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Light Manufacturing Combats a Tight Labor Market

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s expected, there is a lot of conversation regarding availability of labor in economic development and about the skills gap, especially in advanced manufacturing.  While this is indeed the case, information and programming are under development around the country to address the challenge. There is another issue in light manufacturing though.  The simple lack of people.

The skills gap refers to the difficulty of finding highly trained workers to fill specialized roles.  But as the country has tilted towards “full unemployment”, even jobs with basic requirements become difficult to fill. These jobs often have on-the-job training for those willing work.

The national unemployment rate is 4.00% at the time of this report and according to the Federal Reserve, a base unemployment rate (U-3 rate) of 5.0% to 5.2% is considered “full employment” in the United States.  This puts multiple counties around the United States below or barely above “full employment” rates. How are these companies managing recruitment and retention with worker shortages?

According the CEO & Director of LCI (NYSE: LCII) in the Q4 2017 Earnings Conference Call on February 8, 2018:

“We have taken significant measures to combat the labor issues and rising raw costs. Regarding wage inflation and the shortage of workers in Elkhart County over the past couple of years, we’ve spent a lot of time creating great focus on our culture, leadership training, employee retention programs and charitable giving and serving initiatives in an effort to make LCI the employer of choice in our areas.”

– Jason Lippert, CEO & Director, LCI Industries

Elkhart County isn’t the only location with a tight labor market, the chart below shows unemployment rates for counties around the country reflecting the tight 4.0% unemployment rate.

 

 

 

 

 

 

 

 

How is this challenge being mitigated?  Manufacturers are getting creative in order to recruit and retain employees.  Recognition programs, the use of convict or ex-convicts and cultural shifts in the environment, such as the investments being made at LCI, are some of the ways manufacturers are deploying in order to keep up production levels to meet demands.

In addition to how light manufacturers are getting creative within their corporations, some services are beginning to take root in the communities themselves.

In January 2017, Goodwill of the Heartland launched a light manufacturing training certificate program in Cedar Rapids, Iowa.  The program pays workers as they build the skills needed to succeed in area manufacturing jobs.

“Our local manufacturing sector offers good paying jobs, but we know that many companies are experiencing workforce issues.  They are having difficulty recruiting and retaining skilled workers for entry level positions.”

– Jess Schamberger, Vice President of Operations for Goodwill

The Goodwill program offers on-the-job and classroom-based training to prepare new workers for light manufacturing jobs. Based on the Advanced Manufacturing Competency Model, the program requires a minimum of 200 hours working on skills like assembly and packaging and the recycling production process.

The program doesn’t restrict who can participate; the goal is to create paid training opportunities for the unemployed or underemployed. The program has an added bonus of job placement assistance.

Meeting local workforce needs and connecting people with good paying jobs seems to be a win-win for communities and corporations.

In South Bend, Indiana, Ann & Bill Voll, owners of Sibley Machine & Foundry, found a way to give back to and support both the community and companies in St Joseph and Elkhart Counties. After seeing the help wanted signs on almost every business in the area, the Volls found, according to the Department of Workforce Development, that there are over 60,000 people between the two counties identified as having a number of barriers to working a standard work week.  With this knowledge, they partnered with Ziker Cleaners and made 120,000 square feet available to local manufactures who would consider outsourcing their low to medium skilled work.

The Sample Street Initiative was created to develop a pathway for each worker. They begin with an assessment of each worker and then teach them the skills they will need to work in a production facility: these skills range from measuring and manufacturing vocabulary to the use of hand and power tools.

The Sample Street Initiative provides a win-win for the non-participating community member and the businesses in the community in three ways:

  • A job for those currently not participating in the workforce to learn the skills needed in the area with the objective of gaining confidence in those skills and becoming gainfully employed.
  • A location to learn and exercise appropriate behaviors toward work and gain competencies in an assortment of skills.
  • A place for employers to outsource work.

“…we can provide labor to our start-ups as needed, produce products in demand to the manufacturer, and assist candidates to become successful employees to sustain themselves and their families.”

– Ann Voll, Sibley Machine & Foundry, Co-Founder of The Sample Street Initiative

The low unemployment rates across the country will continue to be on the radar as labor availability continues to be the most important factor when companies are selecting a location for a new facility, expansion or relocation project.  Availability of labor is essential to most industries and the creative strategies, financial commitments and support of community services and private industry leaders that light industrial manufacturers are developing for the low and medium skilled positions will continue to be necessary to meet the demands of the products being manufactured.  The creative work done by the manufacturers and supporting players is aiding the continued economic growth within the manufacturing industry and the national economy.