Perseverance During a Challenging Time
September 11, 2020 | Breaking the manufacturing ceiling
With companies of every size throughout the state, Iowa boasts one of the most robust manufacturing sectors in the nation. While the industry has faced challenges this year due to the coronavirus pandemic, most manufacturers continue to operate and are cautiously optimistic about the future. Two industry leaders in the state share insights about their businesses as Manufacturing Day 2020, which is on Oct. 2 this year, draws near.
Iowa’s manufacturing output has grown exponentially over the past decade, increasing from roughly $26 billion in 2008 to nearly $36 billion in 2018, according to the National Association of Manufacturers. That includes a 22% growth in manufactured goods exports during the same period. Top sectors include food, beverages and tobacco products; machinery; chemical products; computer and electronic products; fabricated metal products; plastics and rubber products; nonmetallic mineral products; primary metals; motor vehicles and parts; and furniture and related products.
Fourteen percent of Iowa’s workforce, or 217,000 people, were employed by the state’s manufacturing industry in July 2020, according to the U.S. Bureau of Labor Statistics. While that’s down from 223,000 employees in February 2020 due to the coronavirus, the manufacturing sector remains the largest in Iowa. There are 6,080 manufacturing companies operating in the state, according to an Iowa State University Center for Industrial Research and Service 2018 report.
To keep the industry competitive, education is important. A report, “Iowa’s Advanced Manufacturing Sector: The Iowa Innovation Council Recommendations to Support Innovation, Growth and Competitiveness” published in 2017 as part of the Governor’s 2017 Year of Manufacturing Initiative, suggested facilitating regional network building to connect manufacturers in the state, ensure manufacturers are prepared to compete in a digital world, and invest in 3D printing and advanced manufacturing programs at state universities.
A change in plans
For some companies, Manufacturing Day is an opportunity to provide facility tours to prospective workforce recruits and clients. That changed this year when coronavirus shut down many businesses to the public.
According to the Manufacturing Institute, Manufacturing Day, also known as MFG Day, “helps show the reality of modern manufacturing careers by encouraging thousands of companies and educational institutions around the nation to open their doors to students, parents, teachers and community leaders.”
In Pella, where Vermeer builds agricultural, underground construction, surface mining, tree care and environmental equipment, the business is not allowing visitors. Mindi Vanden Bosch, a channel advancement manager and part of the third generation of the family to own Vermeer, says the company will not be inviting the public to its 33-acre campus.
“We are currently not allowing visitors on campus, so that has changed our Manufacturing Day plans but we still plan to celebrate, potentially a virtual type event,” she said.
At Yeoman & Co. in Monticello, the day will also be subdued, said Tom Yeoman, president and CEO of the company, which designs and produces tools for snow removal and lawn care.
“I plan on buying lunch and share information about Manufacturing Day in October with my employees,” he said.
Filling those slots is critically important, as many manufacturers grapple with the ongoing workforce shortage and skills gap.
The challenge of finding the workers with the right skills isn’t going away anytime soon, Vanden Bosch said.
“Prior to the crisis with record low unemployment and peak demand, Vermeer, along with many other manufacturers, were feeling the stress in meeting customer demand,” she said.
“Specifically, at Vermeer we have researched and began investing in much more robust training programs in critical areas like welding, painting, machining and basic assembly. Ultimately, the goal is to provide a better experience for new team members, while shortening the time frame for the individual to become an engaged, productive Vermeer employee.”
The company has introduced programs to better onboard, train, develop and retain employees to reduce the gap.
“People are Vermeer’s greatest resource,” Vanden Bosch said. “On the shop floor, we are developing onboarding programs that improve a team member’s experience, while better equipping them to perform their workload safely and productively. Our operations and information technology leadership teams are evaluating Vermeer’s current IT and manufacturing systems in order to understand gaps versus how we plan to work in the future.”
Leadership programs have been developed to help create the next generation of leaders at Vermeer.
“In our salaried teams, we are developing leadership programs to help young managers become leaders, and experienced leaders improve their effectiveness,” she said. “At the same time, the Vermeer senior leadership team is focused on clearly understanding where the market is shifting so we can clearly react to talent or customer needs of the future.”
Yeoman relies on a satellite branch of Kirkwood Community College in Monticello to help fill open positions.
“They can tailor any type of training program we need to train our employees,” Yeoman said. “However, our requirements for production staff are minimal. Showing up on time and being able to count to 10 without removing your shoes are the two most important.”
Despite major manufacturing layoffs throughout the state, finding skilled employees remains difficult.
“Hiring qualified staff is always a challenge,” he said. “Even with the virus impacting the unemployment rate it’s always difficult to find staff that that want to show up every day and give you an honest day’s work.”
The coronavirus pandemic led to a slowdown at businesses globally and has affected Iowa’s manufacturing sector in various ways. As business leaders have managed changes in supply and demand, they have also put new efforts into place to keep workers safe.
“This has been a tough year with so much uncertainty when state and national economies were halted, restarted, paused and reopened,” Vanden Bosch said. “We dealt with supply chain issues and labor disruptions early on.”
Vermeer was designated an essential business, allowing it to continue to operate during the pandemic. The company has followed cleaning, hygienic and distancing protocols recommended by the U.S. Centers for Disease Control and Prevention.
“Vermeer focused on creating new common-sense practices to keep our team members safe, and our business has remained robust,” she said. “The management team at Vermeer has worked hard to create an environment where team members are protected so we can continue to serve our customers. Through all this we have continued to see growth in our business segments and in the markets that we serve.”
Vanden Bosch said the pandemic has brought forth several challenges, the largest of which is uncertainty and workers needing to stay home with their children.
“The biggest challenge recently is dealing with the uncertainty of COVID-19,” she said. “In Iowa specifically, we have a robust unemployment benefit, compared to other states. When the federal government mandated a $600 supplemental benefit to weekly unemployment, it created a tough environment to incentivize a stable workforce. We are thankful that families are taken care of, but the side effect for us was higher absenteeism, which caused unpredictable production and supplier schedules. It was a struggle to manage this new reality.”
Those uncertainties have continued with the start of the new school year.
“Looking into the upcoming school year presents more uncertainty for us. Vermeer pulls from many school districts, and there are inconsistent decisions among all those school systems,” she said. “Vermeer is committed to work with our team members as we again navigate a new uncertain world.”
For some businesses, sales are up
At Yeoman, the pandemic has meant increased sales, partly because customers are working on more home projects, and partly because there was a lot of snow during the past winter.
“Since we are in the seasonal tool business our winter tool sales are very strong. The winter we had last year provided a lot of snow and as a result an increase in sales of winter tools,” Yeoman said. “Our customer base will remember the previous year’s winter conditions. If it’s a cold and snowy winter the previous year, they will buy a little more, and the reverse is true if we have a milder winter.”
Due to shipping disruptions and workers staying home, Yeoman’s competitors were not able to ship as much to customers, increasing the Monticello company’s sales. His workforce was not reduced due to the coronavirus.
“Our long handle tool sales have been very good this year. COVID-19 kept a lot of people home doing cleanup, fix-up jobs,” he said. “As a result, the retail hardware business is up 30% to 40%. This translates into increased sales on tools. In addition, the two large tool providers in the industry were adversely impacted by the virus and have been unable to ship tools in a timely manner.
This provided Yeoman & Co. with additional sales to customers with whom we don’t normally do business.”
A strong inventory helped the business react to the competitor pullback.
“We were able to ship since we carry a very healthy inventory so we can ship quickly, typically same day/next day, and we had no impact of the virus within the production or office staff,” Yeoman said.
However, it’s difficult to predict the future in terms of the economy, customer demand and weather, making business even more complex for Yeoman.
“The biggest challenges are predicting inventory level needs six to 12 months in advance,” Yeoman said. “The seasonal tool business is very weather-dependent and as a result, sales can fluctuate from one season to the next, as well as month to month. We have to plan production schedules and inventory to meet high demand events since there are times of the year when we will ship winter snow shovels and pushers, as well as shovels, hoes, and rakes to multiple parts of the country on the same day.”
The increased sales volume has allowed the company to experience raw material price drops, he said.
Navigating a digital world
Staying abreast of digital changes within the industry is another challenge the two business leaders face.
“Keeping up with modern times is always a challenge,” Yeoman said. “We update computer software regularly to manage production and inventory levels, not to mention updating a continually changing customer base.”
Vermeer is tasked with keeping software and hardware up to date in a variety of ways, from robotics to data collection.
“The world is changing rapidly,” Vanden Bosch said. “The digital world is colliding with the manufacturing world. Connected enterprise software that enables data collection, data-driven insights coupled with robotic, autonomous technology, is improving every day. In fact, our workforce is not only more capable of dealing with the digital change, many of them and our customers are demanding it.”
Investing in trade and STEM (science, technology, engineering and mathematics) training programs is one way to ensure the company is prepared for future technological innovations.
“Whether you work on the shop floor in production or design the next innovative Vermeer product, students must be comfortable with digital technology and have a solid math and science foundation,” Vanden Bosch said. “On our shop floor our team members must know how to paint, weld, assemble or run complex machining centers while reading, understanding and interpreting complex engineering documentation using computers and PLCs [programmable logic controllers] connected to smart tools or measuring devices.”
Even though this has been a challenging year, Vermeer is celebrating several successes.
“2020 will also be a big year for Vermeer, as we will be opening our new, world-class manufacturing facility after spending the last two years recovering from the F3 tornado that devastated our Pella campus,” Vanden Bosch said. “The new factory is the capstone of many great campus and business improvements that the team has diligently worked on since 2018. We are excited about the continued investment in facilities, technology and products both in Pella and our subsidiaries around the globe that will propel Vermeer long into the future.”
She credits Vermeer’s resiliency on the company’s lean practices.
“Dealing with the current pandemic has certainly caused all businesses to figure out a new way to keep their business going,” Vanden Bosch said. “Thankfully, Vermeer has been on the lean journey for over 20 years now and our ability to understand our processes has helped us react when uncertainty and change hits us.”