most difficult to fill, according to the Vitality Index, non-technical skills such as communication and attendance continue to challenge employers looking to those who could be trained on the job.

Moving forward, the survey recommends regional manufacturers continue to build on those efforts, working together with one another as well as partners in education and government, to ensure the talent pipeline remains full.

“We’ve made a lot of progress over the past 10 years, but we still have more to do,” says Mark Kaiser, president of Lindquist Machine Corp.