FOCUS: Measuring the manufacturing skills gap in Iowa
Employers try different solutions; will they work?
Dee Zee Inc. can’t find enough production workers to fill its increasingly skilled positions, and the gap is growing.
The Des Moines manufacturing company, which has more than tripled its workforce in the past seven years, currently has more than 100 open positions it’s seeking to fill in automation, robotics, and tool and die and computer numerical control (CNC) operators.
“Over the last eight to 10 months the openings have been growing,” said Kelli Gallagher, Dee Zee’s president. “I think a lot of it is that we need more of these skilled positions. With us investing in the automation, there aren’t as many non-skilled positions; many of them are becoming skilled.”
Dee Zee isn’t alone. The manufacturing workforce skills gap is a nationwide problem, according to the National Association of Manufacturers. NAM estimates that over the next decade, nearly 3.5 million U.S. manufacturing jobs will likely need to be filled. Gaps between worker training and the skills needed for the jobs, however, could mean that 2 million of those jobs will go unfilled.
NAM attributes two major contributing factors to the widening gap — baby boomer retirements and economic expansion. An estimated 2.7 million jobs are likely to be needed as a result of retirements of the existing workforce, while 700,000 jobs are likely to be created due to natural business growth.
Mike Ralston, president of the Iowa Association of Business and Industry, said work force supply appears to be a nearly universal concern for his organization’s members. The organization has not done any formal studies of skills gaps in Iowa, he said. However, based on informal surveys that ABI has done recently, “everybody’s looking for more people,” he said.
Ralston said he has heard of many manufacturers turning to nontraditional work schedules as one solution. “So they’re trying to help people find ways to get their hours at times that are good for them. They’ll find a way to try to work with them. They’re trying to be very creative.”
Inadequate availability of hourly workforce was ranked fourth-highest among 24 issues that Iowa manufacturers believe will impair their ability to grow over the next five years, according to a recent survey conducted by the Center for Industrial Research and Services at Iowa State University. The top three issues expected to limit future growth were rising health care costs, government regulations and rising labor costs. Much farther down the list (eighth) in importance to employers was inadequate availability of salaried technical workforce.
“Regarding workforce, it is much more complex than has been painted in general,” said Ron Cox, director of CIRAS. “It’s easier to say there aren’t enough people, that there’s a skills gap. … I say there’s a lack of certain skills in certain areas of the country or state at the wages that companies are able to pay and stay in business. Basic economics say if I need somebody and can’t find them, if I offer higher wages, that will attract them out of another job. However, businesses say they can’t stay competitive if they pay that wage.”
The most effective programs to address skills gaps occur when companies design approaches that are highly specialized to the region and industry, Cox said.
ABI has made efforts to market manufacturing careers in a new light in recent years, through a campaign called Elevate Iowa launched in 2013. The campaign aims to boost enrollment in high-demand programs such as welding. By 2018, the association anticipates that Iowa will have a shortfall of 6,672 skilled workers in the advanced manufacturing sector.
Since the launch of Elevate Iowa, Iowa’s community college manufacturing and skilled trade programs have grown. Enrollment in manufacturing/skilled trade programs increased almost 10 percent from fiscal year 2013 to fiscal 2014, with more than 3,900 students enrolled. Welder technology program enrollment increased nearly 20 percent, from 1,187 students in 2013 to 1,424 students in 2014.
The long-term strategy of ABI’s Elevate program targets Iowa’s K-12 students and parents, so even more significant enrollment increases are expected in three to five years.
Manufacturers also are working directly with the state’s community colleges in efforts to develop specialized training programs to fill the gaps.
For example, Vermeer Corp. in Pella partners with both Des Moines Area Community College and Indian Hills Community College for specialized training programs, said Rich Kacmarynski, a talent acquisition specialist with the machinery manufacturer.
In terms of workforce, “Vermeer is a little bit geographically challenged,” he said. “We’re an hour away from the metro and an hour away from Ottumwa, so we’re kind of in the middle.”
The company has had a long-term relationship with Indian Hills for welding and machining, and in 2012 Vermeer established an on-site welding training program with DMACC. Two years ago, Vermeer began training industrial painters for its plant through a program DMACC operates at its Southridge campus in south Des Moines.
Partnering with employers
“Our goal with this employer training is to get employer involvement from the beginning,” said Michael Hoffmann, executive director of DMACC’s continuing education department. “It’s been a great fit.” The department creates short-term non-credit certificate programs based on employers’ needs.
In manufacturing and industrial technology, the department offers certificates in areas such as basic equipment operator training, building maintenance and CNC operators.
DMACC recently began hosting employer breakfast clubs to gain more insight on how the college can help address skill shortages and other workforce needs, Hoffman said. At a recent manufacturing breakfast, Hoffmann was told that manufacturing robotics is a significant need.
Indications of the high competition for workers include HR directors visiting community college classes to recruit students and providing students with tours of their businesses.
“One of our challenges is recruiting students into this manufacturing programming, because the unemployment rate (in the state) is so low,” Hoffmann said.
One way that DMACC is addressing that is to reach out to students while they are still in high school. In Pella, for instance, DMACC has established a career academy with the high school so that students can get familiar with manufacturing skills and get college credit while they’re still in high school.
Cemen Tech, an Indianola-based global manufacturer of concrete mixers, has developed an in-house industrial painter training program to address a shortage of qualified painter candidates, said Michelle Eggleston, human resources manager. The company is also taking steps to address shortages in welding positions. Currently, the company has openings for two painters and three welders.
Because the company is selling a record number of units, being short just a few positions limits the ability to produce those units in a timely manner, Eggleston said.
“Of the applications we receive, one in five have the skills we’re looking for,” she said. “But I want to emphasize we’re looking for consistency in work history, and aligning them with Cemen Tech core values, that cultural fit. We want to make sure that candidates who come to Cemen Tech are long for our world. We understand any person is going to have an onboarding period, but there is a gap now in skill needed.”
Cemen Tech has one trainee in its six-month painting program and is seeking another candidate to hire. The company has been regularly providing tours to DMACC students of its facilities to try to generate more interest and awareness in its operations.
“For welding, we’re trying to identify two positions that are looking for part-time work,” she said. “It gives them an opportunity to continue going to school while they earn money and learn about Cemen Tech.”
The company is also seeking greater efficiencies through continuous improvement strategies in each of its operating areas. For instance, it has placed a weld engineer on the floor to work with all the welders, regardless of their experience level, to increase efficiency, quality improvement and training.
At Vermeer, although the pace of hiring is relatively flat this year because of business conditions, the company had experienced shortages in welders for each of the past five years, said talent acquisition specialist Kacmarynski.
“We’re concerned as we go forward, because we’re going to move more into robotics and CNC machining,” he said. “That’s why we’re excited about our partnerships with the high school, DMACC and Indian Hills, to provide us with the skilled workers for our industry.”
Dee Zee has similarly worked with DMACC and Indian Hills Community College in its recruitment and internship efforts, Gallagher said.
“We know that we’re going to need 45 mill operators starting in September,” she said. “We’ve already recruited for some of those, just to keep up with growth. … We’ve automated a lot of our processes; that’s where the automation growth is.”
Although the company has increased its starting wages by 10 to 15 percent for some positions, the low unemployment rate is making it a challenge to find workers, said Corbon Kinney, a talent acquisition consultant with Dee Zee. In response, the company has expanded its recruiting efforts.
“We’ve diversified ourselves so that we don’t only work with jobs boards,” he said. “We’re very heavily involved in social media and marketing through radio.” The company has also participated in special events such as a hiring fair held at the Iowa State Fair.
Dee Zee also participates with an informal group of manufacturers that meet bimonthly to discuss issues, and they’re experiencing similar concerns.
“I think right now the number of qualified candidates in the market is low, unemployment is low,” he said. “Those are two reasons for the shortage of candidates in the marketplace right now.”
Not feeling a gap
Some Greater Des Moines manufacturers say they aren’t experiencing skill shortages.
“We just came off a new wave of hiring last week, and we had a good pool of applicants to choose from,” said Fred Buie, president of Keystone Electrical Manufacturing in Des Moines. “I was surprised, actually. I would be on the side of those who say, ‘I haven’t felt the skills gap yet.’”
Buie said the more challenging positions to fill tend to be welders and painters, because Keystone looks for workers with previous experience.
Ryko Solutions Inc., which manufactures car wash systems in Grimes, recently installed new assembly machines and has had good success hiring new technicians locally to operate them, said President and CEO Mike Gillen. “We’ve not really had a problem with that; we’ve had a good, solid workforce close by,” he said. “Probably the hardest thing is finding good field service technicians, because they’re spread out. It’s more the complexity of having them dispersed throughout the country than being able to find good quality people.”
By the Numbers
Iowa manufacturing employment: 216,887
Percent of workforce in manufacturing: 14.3
Average manufacturing wage (as of 2014): $54,401
Source: Iowa Workforce Development
Expected growth in Iowa manufacturing careers by 2020
CNC machining: +23 percent
Machining: +17 percent
Industrial automation: +16 percent
Welding: +14 percent
Industrial maintenance: +11 percent
Tool & die: +8 percent
Source: Elevate Iowa
Economist disputes skills gap label
Dave Swenson, an Iowa State University economist, said he believes “skills gap” is not the right term for what’s happening in Iowa, because wages for high-demand skilled manufacturing positions aren’t being driven up substantially.
For instance, in welding and CNC machining, “we found the rate of increase in pay was a little bit higher than the rate of increase for all production workers,” he said. “The point is there was still very little wage inflation in those skill categories. If the wages aren’t being bid up, it’s hard for an economist to take the lament seriously.”
Rather, the evidence suggests that a lot of lower-skilled jobs generally in Iowa have disappeared, and they have been replaced with middle- to upper-middle-skill jobs, Swenson said.
“There are a lot of industries competing for those middle-skill jobs, so there’s good competition for that human talent,” said Swenson. In this case, much of the talent is voting with its feet for occupations other than manufacturing, he said.
Swenson pointed out that of 107 manufacturing occupations in the United States, only eight of them — among them welding, machining and CNC tool operators — are considered high-growth, while the remainder are considered high-loss fields.
Though awareness of the issue has definitely increased in Iowa, the solution is more complex than simply training more welders, Swenson said.
“I think industry working with the community colleges will only help at the margins,” he said. “There are so many people competing for these students that manufacturing just has to get in line.”