Posted by: davidhayden | March 14, 2012

Does the high cost of labor sink factories?


This is a re-post of an article I posted Apr 2010 and I was reminded that it is more relevant today than ever before after reading Dean Barber’s post.   You may also want to review a similar article I recently had published in Manufacturing Engineering Magazine

Does the high cost of labor sink factories?

There has been much discussion about the high cost of labor in the United States. And, having worked in a number of union shops I can attest to the seemingly high wages. I have personally benefited from the union wages because as a result of union wage, as managers our wages increased proportionately.

It is not just the wages

Increasing wages without proportional increases in production are a problem. But, having said that, new equipment, methods and advances in manufacturing engineering have dramatically increased the productivity per employee.

There is a much bigger problem. As high as those wages seem to be, no one wants to go into the trades these days.

In every shop I have worked for the last 20 years the problem has been the same. They can’t hire skilled machinist or craftsmen.

For example more than one shop I have worked at was anticipating losing 55%-65% of their skilled workforce to retirement in the next few years. Guess how many people are applying for those jobs? Maybe 10%-15% of what they need and most are not skilled.

I had more than one argument with the shop floor guys about the extent to which we were outsourcing work. My point always was and is today. Get the union leadership together with management and find a way to entice and develop a workforce.

It does little good to keep jobs in the company if there is no one to fill them.

How did things go so wrong?

Sometime ago we hit a perfect storm.

  • Blue color work became unglamorous
  • Environmentalism demonized the manufacture of anything
  • The emphasis on a college implied blue collar workers were a subclass of uneducated stupid people

At the end of the day, kids were discouraged from entering the trades. Somehow it is more glamorous to be waiter or hair dresser than an assembler, machinist or planner. Suddenly every child has a computer and aspirations of making their fortune sitting in their swimming trunks doing internet marketing.

So, India, China, Korea, Mexico and other less developed countries have the labor pool. They are far more concerned with feeding their huge populations that fussing with environmental or OSHA regulations. Is it any wonder the manufacturing work is going offshore?


It is high time we make manufacturing honorable again

No country can survive in a service based economy. If you do not have worker bees earning a decent salary, producing real products, there will no reason to buy services. Who needs an accountant if the bulk of the population if flipping burgers for minimum wage?

Who needs an engineer or lawyer if there is nothing to be made?

But Manufacturing is so dirty, why not let China do it?

I actually had this conversation with a friend who is an environmentally conscious therapist. The hypocrisy was a little thick for me.

There is no cleaner manufacturing than in the western industrialized countries and the US in particular. I guess her environmental conscious only extends to the border of her neighborhood. If the offshore countries destroy their environment it’s ok if as long as they put the word ‘green’ on their packaging.

This is not your grandfather’s machine shop

Machine shops have the reputation of being dangerous sweat shops. Often people on the outside see them as dark, dingy and noisy. And in some cases that may be true, in most cases it is not.

If you get a chance, Go visit a medium or large factory. Ask for a tour. I am willing to bet, the shop environment will amaze you.

Look at what it takes to make that mold for the cell phone you carry around, or the parts that go into your mechanical pen or blender. Imagine the thousands or parts that go into your automobile, bicycle, or computer.

Then, be very thankful that there are still a few of us that like to make stuff.

What is that sucking sound?

Coming in from the bight sun into the catacombs of the empty factory took a bit of adjustment.

Ron was uneasy.  The factory was about 500,000 square feet, dark and full of strange noises.

He could hear the wind whipping through the ceiling fans and that loud bangs of the damaged sections of the steel room.   Ron wished his flashlight was brighter.

As he was banging the flashlight to eek out a little more light, he heard an all too familiar sound that sent chills down his spine.

Ron’s situation is not unique.  He has found himself in ghost factory.  Not so many years ago this building was teeming with life and activity.  Machines were whirring, people were scurrying around, forklifts flying by

After Ron got used to the noise, the chilling sound did not bother him. After all it was just the sucking sound of manufacturing jobs leaving the area.

Since Ron was going to make a fortune turning this factory into a shopping mall, the sound was music to his ears.

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Responses

  1. Great post Dave!

    You have hit the nail on the head with today’s generation not entering the blue collar skilled work force. Machinist and other skilled trades are something to be very proud of and an experienced machininist can earn more than many college educated folks.

    In my pursuit of data for a business plan I’m working on for a non-profit organization I came across an article that speaks about how counselor’s are pointing high school students toward the pursuit of a bachelor’s degree over vocational trades. And how our machinists are retiring and there isn’t many upcoming machinists to replace them. Indeed, I agree with you, this is a mistake for our nation. We need to incorporate machinist training back into the high schools, as well as apprenticeship programs back in the factorys. Skilled trades are an important component of our economic sustainment and growth.

    Link to article: http://www.kanabco.com/vms/reprints%20and%20essays/problem.html

    Some text from the article:
    “High school counselors now direct 100% of their students towards going on to college and getting a BA. In fact, the number of students going on to a four-year college is their measure of success. Because of this the well of potential machinists has gone dry and large companies have simply abandoned their traditional high-school-to-work apprenticeship programs”

    “For every 100 machinist we had in the 60s and 70s we may need only 20 today. But we don’t even have TWO in training now. All of the good machinists have gray hair and are getting ready to retire and we don’t have anyone to replace them”

    Consequently, I was a proponent of vocational machine shop training while I was in high school back in the 80′s (oops, gave away my age). And through the grace of God and the machine shop trade, I have always held a decent paying job and in my 30+ years in the machining trade I have not ever been on unemployment; I pray that I never have too. In short, a significant number of people in this generation are missing out on an opportunity to get into a skilled blue collar field where the pay is good and the job security is higher than most other employment fields.

    Keep up the great work Dave!
    Garrett

  2. Great article that reminds me of the US before … well, you know.


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