The Next Shift: How a Legacy Industry Can Reach New Talent

Transcript:

Bruce Morton: Allegis Global Solutions (AGS) presents the Subject to Talent podcast, a hub for global workforce leaders to unleash the power of human enterprise. Thank you for listening in as we explore the most innovative and transformational topics impacting business today.

Hi, I am Bruce Morton, the host of Allegis Global Solutions' Subject to Talent podcast. Today I am handing over the microphone to my good friend and colleague, Renee Gorman. Renee has over 20 years of experience in the talent industry and as a senior manager of market analytics, she has a consummate knowledge of workforce trends for a plethora of industries. Today she welcomes Anna Wells, the executive editor of Industrial Media, a leading publishing company for multiple manufacturing media outlets. They will discuss the unique advantages, needs and challenges faced by the manufacturing industry in today's shifting talent landscape. Let's listen in.

Renee Gorman: Thanks for passing the microphone to me today, Bruce. I'm really excited to dive into today's discussion because the challenges that industrial manufacturers and distributors are facing have a wide reach and impact many industries. As executive editor at Industrial Media, Anna communicates to millions of professionals on manufacturing industry news, deals, insights and user reports, all which guide industry leaders on making business decisions. She also co-hosts the Today in Manufacturing podcast, which focuses on stories that impact the future of the manufacturing industry. Anna, welcome and thank you for joining us today.

Anna Wells: Thank you so much for having me. I'm so happy to be here.

Renee Gorman: Great. At AGS's Subject to Talent podcast, we always ask our guests the same first question. So how did you get into the manufacturing industry and specifically the workforce management aspects of the industry, and what was your journey to where you are today?

Anna Wells: Sure. So, it all started back in about 2006. I joined a media organization where I was basically assigned a manufacturing beat, if you will, and as a writer that has meant constant observation and research in the industry sense. So, we produce a few websites. We have some magazines, we have some podcasts, and they’re all related to trends in the industrial market. And of course, manufacturing and distribution are so complex, and their success or failure is so highly dependent on their talent pool. So, we cover workforce topics; we cover training, safety, digital transformation, all of those key factors I think surrounding workforce recruitment and retention.

Renee Gorman: Excellent, very interesting. So, to jump right in, I'll start with a labor supply question. Labor supply challenges continue to plague the manufacturing and distribution space. In recent years, the Great Resignation was really the catalyst for historical wage inflation. And manufacturers now have many new competitors for talent as retailers and hotels and restaurants have all increased wages to attract workers. What are your thoughts on the shifts that have occurred?

Anna Wells: Yeah, it's a great question. There's a lot going on there. You mentioned the Great Resignation, that definitely took a hit on blue collar workers. I think it coincided with a time period where so many manufacturing companies were deemed essential right throughout the pandemic. And workers at those plants often don't have the luxury of working from home or hiding in an office all day with the door shut. So really. I think the dynamic with COVID certainly added to the decline in retention for some companies who weren't able to offer their workers that flex time that they wanted or needed to either prioritize their health or to juggle childcare. And we saw a lot of companies in manufacturing bend over backwards to try to address those needs for their workers, but in the end, the manufacturing industry is just not built for work from home.

And then the secondary impact of that I think has been people were fleeing their jobs. The people that were left behind were left bearing the weight of roles and responsibilities that weren't necessarily part of their initial job description. Everyone was having to wear multiple hats, and so now those workers are just getting burned out.

So that's, I think, added to a shortage that has existed for a long time. Manufacturing companies I think are feeling that a little bit more now. And so personally, I believe that it's valuable in the sense that it's causing them to make some big changes and really take a second look at their policies, their requirements, how they present themselves to the market and possible job candidates. Because right now it's a big problem for some of these companies, and we hear anecdotally about people working in environments where they feel like they can't catch up. And that's of course a concern for those businesses who would maybe take on more business, maybe integrate time-saving technologies, but they just don't feel like they can.

So yes, definitely some interesting shifts post pandemic as well, because as you mentioned in your question, there have been some notable increases in wages for entry-level workers in sectors like hospitality, retail and healthcare, which has caused some challenges for manufacturers trying to recruit because there was a long time where those manufacturing jobs were paying more and considered to offer a little bit more opportunity for growth. And now you're seeing manufacturing companies competing for workers with industries that they never did before. And if you could go work at Target for $15, $16 an hour starting and the manufacturing plant down the street is offering $16 or $17, and then the perception is that that manufacturing job is maybe harder work or maybe you think it might be dangerous, I don't know, you're going to struggle if you're a manufacturer, in that case, to get some of those folks in the door.

Renee Gorman: Yeah, that's such a good point. And I'll add on to what you mentioned about perception, because another aspect that has drastically reduced prospects for the manufacturing industry is of course, that more generations, younger generations I should say, hold four-year degrees than the generations that precede them. And younger workers may not even consider manufacturing as a career path. Can you share some insights on what manufacturing leaders are doing to attract those younger workers?

Anna Wells: Yeah, you're totally right. The manufacturing industry has had a perception problem for so long, and it continues. People still look at manufacturing and really, despite so much progress that's been made, they see it as this dusty old industry. There's maybe not the prestige that you see from other industries, so how do you change that? We see companies doing a lot with partnerships to seek out younger folks before they're adults and give them a clear look at a high-tech clean operating environment, talk about the career path. So some of that is manufacturers partnering with tech schools or coming in and trying to finance shop programs for local high schools or something.

And then I think the other responsibility of those manufacturers is really just finding a way to tell their story as a method to that recruitment. You hear more and more about these younger workers and how one of their key objectives when looking for a job is finding a place where they feel like they make a difference, what they're doing matters.

And so I think for manufacturers, that can be a challenge. Maybe you make a widget, where does it go? How does it help people? Are these things that you're making at the forefront of your messaging when you're trying to speak to some of these prospective candidates? Because they really need to clarify some of that. I think they really need to also reinforce that many of the jobs on the plant floor and front office require high skills, even college degrees, that this isn't really your grandfather's factory anymore. It's not just assembly lines. It's oftentimes roles that are really creative and really challenging. And so it's not just hiring a person to assemble something. In many cases it's hiring the person who maintains the machine that automates that task or that's the stuff that you're seeing more today.

And so we see manufacturers trying to take that seriously. In many cases, it's difficult because they are really trying to change the way they operate from a hiring standpoint. And of course, that's a cultural thing, so that's hard. But I think one of the other things that's been important for businesses like that to attract a younger workforce is all the reports and all the research out there says that the younger generation of workers really want to have a seat at the table. They want to feel like they are making an impact day to day. They understand the objectives of the organization, they have goals set for them, they have mentors. They really feel involved instead of just being a cog in the machine, if you will.

So I think that's another thing that is really a cultural shift for manufacturing companies that they need to address. They got to get rid of the pecking order. They have to get rid of the gatekeepers and the silos and stuff and really spread things out, give team members access to the executive team, make them understand that they're involved in the company's objectives and making progress. And this is what the overall goal of the organization is. You can't just set somebody in an office or on an assembly line and expect that they're going to be happy there.

Renee Gorman: Yeah, I think you're absolutely right. I think assuming that Gen Z wouldn't be willing to even step into that line of work is a mistake because they are knowledge seekers and they are the first digital natives that are in the workforce, and they're change adopters. And I think we need to start focusing on all the positives that they bring to the table and just evolve the way that we engage with them. That's perfect.

And then I think sticking with technological advancements, as is true with all industries today, those advancements are making an impact on manufacturing and distribution industries as well. And some would say that companies should invest in reskilling and upskilling their workers to evolve with these changes in order to retain and attract talent. Can you speak a bit more on what kind of advances they should embrace and how that's affecting the future of work?

Anna Wells: Yeah, definitely. So technology is a big shift in manufacturing. We're seeing investment in automation and digital tools really accelerate in the last couple of years. What we've seen is there's really been a broader acceptance of automation. I think there was a time when there was a lot of fear around automation. People saw it as a job killer. That was a barrier for a long time for a lot of companies. I think businesses have come around on that, which is good. You're seeing more investment in the last few years in manufacturing verticals outside of automotive. And that's actually very significant because if you look at the data, automotive manufacturing was responsible for a huge chunk of automation investments for a very long time. Now you're seeing that spread out a little bit, which is, I think, an important steppingstone for the industry.

I think part of that is due to the fact that automation technology companies are meeting these manufacturers halfway. There's a lot of customization that's now being built in manufacturing. They do a lot of build-to-order. So, there's a lot of smaller companies out there for a long time that were saying like, "This automation isn't for me. We don't have a 100,000 square foot plant. We don't have multiple assembly lines." That is changing. You're seeing that cobots (collaborative robots) and things like that enter the market, and as they scale, they're becoming more affordable. The technology has improved to the point where they can work side by side with humans and do so safely.

So that's important to see some of that technology take off on the plant floor. McKinsey recently said that the automation tipping point is coming for industrial, and depending on the speed of technological advances, that could be sometime in the next five or 15 years. It just so happens in my opinion, that that sweet spot for automation is solving a big problem for manufacturers, which is the need for labor. So, if these jobs are replaced by machines, they never come back, which is a scary prospect. But at the same time, I think you have to really shave down that rhetoric and consider, do we want those jobs? Because they've been notoriously hard to fill. It's hard to retain people in repetitive backbreaking work. People don't want those jobs. But what comes along with the automation investment is you can take care of that and also add jobs, the folks that are managing the productivity dashboards or programming the bots or maintaining the systems, there's a lot of other employment opportunity that comes along with that.

So I think that that's the nuanced look that the industry is starting to take around automation and those tech tools that they really need to operate.

Renee Gorman: Oh, that's wonderful. And it's good to hear too. Another popular topic nowadays is the geopolitical landscape. It's very complex. It's always evolving, and a lot of global organizations are choosing to onshore or nearshore. And with some of these countries acting as global manufacturing leaders, how could decoupling impact not only the cost of labor, but an organization's talent attraction strategy?

Anna Wells: That's a very interesting question. I think I would look at it from the perspective of the stress to operate in those business conditions, and we saw that a lot during the pandemic. People got burned really hard on stuff. They were on the phone with their customers daily, tracking orders, trying to provide updated information, accurate information, trying to provide accurate pricing.

And so to me, I think a lot of companies determine in the end like, "Hey, this isn't worth it. We're having such big challenges with not just timelines but quality." And if you look at the data that we have from our audience of manufacturers and distributors, these are the top things that they look for. Price is not No. 1 for these companies. When they buy products, they want to know that they're high-quality products and that they can get them on time.

So if both of those things are in flux, that's a huge challenge. And I do think from a workforce perspective, it tends to fall on the shoulders of these poor sales reps and customer service people. And so they need to have reliable partners. They need to be able to have business continuity. And if there's delays and challenges around that, the shorter supply chain is just fewer links. It just causes more visibility. It's shorter lead times, fewer concerns about how that business relationship is going to go. So it impacts these businesses financially. And I think a lot of workers, again, I hate to use that term burnout again, but a lot of workers got burned out during the pandemic because it was so stressful.

So to me, I think that it helps those companies operate more cleanly. And I do think also, if everybody's reshoring, it levels the playing field a little bit as well, which makes things easier from a recruiting standpoint for these companies.

Renee Gorman: Absolutely. There's so many emerging markets that can be looked at as well as a potential to move those resources elsewhere. Certainly costly, but to your point, in the long run, could potentially have more of a positive impact on finances altogether.

For many organizations, whether they're in the manufacturing and distribution space or not, sustainability is at the top of the list for strategic initiatives. It matters a great deal to stakeholders, to employees, certainly to future employees. Can you share some examples of sustainable strategies that have been implemented with great success?

Anna Wells: Yeah, definitely. This is an exciting area for me. I'm happy to see the growth of environmental, social and governance (ESG), and I think it's important that manufacturing companies and industrial distributors take a leadership role here. We're seeing companies in the industrial space ask for help, which I think is super productive as a way of approaching this. They have done a good job over the years of tackling some of the low-hanging fruit regarding energy savings, because that's always had a cost-saving incentive to do so. But often, I think they need some more guidance getting over the hump beyond that.

So we see them looking for integrated service offerings from their suppliers who are well-equipped in many cases to say, go in and do an energy audit and say, "Here's how you can reduce your compressor energy consumption, for example, and here's how you do it." So they can provide really those consultative skills, but also the product solution, and that's making that more manageable I think for industrial end users who don't know where to start on that.

We are seeing some companies as well get behind alternative energy. I recently interviewed a solar company who walked through the changes in solar purchase and ROI with me, and it was really eye opening how much has changed in the terms of the incentives, how these companies should also be taking a renewed look at some of the more tried and true solutions. Because anytime legislation passes, you have to look again, "What will my state offer me? Will the federal government offer me if I make some of these changes?"

So yeah, again, I think the question's so valid because back to this reputation issue for the industrial market, manufacturing has been so long associated with emissions, runoff, hazardous chemicals, things like that, and in many cases with good reason. But when these companies are trying to target workers where green initiatives truly matter to them, not having a solid or a defined plan there can really make or break it for many job candidates. And I think it's up to these companies to find the solutions, but then also tell that story before they lose out on folks who think that the industrial space just doesn't do ESG. That's not true at all. Right?

Renee Gorman: Yeah, absolutely. Yeah, I think more than ever, everybody knows that organizations have both a social and a corporate responsibility to make sure that those plans are in place. So for labor unions and regulations, that's been another popular topic in the news. In fact, I've heard 2023 referred to already as the year of the strike and balancing labor relations and compliance with labor laws and regulations can be a complex challenge for manufacture and distribution companies. Any thoughts that you'd like to share on that topic?

Anna Wells: I do think that there was a very narrow window there that employees had a ton of leverage when it came to pushing back and trying to get better working conditions, greater pay. I know that's been a challenge for the business side of it, trying to manage that and what does it do to your public brand if your workers strike, and how long can you afford for that to happen and what can you afford to increase from a wage and benefit standpoint?

So yeah, short of having a crystal ball, I don't know what happens next. I do think that some of the leverage is waning a bit as economic conditions have softened a little, or there's been some recessionary fears. But as long as the job market is strong and businesses continue to add jobs and they continue to need workers, there will still be some leverage there from these workers. And so in manufacturing, the union membership rate is higher than in most other industries. So in manufacturing, we see a lot of the strike stuff happening and you are seeing a lot of these workers get what they want or get close to it. So I don't know what happens next, but it's certainly from my perspective, been very interesting to watch.

Renee Gorman: Yeah, absolutely. And you alluded to it a little bit already when you mentioned a crystal ball. So to wrap up our discussion today here on the Subject To Talent podcast, we like to end our episodes with a look to the future. So the crystal ball question. In light of growing adoption of AI and other technological advancements, the ongoing struggles with the labor force and the labor challenges, where do you see the manufacturing industry in five years?

Anna Wells: So I think that's a great question. The manufacturing industry has often been a laggard when it comes to investment in high-tech solutions. I do think we're seeing that changing, as I mentioned earlier. And so for me, the most exciting part of looking to the future would be watching this accelerate, which I think that it will. Technology is intimately tied to workforce development, especially in this industry. And it's taking these jobs that are repetitive and super hard on your body, and it's providing new ones that pertain to the tech side. And yes, this will require upskilling and the manufacturers will need to pay for that and offer that, but I do think that they're going to see the value in that investment.

And the side benefit of this digitization is that I think it does improve that industry overall perception as it becomes more and more tech forward. And I think it serves as a retention tool as well. Younger workers are saying that if their workplace is not tech enabled, they will consider leaving and working somewhere else. Manufacturers and distributors are seeing that. And so I think that the acceleration that's already happening now will just continue to move forward full force.

You mentioned AI, we're seeing AI businesses and manufacturing finding the business case for AI, which they did not before. I think for a long time it was like automation part two. They're like, "What is this scary thing? What is it for?" Now we're seeing companies actually find ways to use that for predictive scheduling and inventory purposes. So more tech in the future, I think. And to me, that only strengthens the position of American manufacturing.

Renee Gorman: Wonderful. Well, I think I can speak on behalf of our listeners in that we hope you're right because I think those are great predictions. And then finally, Anna, what should listeners do if they want to learn more about you or where to follow you?

Anna Wells: Yeah, great. That's awesome. We have a couple of great websites, ien.com, which is for our manufacturing brand, Industrial Equipment News. We also are featured on manufacturing.net. I'm on a podcast that airs every Thursday called the Today in Manufacturing podcast, if anyone would like to check that out. It's just three of our editors on a panel talking about the top news stories that are impacting the manufacturing industry that week. And we provide some analysis on some of the factors that make those issues matter and what we expect for the future. So if you want to check out the podcast, that would be great. We'd love it.

Renee Gorman: Excellent. Very good. Well, thank you so much for joining me today. We really appreciate it.

Anna Wells: Thanks so much, Renee.

Bruce Morton: If you enjoyed this episode, please rate and review us on Apple Podcasts, Spotify, or wherever you get your podcasts. And if you have questions, send them to SubjectToTalent@AllegisGlobalSolutions.com. Follow us on LinkedIn with #SubjectToTalent and learn more about AGS at AllegisGlobalSolutions.com where you can subscribe to receive additional workforce insights. Until next time, cheers.