The State of Manufacturing
September 13, 2019 | The state of manufacturing
National Manufacturing Day is quickly approaching. Scheduled for Oct. 4 and part of the larger National Manufacturing Month, the annual event provides an opportunity for manufacturers and trade organizations to educate and create awareness about the industry.
On last year’s National Manufacturing Day, nearly 3,000 events took place across the country, according to the Manufacturing Institute. Iowa businesses and organizations are involved, too. Iowa State’s Center for Industrial Research and Service (CIRAS) holds events all month long. Last year, ABI and Elevate Advanced Manufacturing hosted a Legends in Manufacturing Awards Dinner and an Advanced Manufacturing Conference.
In 2019, the state’s manufacturers have special plans for the day. Lisle Corp. and its sister company EZ Way of Clarinda host elementary and high school students in their facilities every year. At least 100 students are expected to come through the plants.
“We host students who are interested in manufacturing,” said Mary Landhuis, president of Lisle Corp. “Tours get them some exposure to what manufacturing is all about.”
Agri-Industrial Plastics of Fairfield will roll out a new solar panel array on its factory rooftop for National Manufacturing Day. The 1,350-panel project is expected to produce more than 500 kilowatts per hour and is fitted with a Tesla battery for extra storage. The company will also be presenting the project at the Advanced Manufacturing Conference in early October.
“Innovation and sustainability, we’re all in it together,” said Lori Schaefer-Weaton, president of Agri-Industrial Plastics. “It’s not just for ourselves, but for the community we live in. We’re excited about that.”
National Manufacturing Day comes at a positive but trying time for the manufacturing industry. Revenues are on the rise, but workforce issues, advances in technology and geopolitical trends are all having an impact on how Iowa companies operate and plan for the future.
CONTINUING THE WORKFORCE FIGHT
It’s become somewhat of a recurring theme for Schaefer-Weaton. She said fighting for talent is her top priority. Agri-Industrial Plastics is located in a city of about 10,000 people with a number of other manufacturers as well, making the task that much tougher.
“We’re fighting everybody for talent,” Schaefer-Weaton said. “Workforce is at the top of my list all the time. I can tell a pretty good story when I’m recruiting someone about why small-town Iowa is a great way of life. Cost of living is reasonable. You can get entrenched and involved in your community. I can tell that pitch all day long.”
Landhuis’ company is dealing with the same problem, and there hasn’t been much of an improvement in the workforce space in the past year or so. Statewide initiatives such as Elevate Advanced Manufacturing and Future Ready Iowa are more long-term plays, she said, so it could take a while before real change comes to fruition.
According to Iowa Workforce Development, which keeps a running survey of Iowa businesses, 32.5% of respondents reported a vacant job position. Almost 50% of respondents said “agree” when asked if the vacancies were due to lack of applicants.
“We haven’t seen a huge change [in the past year],” Landhuis said. “It’s good to be highlighting the issue and really bringing it to light. It’s good to see that activity is happening because it’s reaching those kids at a young age and talking about what manufacturing is. There’s a bad rap sometimes, but I think that identity is making a shift.”
Miller Products, an on-demand machine shop and components manufacturer in Osceola, runs programs through local schools that involve students at younger ages. Jack McFarland, president of Miller Products, said generations of children have been told they have to go to a four-year college to find a good job and live a good life.
But that’s not the case anymore, he said. A trade school or community college can lead to good jobs and well-paying careers without the same debt.
“What we’re trying to do is work with schools and other businesses in town to educate people to come and see what we do,” McFarland said. “You can play with computers. We have state-of-the-art stuff right here. You don’t need school debt. You’ve got to convince parents that their kids can do something different.”
The push to find more employees has led to heavy investments in internships, apprenticeships and other training programs. Miller Products has partnered with Des Moines Area Community College to conduct employee training. The company of about 40 employees has one person going through the program right now to pick up technical machine skills.
Lisle Corp. has leaned into its internship and summer student employment programs. Many local young adults will go to college and pick up a job in manufacturing when home for the summer, working in packing, shipping and assembly. Internship opportunities also pull in college-aged adults and are wide-ranging, with jobs in engineering, sales, marketing and more.
“That helps them get a taste of manufacturing,” Landhuis said.
Agri-Industrial Plastics offers both internship and apprenticeship programs. Over the summer, the company had four interns in engineering, quality engineering, robotics and human resources. Schaefer-Weaton said the program has been successful. A number of current full-time employees have come from internships.
Apprenticeships at the company help employees ramp up their current skills and advance their career paths. And since the company is always looking to promote from within, apprentice-style training can afford employees plenty of opportunities.
Going forward, all three companies agreed it’s important to continue educating people about the opportunities in manufacturing. It’s also essential to find new ways to boost career advancement for potential employees.
“The best thing we can do is hire good people, loyal people and people who are willing to come into our organization and improve themselves,” Landhuis said. “Then we can provide upskilling and training to boost their career. There’s so many areas you can go into in manufacturing, but again it’s the willingness to learn and better themselves that’s the big key.”
INNOVATION LEADS THE WAY
The workforce issue goes somewhat hand in hand with the burgeoning innovation happening in the manufacturing industry. More manufacturing companies are investing in technology to offset workforce issues while subsequently boosting production.
A recent study from Deloitte, the Council on Competitiveness and Singularity University found that 86% of the top 100 companies in research and development spending worldwide are from the manufacturing industry.
Anecdotally, that increase in attention and spending has been happening in Iowa, too.
“Technology is moving so quickly that sometimes it’s difficult to keep pace,” McFarland said. “There’s a lot of interest, work, effort and investment being made in additive manufacturing or 3D printing. We’re going to see some significant changes in our industry.”
While innovation is happening on a national scale at a rapid pace, investment in new machines and products has to be strategic. Schaefer-Weaton provided an example: Installing a new robot to build parts that bring in $50,000 per year isn’t worth the investment. But a machine that builds parts worth $500,000 every year? The return is much easier to see in that scenario, she said.
More technology also creates a need for highly skilled workers, which spells another challenge for employers. As automation becomes increasingly prevalent, workers will need to know how to operate and program advanced machinery. That’s why robotics and advanced manufacturing programs at community colleges are becoming a bigger priority for manufacturers.
“What we need today are more skilled people through automation and process improvement,” McFarland said. “The real simple manual labor jobs are not available and you need someone to run the more sophisticated equipment and programs.”
But that also means fewer labor-intensive jobs, which opens the pool of potential job candidates. As the price of new technology becomes more cost-effective, Landhuis believes manufacturers will increasingly implement robotics into their processes, creating new avenues for potential employees who were perhaps skittish of hard labor.
“For a highly repetitive job or a job with a risk of injury, that’s where robotics makes sense,” Landhuis said. “The price point has become much more reasonable and much safer. Now when you see a robot operate, they sense if someone is close and then automatically stop. You don’t have to worry about the new safety factor being introduced into your [facility].”
TARIFFS REACH THE BOTTOM LINE
Many think of farming as the biggest industry affected in the ongoing and escalating trade war between the United States and China, but manufacturers, many of which import parts or materials from overseas, have also felt an impact on their bottom line.
Miller Products creates low-cost components for larger manufacturers and has actually seen a boom in business since the tariffs were first implemented last year. McFarland believes the spike may be due to larger manufacturers searching for material options inside the country just in case prices become astronomical overseas. Miller Products can also deliver parts much faster than manufacturers in Asia.
“Price is always an important part of it, but when you make low-dollar parts, a few cents or dollars to get your product out the door quicker versus not out the door is important,” McFarland said. “So part of it is delivery, but I think the other part is just fear of having an adequate source [for these components].”
Despite the recent increase in business, he said the cost of materials has increased and that price increase is being transferred to the customer. Lisle Corp. is in the same boat. Tariffs have forced the company to push costs onto customers as well.
“It’s affecting us, but we understand the big picture and we feel the initiative,” Landhuis said. “In the short term, it does affect us, and we have to pass that along to our customer base.”