Iowa Manufacturing: How the industry is faring and ideas for the future

Iowa’s manufacturing industry produces a broad range of items, from food and beverages to chemical products and machinery. While each sector has its own unique challenges, looking at the industry as a whole can help identify patterns worth noting and make predictions about the future.

We spoke with three business leaders to discuss what challenges they’re still facing post-pandemic, what new improvements they see bringing positive changes, and what’s on the horizon for the industry.

FACING CHALLENGES

If it hasn’t already been talked about enough, the manufacturing industry as a whole is still feeling the effects from pandemic-related supply chain issues and labor shortages. But these issues we’ve been hearing about for over two years can look different in each sector.

Gretchen Spear, regional government relations manager at International Paper, said the company is seeing shortages the most in transportation. International Paper produces paper and packaging products, with four facilities in Iowa including a paper mill, two box plants and a recycling facility. Spear said delays at ports, a lack of rail cars and a shortage of truck drivers are among the challenges of shipping products between facilities and to customers.

“We spend about $2 billion annually to ship our products throughout the U.S. and to our global customers. So transportation has a huge impact,” said Spear. 

Ramco Innovations, an industrial electrical and electronics equipment supplier in West Des Moines, is facing volatile pricing structures as a result of supply chain backups, labor shortages and inflation combined, said Hank Norem, president.

“We can’t count on fixed pricing. There’s surcharges popping up that we didn’t used to see, and multiple price increases where it used to be one per year,” he said.

Scott Walter, president and CEO of EFCO Corp. in Des Moines, said his company is finding it hard to source employees skilled in manufacturing disciplines like welding and machine operating. EFCO provides products and services to the construction industry for the forming and shoring of concrete. 

“The problem is not yet people leaving the workforce, but it is being able to bring in new people to anticipate that. We’ve had to cast a wider net.”

POSITIVE IMPROVEMENT

Not everything is bleak, however. One thing is for sure: Out of the struggles of the past come improvements for the future. Learning to adapt and seek solutions to the above mentioned problems has created a cache of knowledge that companies can now refer to when issues arise.

According to Norem, “Companies are more focused on project management because they know time is money, and labor and components are short. They can’t afford to make missteps in their planning processes.”

Making a conscious effort to reduce errors and limit waste not only saves money on material costs, it helps out the planet too. In fact, many companies are shifting their focus toward eco-friendly goals. One example is International Paper’s “Vision 2030” initiative, in which the company aims to achieve a variety of community and environmental targets. Sustainability goals include reducing greenhouse gas emissions by 35%, reducing water use by 25%, and sourcing from 100% sustainably managed forests and recovered fiber.

“Our Cedar Rapids paper mill is the largest 100% recycled paper mill in the Americas,” Spear said. “We are diverting 1.1 million tons of paper and cardboard boxes from landfills annually.”

EFCO Corp. is also trying to eliminate waste and more fully utilize their assets. Walter said the company is currently using about 85% renewable energy in manufacturing its products, and is hoping to increase that percentage.

PREPARING FOR THE FUTURE

Beyond making improvements now, the manufacturing industry is also looking ahead for possible oncoming challenges and opportunities. As inflation remains a topic of conversation, some are trying to plan accordingly.

“We call it ‘the new normal’ in manufacturing. I think that we learned so many lessons and nobody ever wants it to happen again, so we’ll always be looking for new and better ways to innovate,” said Norem. “That’s another positive – companies have been much more open about sharing best practices amongst each other.”

For International Paper, predictions are tougher to make. At the start of the pandemic, there was a spike in e-commerce as many households turned to online ordering for their goods. This required more shipping and therefore more boxes. International Paper saw this demand for boxes increase and has kept up its pace to meet it.

“Now we are looking at where this demand will go. As consumers, we all became accustomed to clicking that box to order and have it arrive in two days,” said Spear, adding that it’s hard to predict how the demand will change in the face of new challenges like inflation. 

“Our team is optimistic. They’re not distracted by predictions of recession. We’re preparing for the labor situation to remain the same or continue to get worse, so we continue to invest in new technology and automation,” Walter said.

Automation is another area where many in the industry are looking to expand. Norem predicts that more and more companies will increase their use of automation tactics as they begin to understand the benefits. Ramco Innovations is currently providing automation training for its customers, who Norem said are short-staffed and therefore need additional in-house training.

THINKING LONG-TERM

The labor shortage is on everyone’s radar, but tackling the problem may require some endurance. Beyond investing in automation, companies have been looking at ways to attract young talent to the industry. This involves starting with students to prime the market for the coming years and future generations.

“STEM initiatives that you see in middle school and high school are really going to pay off longer-term, because each crop of students that are coming in seem to really like to get their hands on products, and innovate and work in that type of setting,” said Norem.

Beyond the grade school curriculum being in their favor, many companies work at the college level to offer internships, co-ops, job shadows and other work-study initiatives to show students what manufacturing has to offer.

“I think more students will find manufacturing as an attractive field to enter. The ‘dirty job’ mentality is getting displaced by this high-tech environment where they want to learn and innovate,” said Norem.