Michael Bergstrom, PMG’s Director of Client Solutions, speaks on Manufacturing Revival Radio about the state of labor in manufacturing

Michael Bergstrom, Manufacturing Revival Radio; Photo courtesy of Manufacturing Revival RadioIn November, Michael Bergstrom, PMG’s Director of Client Solutions, was invited to speak on Manufacturing Revival Radio during their live broadcast at FabTech in Chicago. Michael was invited to speak on the state of labor in manufacturing.

During the interview, Michael discussed the changes that many manufacturers may not be aware of regarding today’s workforce. Host Todd Youngblood discussed with Michael about why it is better at times to use a labor solutions firm, like PMG, instead of hiring a directly.

“What’s growing and changing in the workforce today is that workers want flexibility; workers want greater independence,” said Michael.

Traditionally manufacturers have looked to hiring skilled technicians to meet production needs, but this is not always the most cost effective, productive option.  That approach also does not attract the rapidly growing numbers of skilled workers that prefer to work on a contract basis.

“As businesses, we have to adapt to the changes,” said Michael. “The desires of today’s workforce is changing and this segment of the workforce is growing five times faster than the traditional workforce that we commonly associate with.”

You can listen to full interview below.

 


Photo courtesy of Manufacturing Revival Radio

For Freedom, Money & Stability: The State of the Independent Workforce

PMG Blog: The state of the independent workforce

MBO Partners recently released a study on the State of the Independent Workforce. Since 2010, 12.6 million payroll jobs were added in the United States, causing what many predicted would lead to the decline of the independent workforce. Contrarily, at a rate of 27%, the independent workforce grew five times more than the overall U.S. employment growth rate of roughly 5.4%. As of 2015, there are 30.2 million independent workers.

Below are some of the main reasons why the number of independent workers has dramatically increased, and what we can expect from this trend in the future.

 

WHY BE “AN INDEPENDENT?”

 

Freedom, flexibility, control and purpose

One of the key takeaways from this study, is that workers are not desperate for jobs anymore, and people want as much control of their profession as possible. When giving the primary or one of the most important reasons why independents chose this type of work, the majority (61%), noted that they wanted “to control [their] own schedule[s].” The next top three were also voluntary reasons including “to have more flexibility” (58%), “to be my own boss” (54%), and “to do what I love” (48%). This, however, doesn’t necessarily mean that independents do not care about income as long as they are fulfilling their passions.

 

High-earning potential

According to surveyed independents, 45% state that they make more money as an independent or contingent worker than they would working for a traditional, full-time employer doing the same job. In the past five years, the percentage of high-earning independents, or those who earned six figures, or more per year has grown dramatically. Of 17.9 million full-time independents, 2.9 million, or 16%, are high-income workers and this number is projected to grow to 3.8 million by 2020.

Three things driving these numbers:

 

Traditional full-time employers are less dependable

There has been a growing trend in people finding traditional, full-time employers to be undependable. This is seen when companies face mergers and acquisitions, lay-offs from losses in revenue, and job automation. For that reason, less than half surveyed believe that traditional employment is less risky than independent employment.

Employers see the problem of having full-time employees as well. Having contract and contingent workers, freelance workers and utilizing labor solutions firms relieve a lot of work for employers like locally sourcing, paying for employee benefits other related costs.

 

 

WHAT TO EXPECT IN THE FUTURE

 

One of the biggest changes we can see that will result in the growth of the independent workforce, is the increasing number of millennials entering the workforce. Millennials value having a flexible work-life balance and pursuing their passions, more than their baby-boomer counterparts exiting the workforce.

This growing job requirement will also become more appealing to employers who also appreciate contract, freelance and on-call labor, as it can be less expensive than hiring directly.

 

*Note: In this study, MBO Partners defines ‘independent workers’ as “the 30.2 million American (21 years or older) who work for themselves on a regular basis as freelancers, contractors, consultants, temporary and on-call workers and those working on fixed-term employment contracts of less than 1 year.”

The full study can be found here.

The reality of direct hiring in manufacturing [INFOGRAPHIC]

Hiring directly is a challenging task that is one of the most time consuming activities for any HR Manager, especially in the manufacturing industry. There is a nationwide The Reality of Hiring Directly in Manufacturingmanufacturing skills shortage and an imbalance of trades skills distributed across the country.  While there may be an abundance of welders in Louisiana who graduated from a reputable welding program, there could be a lack of CNC machinists. It could be the opposite in North Carolina. It has become nearly impossible to find all of the skilled workers needed by a typical manufacturing company when looking for those candidates just in a single local market.

To be specific about the reality of hiring directly, let’s use a hypothetical story involving “Company A.”

 

Company A was about to head into 24 month peak production period and needed 60 CNC programmers to help with the manufacturing process.

The hiring team allotted 25 days[i] to find, interview and hire 60 programmers. After spending countless hours going through the selection process and putting off all other tasks, the hiring team found exactly 60 employees to help during the production flux. It proved to be very difficult to source talent locally so the hiring team had to lower their job requirement standards.

As a general policy, Company A tests new employees for drug use. After the test results returned, one-third[ii] of the new employees had their job offers revoked for failed drug test. That was terrifying for the company, as they did not recruit back-up candidates.

After turnover from failed drug tests, Company A found an additional 8 to 10 percent of the new hires were unqualified for the positions for which they were hired because they had lowered their standards to be able to fill all of the openings. What Company A didn’t know was that by lowering their standards, they would incur additional costs that include increased cycle time and increased overtime to complete production.

Company A’s management team decided that it would be more expensive to continue to hire and train new workers than to work with the few (about 36 out of 60) they still had. They thought their current workforce and the new hires would be capable enough to compensate for the unskilled workers and fall offs. Though many of them were very skilled workers, they still had to work several hours of overtime just to stay afloat. The company had an extensive backlog and it was impossible to stay on top of new orders. ­­­­

After 12 months, 25-30 percentI of the new workers left the company both voluntarily and involuntarily. Company A’s hiring practices caused them to lose 11 percent EBITDA, and they are at risk of losing more.

 

If the nation had an abundance of skilled workers in the manufacturing sector, hiring locally and directly wouldn’t be a problem. Unfortunately, that is not the reality of the U.S. manufacturing industry. With baby boomers retiring and the lack of interest in millennials to join the industrial workforce, companies need to look outside of traditional full time employees and local workers to meet their skill needs.

To avoid the risks of facing the same fate as Company A, manufacturing businesses should seek out the resources of labor solutions providers. They have more access to laborers across the country and are highly specialized in recruiting manufacturing experts. This also avoids the added work put on a hiring manager who may not be familiar with employee roles on the shop floor.

Until more individuals seek out careers in manufacturing, it’s not feasible to expect to find the best of the U.S.’s skilled workforce without utilizing contract labor experts.

 

[i] Based on national averages for annual turnover rates in mfg. industry; data includes layoffs/discharges, quits and other separations

[ii] Results come from surveyed manufacturing companies in Pennsylvania

The contingent workforce: why workers are abandoning traditional, full-time employment

The Contingent Workforce 
If there is a perfect time for machinists, welders and other skilled industrial workers to start working in contract labor, this is it, and for several reasons.

  • Since jobs in American manufacturing have reshored, the number of contract job opportunities for American workers is increasing.
  • Many companies are starting to hire more contract workers because it gives them the advantage of flexing their workforce based on production needs.
  • As the gap between the demand for skilled workers and the number of skilled workers widens, it is absolutely necessary for companies to look outside of local markets and traditional employment avenues for skilled workers.
  • An increasing number of workers are choosing to have adaptable work schedules over full-time or salary jobs and companies are more open to using contingent workers than ever before.

Though less common than full-time employment, contingent work opportunities are being sought out by job seekers, often over traditional job positions. As of 2014, freelance, contract and temp workers account for 15 percent of the U.S. labor force and are expected to increase to 20 percent by 2020. The numbers are rising so dramatically because workers are starting to understand the benefits of contingent labor, especially in manufacturing, and jumping on the bandwagon.
 

CONTRACT LABOR, IN MANY CASES, PAYS MUCH MORE THAN TRADITIONAL LABOR.

This is justified for a couple of reasons. When employers hire contract workers, especially through a labor solutions provider, they expect expert employees. That expertise is usually reflected in a worker’s pay check. It’s not uncommon for journeyman machinists to be underpaid in a permanent position because employers cannot afford a competitive salary, or even hourly rates on a long-term basis.

Another reason, which is often seen as a downside of contingent labor, is because insurance and benefits are not typically offered to contract or freelance employees. This often frightens people who are accustomed to full-time, permanent employment, but a lot of workers will choose contract jobs over permanent positions because the premium pay more than covers the cost of paying for their own benefits.

A common response PMG recruiters get from candidates is, “I’m looking for something more permanent,” but once they hear about the earning potential (which includes paid travel, lodging and per diem allowance), they can’t turn down that kind of opportunity.

 

YOU GET TO CHOOSE WHICH JOBS YOU TAKE AND WHEN YOU WANT TO TAKE THEM

Skilled workers in manufacturing who have years of experience and references to boot will always be sought after by employers, especially with the sizeable job growth in manufacturing and a labor skills gap.

With that being said, highly skilled workers will be sought out by recruiters offering different contract positions on a regular basis. That means they can decline jobs that don’t meet their pay standards or work criteria, and accept jobs that better fit their compensation goals, build an impressive resume and offer the flexibility to work whenever and wherever.

 

CONTRACT WORK IS BECOMING MORE POPULAR FOR RETIREES

Retiring baby boomers who work as contract employees for PMG enjoy the benefits anyone receives from contract labor like excellent earning potential, the ability to travel to new destinations and the ability to be selective the about positions they are offered. Picking up temporary jobs for retirees is a great way to supplement social security payments without exceeding income limits, and to stay busy during retirement.

Companies are often excited to take on retired manufacturers because they have much more experience than younger employees and require less training. Contract work during retirement is mutually beneficially for both parties.

 

THE EXPERIENCE YOU’LL GAIN WILL MAKE YOUR RESUME LOOK A LOT MORE IMPRESSIVE TO EMPLOYERS HIRING ON A PERMANENT BASIS.

Job hopping is becoming the new normal for employees, especially for Generation Y workers who expect to stay at a job for three years or less and move on to something else. Candidates change jobs because they like the new challenges and the ability to gain experience, but it can be a huge turn-off to hiring managers because it looks like these employees will leave as soon as something better comes along.

Contract labor is a good way to take advantage of the variety and flexibility of frequent job change, while preventing the appearance of job hopping on your resume. It gives workers the chance to explore a number of jobs, and gain skills that are attractive to employers without appearing that they lack company loyalty.

Contract employers also have access to state-of-the-art manufacturing facilities that give workers the opportunity to learn to use the most recent equipment available. This is possible because of the relationships between the manufacturing companies and labor solutions providers. These experiences and abilities look very impressive to hiring managers and employers and are more easily obtained in the contingent workforce.

 

WORKERS ARE ABLE TO TRAVEL TO EXCITING LOCATIONS WHILE ON ASSIGNMENT

Contract workers are often hired because they are experts in their field who can’t be found at their facilities and locally, and are needed to supplement a company’s full-time team. Direct employers and local staffing firms are typically limited to the pool of job candidates that are within a certain mile radius. When they can’t find the perfect candidate in their back yard, they consider other means of recruitment. In these cases, companies will work with national contract labor providers to arrange for workers to travel to a job site, and pay for lodging for the duration of the job.

Many contract workers prefer to travel to different job sites for contract positions because it gives them the ability to travel more conveniently, frequently usually without having to pay for hotel and airfare.  They also take the opportunity to immerse themselves in the communities where they are staying and have a better travel and even  work experience.

Some PMG employees enjoy travelling for work because it give them a chance to visit friends and family who live around the country. One worker took on a project in a different state because it was close to where his daughter was living and he was able to spend time with her. Two other employees are good friends who met while working on an assignment with PMG. One of them lives in Northern California and the other lives in Southern California. They don’t really have time to visit each other, so they try to work on the same projects so they can travel together.

 

Considering the benefits, contingent labor can be the most practical way to gain a sizable amount of work skills in a short period of time, enjoy the flexibility not found in traditional employment arrangements and earn more money in the process. Though freelance workers make up most of the contingent workforce, it is not always the most stable or consistent when it compared to other types of contingent labor. Contract employees have the ability to work year-round at one or multiple jobs through contract labor firms like PMG and make above average pay. Workers who prefer flexible work schedules can take time off from working after a project ends, and start a new one when they are ready. Contingent labor is the future of the job market and businesses and workers are quickly adapting.

Society and the manufacturing skills gap: the public perception of manufacturing and how employers are working to narrow the skills gap

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The U.S. manufacturing industry, without question, is thriving. The number of manufacturing jobs in the United States has greatly increased in the last five years as labor and factory operations are coming back from overseas. With average salaries ranging from $50,000 – $70,000 per year and positions available all over the country, jobs in manufacturing should be more attractive than ever.

The only problem is that there is shallow pool of qualified candidates for these jobs because of a manufacturing skills gap in the younger generation. Manufacturing and industrial employers are struggling to bring in the number of skilled workers they need mainly due to social influences.

 

PARENTS AND PRESTIGE

More people are going to universities and pursuing non-technical degrees than in the past. This fact, coupled with children seeing less value in service trades or industrial jobs because they are something parents pay someone to perform, have led to the perception that manufacturing jobs do not have the status or earning potential of office jobs.

Studies suggest that students are less likely to go into manufacturing because the positions lack the “prestige” of desk jobs and are less likely to impress parents and peers. They don’t realize that desk jobs often pay substantially less than jobs in manufacturing, and are more difficult to maintain.

DECLINING NUMBER OF HIGH SCHOOL PROGRAMS

The lack of exposure to industrial trades at a young age, translates to a lack of interest after high school. Michael Johnson, a technical recruiter at PMG, reflects on the educational programs he had available when he was in school.

“We had metal shop, wood shop, architectural drawing, pottery; trades you can learn,” says Johnson. After looking through the classes offered at his high school alma-mater, he was disappointed to see what was available. “There aren’t any industrial art programs in high schools anymore.”

LACK OF PROPER TRAINING

There are people with four-year degrees that are choosing to go into the manufacturing field, but they lack the proper education in manufacturing one receives from attending a community/technical college or trade school.

Johnson explains that students who obtain degrees in Psychology or Accounting, for example, have trouble competing for jobs in those fields. As a ‘Plan B,’ these students try to get jobs in manufacturing because of the pay and the large volume of open positions. However, they lack the skills and experience that are needed for these difficult and often physically demanding jobs. Though many companies will provide on-the-job training or resource programs, it still doesn’t exactly mean they’re qualified. “They lack the formal training,” said Michael “that’s the big thing.”

 

Companies and government bodies have acknowledged the social causes of the skills gap and are working to build the skilled trades workforce. Their aim is to invest in long-term solutions that will change attitudes about industrial careers.

 

COMPANIES INVESTING IN THE NEXT GENERATION

Companies are investing in educational programs that prepare individuals for work in high-demand fields. This helps educators improve their academic resources and provides students with job connections following graduation.

Along with funding academic programs, some companies are trying to promote apprenticeships to allow students to have more hands-on experience. Companies like Dow, Alcoa, and Siemens have partnered with community colleges to promote apprenticeship programs in the manufacturing field, mainly for advanced positions, like welding.

GOVERNMENT FUNDING AND NARROWING THE SKILLS GAP

State and federal governments have also been investing in apprenticeships. In April, President Obama announced that $100 million in federal grants will go towards funding apprenticeship programs as part of an ongoing government strategy to reverse the declining trend of these programs.

On a state level, Connecticut increased apprentice tax credit from $4,800 a year to $7,500 to make these programs more appealing to employers.

USING CONTRACT LABOR SOLUTIONS

Companies that offer contract labor solutions specialize in leveraging their national reach and the flexibility associated with contract work to build a pool of the most qualified manufacturing workers. These are workers to whom employers would not otherwise have access through traditional employment avenues to fill openings. Employers who elect to utilize a contract labor solutions partner gain the ability to bring on the perfect candidates for their open positions without having to sacrifice productivity from unfulfilled positions or hiring less-qualified workers.

 

Though there is a skills gap in the U.S. manufacturing work force, there are still very talented and hardworking employees available to work. Trying to fill jobs with any willing and able workers is just a quick fix to a problem that will cause the United States manufacturing industry to become less competitive on an international level. Investing in the education and training of a younger generation and working with companies who specialize in providing contract labor resources to bridge skills gaps will be the most effective way to fill the skills gap and improve the industrial sector.

 

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