Is shortage due to skills or wages?

Steve Lowe Jr. is scrambling to find more than a dozen skilled machinists, experienced engineers and laborers after his company recently won a multimillion-dollar contract to build giant camshafts for diesel locomotive engines.

He said he’s sought out state work force agencies, local community colleges and employment agencies in seeking the workers he needs to start camshaft production this summer.

Lowe said he even looked into hiring foreign workers through the federal government’s controversial H-1B visa program, which allows workers from other countries to work temporarily in the United States.

“To date, I have found no one,” said Lowe, president of LSM Systems Engineering in Waterford, north of Detroit.

Melissa Hull, engineering and production coordinator at American Tooling Center located in Grass Lake, east of Jackson, tells a similar story.

Business is booming, but the company is having difficulty attracting enough machinists, tool-and-die journeymen, and computer numerical control machine programmers to keep up.

“We’re swamped, said Melissa Hull, the company’s engineering and production coordinator. “We’re running 10-hour shifts a day, six days a week.”

That’s mostly great news after a decade in which Michigan lost about 468,000 manufacturing jobs — more than half of all manufacturing jobs in the state -- as automakers, office furniture manufacturers and others struggled to survive the worst stretch of economic decline since the Great Depression.

But industry executives say an improving economy and a surprising comeback of manufacturer have left them struggling to find enough workers to take full advantage of the resurgence.

“The tables have been flipped,” Lowe said. “Two years ago we were just trying to keep the lights on. Now we’re trying to figure how we’re going to find the people we need to do all the work we have.”

Shortage visible, causes aren’t so clear

Other industries, including information technology and health care, also are reporting difficulty in finding the kinds of workers they need. But the labor shortages appear to be most pronounced in manufacturing.

Some economists are skeptical that there is a true labor shortage in manufacturing, noting Michigan’s unemployment rate is still high at 8.9 percent and that most manufacturing wages are not rising.

“Manufacturing wages have been flat overall,” said George Erickcek, a regional economist at the Upjohn Institute for Employment Research in Kalamazoo. “That leads to questions about whether there is a talent gap in the state.”

Erickcek and other experts say if there were a true labor shortage in manufacturing, employers would be forced to boost wages to attract workers. For the most part, that’s not happening.

Manufacturing wages in the state have barely budged in the past four years, rising to an average $1,046.61 a week in December from $1,041.11 in 2008, according to the Bureau of Labor Statistics.

Adjusted for inflation, the average weekly manufacturing wage in Michigan has fallen $63.64 since 2008.

Manufacturers say stiff, low-cost global competition has kept a lid on wages. But they say the industry still offers decent money for the thousands of Michigan students who do not go on to a four-year university, but who have some education or skills training beyond high school.

Too many of those young people are taking dead-end jobs in shopping malls, restaurants and other retail outlets when they could be entering better-paying careers in manufacturing, some say.

“We train our youth to work in service-related industries versus making goods,” Lowe said. “We’re more of a consumer nation, rather than a producing nation.”

Plant floor jobs at American Tooling pay from  $12 an hour for an entry-level machinist to around $24 for a journeyman tool-and-die maker.

“You have to be willing to put in the time (for training),” Hull said. “And you need to prove yourself for the first 90 to 120 days.

“There’s an attitude out there that ‘I made $25 to $30 an hour at a plant that closed and I’m not going to accept anything less,’” she said.

Some observers say manufacturers share much of the blame for the shortage of skilled workers they now face.

Factories have long had the reputation as being dirty, depressing places in which to work. Many employers cut wages and laid off workers throughout the 2000s, reinforcing manufacturer’s reputation as an unstable industry.

“A decade is a long time to talk about manufacturing when it’s all negative,” said Bob Sherer, director of the Michigan Workforce Development Agency’s manufacturing cluster.

Other experts say employers are hunting for “unicorns” -- job candidates with qualifications far beyond what is required to do the work.

Manufacturers also cut training and apprenticeship programs, which dried up the pipeline of future workers. High schools dropped vocational education programs and some community colleges cut back on skilled trades curriculums.

Many of those who were laid off during Michigan’s “lost decade” left the state, found other work or retired.

“Some who left don’t want to come back. They’ve been burned too many times,” Sherer said. “(The upswing in hiring) has happened before in Michigan.

“But they don’t realize that it’s an unbelievably good time to get back into manufacturing,” he said.

Manufacturing propels job growth

The state has added about 50,000 manufacturing jobs in the current recovery, representing more than 40 percent of all new jobs in the state.

But growth in manufacturing employment is likely to slow from 16,000 new jobs last year to 10,000 new jobs this year and 13,000 new manufacturing jobs in 2014, according to a University of Michigan forecast.

Still, manufacturing will be responsible for 25 percent of all new jobs in the state over the next two years, the U-M forecast said.

Employers aren’t just looking to grow their staffs to meet rising demand. They’re also faced with having to replace large segments of their work forces that are nearing retirement.

“Any shop you go into in Southeast Michigan, the average age is in the 50s,” said Bill Rayl, executive director of the Jackson Area Manufacturers Association.

“Companies tell me that 50 percent to 60 percent of their work forces are eligible for retirement,” he said. “They don’t have a plan if those folks walk out the door.”

Success: The DIY approach

Faced with severe shortages of machinists, welders and machine programmers, more companies have started training programs to develop new workers.

And some have started to inch up salaries, said Annette Norris, program manager at JAMA’s Academy for Manufacturing Careers.

“There’s a big perception that manufacturing doesn’t exist any more in the United States and that it’s all gone overseas,” she said. “That’s so untrue.”

Another misconception about manufacturing is that factories are dirty and dangerous, Norris said.

“Some of the shops are so clean, you can eat off the floor,” she said. “They do pay well and you can earn a living.”

Erickcek said manufacturing wages vary widely by region and industry segment.

The average manufacturing wage for the highest-skilled workers in the Grand Rapids area fell from $75,000 in 2007 to $66,000 in 2011, the latest data available.

But during the same period, the wages for the highest-skilled manufacturing workers in Kalamazoo rose from $57,000 to $65,000, Erickcek said.

The difference in wages between the two areas may have been a result of declining wages in Grand Rapids’ auto and office furniture segments, and rising wages in Kalamazoo’s pharmaceutical and medical device industries, he said.

State tweaks its training programs

State work force officials have revamped job training programs in the face of employers’ immediate need for workers, particularly in manufacturing, health care and information technology.

Former Gov. Jennifer Granholm’s “No Worker Left Behind” program trained displaced workers and others for opportunities in growing industries. But officials said it was a costly program that too often didn’t result in participants landing jobs, in part because Michigan’s economy was still shrinking.

“In the previous administration, the focus was on getting as many people as possible in training for in-demand occupations,” said Gary Clark, director of talent development services at the state Workforce Development Agency.

But that training didn’t always line up with actual job openings because the state didn’t know enough about the actual job requirements to provide the right training.

For instance, a job seeker might have trained to be a welder, but might not have learned the specific welding skill among many types of welding that an employer required.

“Now we’re meeting with specific industry groups and employers to find out exactly what they need,” Clark said. “Once we get an idea of what the actual jobs require, we can get people trained for those jobs. “We’re developing demand-driven work force programs.”

The state is continuing to deliver job training assistance through 100 Michigan Works! service centers. Clark said the state is required to administer job-training programs through the centers under a 2006 state law.

But state officials are faced with trying to meet the demand for more training with fewer dollars. Most of the state’s job-training money comes from the federal government, which has slashed training funds in recent years.

Appropriations to Michigan from the federal Workforce Investment Act have fallen nearly 55 percent, from $243 million in 2008 to $110 million in the current fiscal year.

Even job training for veterans has been slashed despite all of the talk of trying to help them make the transition from the battlefield to the workplace.  Michigan is receiving $5.5 million in federal funds this year to train veterans, down about $600,000 from 2011.

Congress has not reauthorized the Workforce Investment Act in years. Instead, states have received training dollars through budget continuations, which some fear could end because of various austerity measures being considered by Congress.

“The big thing for us is that the federal government reauthorize the Workforce Investment Act,” said Sarah Hartzler, president of the South Central Michigan Works! office in Hillsdale.

Her agency works with American Tooling Center and other Jackson area-companies to help them find and train workers they need.

“Reauthorization will have a direct impact on the amount of training we can provide,” she said.

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Comments

Todd Anson
Tue, 03/12/2013 - 8:51am
It is terrific to see the demand for manufacturing talent returning to Michigan, but a word of caution, the pay gap Michigan workers are suffering from is a product of the state's not adding 21st Century information age jobs at a fast enough pace. Stand up and applaud the return of these hard manufacturing jobs, but be smart Michigan and be selfish Michigan- challenge yourself to add targeted numbers of New Economy jobs at the same rate you add manufacturing opportunities. This is the way out of the steady decline Michigan's over-dependence on autos has created. Move aggressively during this recovery to diversify beyond hard manufacturing and autos. Leverage the great University of Michigan for technology jobs and aggressively challenge yourself to create one New Economy job for each manufacturing job. That's the long term answer for Michigan.
Garth Kriewall
Tue, 03/12/2013 - 9:05am
Rick gives a good overview of the situation. Although he mentions it briefly, it's worth noting that career and technical education programs through the ISDs across the state are collectively doing a great job of giving kids the skills today's manufacturers need. Those skills far exceed what many people think. Today, CTE is a choice in itself, not the option of last resort for kids with few alternatives.
Carol
Tue, 03/12/2013 - 9:12am
There is a bit of a gap in this information..it's a lot of the story but.lets remember the legislative body of our state has behaved so poorly, not representing the 70% of us but only the radical right. Look at our educational system, issues we approve of but the legislature or attorney general or Secretary of State doesn't--we end up being the laughing stock on national news. I have had people tell me they wouldn't want to live here because of our politics.
Ed Haynor
Tue, 03/12/2013 - 9:23am
Is Shortage Due to Skills or Wages,? Mr. Haglund offers a number of scenarios covering most theories. For a more research-based analysis to this problem, check out an article titled, "Study Demolishes the Myth That U.S. Workers Lack Skills" at: http://inthesetimes.com/working/entry/14660/the_medias_skills_gap_thesis.... Its focus is on Wisconsin, but I assume the same conclusions could be made in Michigan.
Olga Swarthout
Tue, 03/12/2013 - 10:08am
I'm not from the manufacturing sector, just an average college educated female observer, but I'm noticing some disconnect in Michigan industry. Where are the apprentice jobs for entry level employees?. I recently heard that Siemens and other corporations establishing German style apprenticeships in North Carolina. Just like in Europe, the company is willing to make a considerable investment in a high school graduate to produce an employee highly skilled in all areas of manufacturing. Not just a "shop rat", but an employee proud to be part of the building blocks of the corporation. It does appear that employers are searching for unicorn workers- people trained in a specific skill set with limited ability to develop other global competencies on the job. I see massive tax breaks being give to MI employers, but the money isn't put into training programs. Instead I see an ad on tv offering potential workers " 18 Week HVAC Bootcamp" as a training program !!!???
SBR
Wed, 03/20/2013 - 11:18pm
Olga, you raise very good points. I had a 33 year career in the chemical industry, in 2 Fortune 500 companies. Almost all of our machinists, electricians, welders, mechanics, and other trades people were developed within the company. Large companies are positioned to do the training. But SMALL businesses either cannot afford to do the training or are unwilling to make the financial commitment. Many of these businesses want to hire the experienced skilled trades people. It is not easy for a graduate of a community college trades program to get a job, despite the many job openings! I see the same thing happening with bachelor degreed engineers. Typically, new graduate engineers get jobs with large companies and get experience. Large companies have not hired many engineers in recent years, We have thousands of young engineering graduates who are now unemployable in their fields because they have not been given a chance at a first job. Companies will not hire them if they are 1, 2, or more years after graduation with no experience. It is a tragedy....a lost generation. I have little sympathy for employers who axe productive, experienced skilled trades and engineers, and then 2 or 3 years later when business improves complain they can't find experienced people!
Rich
Tue, 03/12/2013 - 10:49am
I think the problem is with the way companies hire. Too often, the job to hire is relegated to the HR department, who establishes that all applicants to be considered must be in the top 10% of their class and have a degree from a "prestigious" school. A lot of the times, engineers from "prestigious" schools do very well with the books but couldn't tell which way to tighten a nut or solder two wires together. My son has an engineering degree and is looking for a job. Recently, he had a telephone interview with a young giggly HR person who asked a question. When he asked her to define what she meant in the question, her response was 'I don't know what they mean, it's just one of the questions that's on our printed list'. If you want to hire, you must divorce HR from the hiring process.
R. Lawson
Tue, 03/12/2013 - 10:57am
In the IT industry they have complained of shortages for decades, even when their weren't any. The shortage shouting has been a tool for industry to get what they want from government. Usually the narrative goes like this "we just can't find any workers with the skills we want, so you need to raised the H-1b cap". They are in effect crying wolf so if there is an industry with a true shortage where we should be preparing more people to enter, they are viewed with the same skepticism. And there also may be a shortage of people willing to work at the salary you are willing to offer (or can offer because of global competition). Your business model may no longer fit into the American model because the American government has acted against your business interests through trade deals. You may still be able to manufacture goods, just not here. Outsourcing, trade imbalances, the rush to sign "free trade" agreements, and globalization have changed things considerably. They have in effect picked winners and losers. They call it free trade, but there are protections everywhere carved out for those who had the political power to make that happen at the time. In short, your labor problems are a symptom of a bigger problem. So long as we run trade deficits as far as the eye can see and allow crony capitalism to thrive, expect to see a gradual and steady decline of American prosperity, and for prosperity to be concentrated among a select group of people.
Anne Seaman
Tue, 03/12/2013 - 1:23pm
Try recruiting veterans who have the work ethic and many of the mechanical skills required. But companies have to invest in training their own--manufacturing their own fantastic employees.
sam melvin
Tue, 03/12/2013 - 1:30pm
In 2009 EMU got $ 1,5 million to retrain workers , so how many retraine dand how many have a good paying job.Really like to know!
Joe
Tue, 03/12/2013 - 2:52pm
Robots are the future and young people know this. If a robot can do it, the manufacturing job will eventually be replaced. Healthcare is where the growth and money is. Training programs in those fields are backed-up. If manufacturers that have just had their taxes cut want skilled workers, then train them rather than import them and add to joblessness.
Charles Richards
Tue, 03/12/2013 - 3:51pm
Mr. Haglund could render a valuable service by investigating the effectiveness of the various job training programs. The federal government has a dozen or so job training programs and none of them are very effective. Are the state programs any better? Do companies have any better luck? What percentage of trainees work out?
Larry Montgomery
Tue, 03/12/2013 - 10:52pm
How do I apply?
Dawn
Wed, 03/13/2013 - 9:58am
Very interesting read...this gave me a new perspective and insight into why my husband with multiple skill sets (CNC programming, software engineering, management, team lead, instrumentation, emissions controls and algorithms, laser design and support, dyno testing, college instructor, etc), a masters degree in chemical physics and people skills hasn't found a job in four years. The answer I now see--there are jobs out there that match his skill set--when he applies no one reads further down his resume than the degree he holds. Why is a chemist or physicist applying? What is physical chemistry? What they don't realize is that chemistry and physics are the basis for all of these jobs--it doesn't take just an engineering degree. So, HR departments (either the human staff or their resume data mining software) need to start spending the appropriate amount of time understanding an applicant's skill set, valuing education, and truly knowing what skills the hiring department needs to make a match. It is a circus right now--my husband went on one interview where the HR dept. and the hiring dept. were literally having an argument about where he would best fit right during the interview! The result--he never heard back from them, so I guess they couldn't find a way to agree. I am glad to see a glimmer of interest in the use of apprentices again. I have believed this to be something our country has gotten away from and needs again. Many in business have said that mentors serve that role--sometimes. I would like to see a significant expansion in apprenticeships throughout our economy, not just in skilled trades. I also agree with the comment about the need to diversify the Michigan economy. The arts are making a strong effort in Grand Rapids, Detroit and Ann Arbor--what else can we get started Michigan? Don't all those former manufacturing workers have hobbies they could turn into businesses? Or, has their hobby only been sitting in front of a TV or "going up north"...I do hope there is more. Here's to hope, deep thought, a strong work ethic, and perseverance.
Ron
Sun, 03/17/2013 - 8:45am
When I started in education over 40 years ago our high school/ skill center had 20 plus trade/CTE programs, now only a few. Mandatory graduation requirements have minimized many of the elective areas in school .Couple that with few apprenticeships and guess what fewer trade entry level trade careers. This notion that we need more and more 4 year degreed people needs another look. Amen Ron
hairman
Sun, 03/17/2013 - 9:33am
Get a list of those drawing UNEMPLOYMENT or WELFARE/TAXPAYERS $$ and see if they might qualify
BernieMcA
Tue, 03/19/2013 - 8:20pm
LSM Systems Engineering only has one posting for a mechanical engineer and starting pay is listed at $48,000 and there was only one posting for American Tooling Center for a third shift shipping assistant.
Todd Syme
Sun, 03/09/2014 - 11:57am
The point is..... You get what you pay for. It takes a lot of skill and talent as well as a huge amount of attention to detail. To be a toolmaker. I wonder how many employers would want to see a twelve dollar an hour airline pilot at the controls on their next flight? The smart ones are not lining up to be machinist!
Paul Taft
Sat, 10/04/2014 - 8:32pm
it takes an enormous amout of training, Knowlage and skill to be a true machinist. if you want qualified canidates you will have to pay for them. if you wont pay them for the time the have committed to becoming skilled machinist don't complain if they dont want to work for you.
anthony
Wed, 01/20/2016 - 11:26pm
ive been a cnc programmer machinist for 22 years. ive been laid off on average every 4 years or so plus ive worked long hours because of the shortages in the industry. It is now 2016 and I am looking for a way out of the industry because wages are still low for skilled workers compared to what they were 20 or 30 years ago and the main reason for me is companies put to much preasure on good employees to perform and make good product because management is usually out of touch on how to make something and they over commit just like the company in the article overcommitted to a big project. personally I don't like to work crazy long hours for overtime I value my time with my wife and dogs and would rather not slave away so some other guy can get rich off my skills.