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Kevin Kane:
Welcome to another First Business Bank Podcast. I'm Kevin Kane, and I'll be your host for today's episode, Workforce Challenges for Manufacturers. To help us explore this topic, I'm joined by George Bureau, Vice President of Consulting for WMEP Manufacturing Solutions.
Kevin Kane:
George, welcome. Before we dig in, for our listeners who may not be familiar with WMEP, can you share a little bit about the focus of your organization and a little bit about your background for us?
George Bureau:
Absolutely, Kevin. Again, thank you for the introduction, and good morning, everyone. Again, my name is George Bureau, Vice President of Consulting.
George Bureau:
Let me talk a little bit about Wisconsin Manufacturing Extension Partnership. That's what the WMEP stands for. We're a private, nonprofit consulting group focused on helping Wisconsin manufacturing be successful in building value, delivering value, and winning in the marketplace. We've been doing that for over 25 years, based in Madison, and we have coverage around the state and work every day out in manufacturing. Again, happy to be here this morning, Kevin.
Kevin Kane:
Terrific. Kind of to follow, you've got your ear to the ground, and we do, as well, at First Business Bank as we're talking to clients and prospects. Virtually all manufacturers right now in Wisconsin are experiencing challenges around their workforce. That could be keeping the talent they have, replacing workers who have retired or have left, or finding new employees to support the growth of their businesses, but again, everybody's got this significant headwind in terms of finding that talent. George, from your point of view, what sort of brought us to this point, in terms of where we're at?
George Bureau:
Well, Kevin, I think it's important to take a walk past memory lane, down memory lane. This issue really started to build in the mid to late 1990s. At that time, the cry was manufacturers were having trouble and problems finding skilled workers. Over time, what's happened, we've seen that problem move from lack of skilled workers to, "I can't find workers." We are currently seeing some new challenges regarding affordability.
George Bureau:
If you think back, what are the drivers of all this, well, the big elephant in the room is demographics, particularly the retirements of the baby boomer generation. Subsequent generations are generally smaller, as far as sheer numbers, which makes it more difficult, so the pool to replace retiring workers is smaller than the pool it is replacing.
George Bureau:
What we're seeing is the workforce is getting older. Then throw in the sprinkle that happened, believe it or not, two years next month, COVID-19. COVID-19 really changed dynamics on top of this. It changed the dynamics about attitudes towards work. I think a lot of people reevaluated, particularly if they had family members who were sick. They've reevaluated what they wanted to do with their career, where they wanted to go, and most importantly, work-life balance. Subsequent to that, you'll read the new term for that is the Great Resignation that's been pretty much in the press recently.
George Bureau:
Also, on top of this was supply chain and supply chain issues caused by, many times, undermanned manufacturing centers because of people being out for COVID-related health issues, increased demand that happened particularly during the crisis, so a lot of pressure put on the supply chain, both overseas, as far as some raw materials and components, as well as in the state of Wisconsin. The pressure on the supply chain has also caused manufacturers to be very busy at a time that they also have workforce challenges to be able to get enough people and to have enough people with the skills. All those have really combined to create this workforce crisis, Kevin, that we're seeing. Again, the big drivers, demographics compounded by COVID-19 compounded by the supply chain issues, and I think, coming soon on the horizon, which we're hearing a lot about now is inflation. That'll be probably a new piece in the mix. That's what's really created the challenge, Kevin, that we're seeing.
Kevin Kane:
Got it. I might want to, a little bit later in our conversation, George, return to some of those themes if we've got a little more time.
George Bureau:
Sure.
Kevin Kane:
One quick sidebar, I guess, is everything that you described... Obviously, we're here in Wisconsin. We're focused on that. Do you think that those issues that you described, are we unique in that regard? Is this something that is all over the place? I'm just curious about if you have a view on that.
George Bureau:
Well, one of the beauties of WMEP is we are part of the manufacturing extension partnership family of NIST, which is a department of the U.S. Department of Commerce, where we have that affiliation. There's centers that are in all 50 states. This challenge, Kevin, goes across the country. It is particularly acute in manufacturing heavy state economies, like Wisconsin. The good news is we have some things that work in our favor, but indeed this issue of the sheer number of people, the skills to match it, and what COVID has done to it pretty much cuts across the board.
Kevin Kane:
Got it. Back to that context that you described, the demographics-
George Bureau:
Right, mm-hmm (affirmative).
Kevin Kane:
The supply chain, and those kinds of things, with that background, what is a manufacturing firm... What are they supposed to do? Where do you even begin, if you're running a manufacturing firm and are confronted with these challenges.
George Bureau:
Think about it this way. There's some options. One is we could do nothing. That is an option. That's a decision that you can make, which I'd strongly suggest you don't do, in essence become that victim, but I think there's a number of things that a manufacturer can do. What I'd like to do is have everyone in the audience visualize the following.
George Bureau:
Consultants are famous for putting diagrams together, so draw a line across a piece of paper. Underneath are things that we have less control over or no control. Above the line are things we can control.
George Bureau:
If you think about some of the factors, Kevin, we just talked about, we can't control overall demographics at a state level or individual manufacturer. We certainly can't influence the curve as it relates to the next variant of COVID, et cetera. Those things are truly out of our control, but there are some things we can influence, which we'll come back and touch on. Most importantly, there are things that we can control, and those really wrap around three area, Kevin, I think.
George Bureau:
That comes back to what we do from a recruiting perspective. How do we do more with less, or how do we redeploy? And lastly, what can we do regarding retention, so three big areas that I think can certainly give a sense of more control in how to deal with a situation to a manufacturer.
Kevin Kane:
Okay, and so maybe to follow on that. I think I'm tracking with some of the things you're describing there.
George Bureau:
Sure.
Kevin Kane:
How, for example, would automation fit into this equation?
George Bureau:
Example, when you think about redeploying, if I talk to many manufacturers... In fact, we did this about six weeks ago, and we get data every day. It's very common for a given manufacturer to have 10-20 positions open. Now, bear in mind, again coming back to the workforce shortage, that means the remaining people there might be working even harder, hopefully not putting in forever overtime, but certainly working harder.
George Bureau:
When you have open positions like that, that are difficult to fill, and you're looking in the outside market, what automation could do is it could take responsibilities and roles that are boring, monotonous, perhaps dangerous or dirty. Let automation do that work, and then take those people that were in those positions, upskill them, give them a chance to grow in their career and fill other positions. Again, it's a way, in essence to... Automation becomes part of a solution. It's not about automation. It's what it enables. It enables you to free up human resources and put them in areas of your business that you could generate more value or you have chronic inability to find those people to fill those roles. Also, most importantly, it gives your current workforce, the people that are impacted, a chance to grow in their careers.
Kevin Kane:
Okay. Maybe to follow on that, if I think about automation, and certainly in our business, among other things, we provide financing solutions, and so that, perhaps, is where I'm going, but what about access to capital? If I think about automation, love the idea. It makes perfect sense, but talk to me a little bit, and our listeners, about how access to capital drives some of those-
George Bureau:
Absolutely.
Kevin Kane:
I'll call it access to those solutions, if you will.
George Bureau:
Well, if you think about it, some of our solutions and how we redeploy is going to require investment. Investment's going to require, typically, capital. Being an East Coast guy that was planted into the Midwest, the Midwest tends to be more risk adverse. Part of what we try to do, working with manufacturers, is to understand those risks, mitigate the risks, so they feel more comfortable to take on financing, take on loans, again for generally very fast payback, high payback automation.
George Bureau:
Automation, as we talk about it, Kevin, doesn't always mean robots. It could be conveying systems. It could be... You name it, control systems that you put in, all with a sense, again, that you can actually reduce your overall costs, free up labor, redeploy that labor, but again it comes back into making sure I'm comfortable to make that investment. That's where, again, we as partners to manufacturing, from a First Business Bank and WMEP perspective, can work with them to show them that path.
Kevin Kane:
Right. Yeah, and then part of what I think you're describing is that analysis that goes into, okay, what might be required? What is the hurdle for that return on that investment as an option to... I like the word the used, mitigate some of the issues that come into play.
George Bureau:
Exactly.
Kevin Kane:
Following from there, too, any other mitigants? I'll keep with that word, but any other mitigants that come into play? We've talked about access to capital and how you might apply that, talked about automation, and by the way, I appreciate the distinction you made between it isn't always the multimillion dollar robotic system, but there may be some intermediate solutions that move you in that direction or plant configuration that help, but any other mitigants that might come into play beyond access to capital and automation that you've just touched on, George?
George Bureau:
Well, particularly to mitigate risk is looking at your overall processes. Again, when I mentioned about doing more with less, it can... Think about it. I mentioned, Kevin, one of our drivers of the whole situation, which is a top two concern for manufacturers, is supply chain concerns. If we can reduce the amount of scrap that is produced by our facilities, part of that is, again, how do we run higher quality rates, higher productivity rates, to reduce scrap, that reduces the risk I have on supply chain. That's another example where, again, there's proven processes around Lean and Six Sigma that you can use to attack that, or even taking time and space out of operations, reduce the number of steps, which again helps reduce risk of it.
Kevin Kane:
Okay, sounds good. Actually, if we could touch on supply chain.
George Bureau:
Sure.
Kevin Kane:
You've brought that forward a couple times, and it's what you described earlier, so the idea that, okay, supply chain, that might be the second or third most significant issue confronting manufacturers. With that, we've certainly heard from companies that they're reassessing how they source product or material, much of which may have been coming from overseas, and so the word onshoring we hear fairly often. Where I'm going with that is everything you've just described, in terms of workforce challenges, onshoring... I love the idea, but it feels like that would actually amplify or make some of these issues even more problematic. Do you see it the same way? What's some of the discussion around maybe the conflict between, hey, we want to shorten our supply chain or bring it back domestically, but... Yeah, talk to me about that aspect of things, if you would.
George Bureau:
Well, I think it first comes back, before we even get into the onshoring and offshoring, is to truly understand where are our risks, from a supply chain perspective?
Kevin Kane:
Okay.
George Bureau:
What are our critical components? What is our sourcing philosophy? If we have critical components that we have periodic issues with regard to delivery or inflationary increases that are out of control, what have we done to make sure that we have backup sources is a good starting point. Then, from there, to truly weigh, if you look at the needs of your business, treat an onshore no different than a nearshore, no different than an offshore, as it relates to does a potential supplier meet those criteria? Walk before you run with it, and make sure, again, that it's sustainable in your business model is what we'd recommend.
Kevin Kane:
Makes sense.
George Bureau:
Yeah.
Kevin Kane:
Any other, if you think about... Again, as you described it at the beginning of our conversation, day in and day out, WMEP is talking to companies and manufacturers, specifically, throughout the state. Any common themes or strategies that you have seen where a company has had more success in the hunt for talent?
George Bureau:
Oh, absolutely.
Kevin Kane:
Perhaps it's tied into some of the things you've already described, George, but that would be an interesting perspective.
George Bureau:
Let me sketch a few things. Number one is, if I look, there are companies out there that are navigating this pretty successfully. They tend to be pretty quiet, don't say very much, because they are. I guess, one of my key challenges for any manufacturer listening to this is don't accept your fair share in this case. There is workforce out there. Manufacturing is in a good position with relatively high paying jobs. We're over that paradigm of dark and dingy, and it's incumbent upon all of us to get that word out there, that we can compete with retail. We can compete in other spaces and pull workers in, but if I look at it, number one is how do we position our company from a perspective of what our value proposition is? "Why should I come work for your company? What makes you different and special?" The more a company can do that, it makes it easier to say, "Why should I come apply?"
George Bureau:
Secondly is, rather than wait for people to come to us, where do they hang out? Where are those people? Who is that persona that we're looking for? Proactively go after them. In other words, don't fish anywhere in the creek. Go where the fish are best biting. Go there. Go there with a compelling message.
Kevin Kane:
Okay.
George Bureau:
Then from the perspective... Okay, I'm sorry, Kevin.
Kevin Kane:
No, go ahead. No, go ahead. Keep going.
George Bureau:
One last thing is, when you recruit somebody into your firm, think about what that first 1-2 weeks are like. Make it special. You want their significant other, their families, to say, "Wow. Have they ever treated mom nicely. This is a great place," because the more you have your employees singing the praises of what you do and in your company, the more effective you're going to be at this, Kevin. I could go onto the next step, but you have a question.
Kevin Kane:
Yeah, well, and actually I think it ties in, because what I was going to share is that a question that we hear consistently from our clients... Our focus at First Business Bank is solidly in the middle market. It's not a mid corporate. It's not a large corporate client. One of the things we hear from companies is, "Hey, how can we possibly compete for talent with larger organizations that have deeper pockets, more resources?" That is on their mind, you know? I think you sort of touched on that a moment ago, when you were talking about... I'll use the word, the employee experience. Do you have any additional thoughts on how do the smaller, but good, companies fight for that talent, knowing that there's probably somebody down the street that's a bit bigger and is going to write a bigger check? Just in terms of compensation, if you will.
George Bureau:
Well, absolutely. I think one of the places it starts, if we really dial it back, let's look at the culture that we spend, because the reality is we spend our best waking hours in a work situation, typically. If you think about it, particularly with the younger generations, working for a company that has true purpose, that the products make a difference in the world that we live in, that's a big deal.
George Bureau:
I'll challenge anyone, particularly in manufacturing, to say, compare that to working in a distribution center where you load pallets on a truck. I'll use a real life example of walking into a company in Northeast Wisconsin, where specific machine parts are used in high pressure situations, that if that particular piece fails, there's an explosion that hurts a lot of people. Well, they've made that story clear to their employees. They take extreme pride in workmanship and what they do with their products, because they know what it's being used for, whether it be in jet engine type of parts or high pressure vessels, for example.
George Bureau:
The more we can make that sets us apart, coming back to the purpose, why are we here? And that we make a difference in the world. That's a great place to start, Kevin, a foundation to build on.
Kevin Kane:
Yeah, I really like that approach, and my guess would be, too, if you have a purpose-driven organization where the folks there can understand how what they do for that company and how that fits into... I'll call it a mission. Maybe that's not quite the best word, but I'm guessing that if you have an employee who has that perspective, it probably helps on the turnover side of the equation, too, that an employee who has that view of the culture is more likely to stay with a company versus jumping to another opportunity for a couple dollars more.
George Bureau:
Exactly. Think about it. That's where all these pieces fit together. What we do for engagement of employees, to engage their hearts and minds, to show them that they have a career they can grow in, that they can take pride in. There are work situations out there where an employee doesn't want to bring their family in, because they're ashamed of their working conditions. Put yourself in their shoes versus imagine the opposite, where a family could come in and tour, and they're showing their workstations. They're showing the beautiful place where they eat lunch. It doesn't have to be big and expensive, but again, the more we can do that and engage their minds and hearts, the better retaining them, because one of our challenges for any organization, be it manufacturing or other, is we typically hire in a certain geographic market. What is our reputation? Not what we think it is, but what, truly, is our reputation?
George Bureau:
Imagine, just imagine, it will get warm in Wisconsin again. Now it's May, and there's a barbecue going on, Kevin. A number of your employees are there, and they're talking to their friends, and they're saying, "This is a really cool place to work, the exciting things that we're doing. It's a great place. I could see myself working there 10 more years. You need to come work here." That, to me, is where you know you've reached it, that you're people are singing the praises for you.
Kevin Kane:
That's a great example.
George Bureau:
Mm-hmm (affirmative).
Kevin Kane:
Maybe, as we kind of wind up...
George Bureau:
Sure.
Kevin Kane:
One other thing that comes to mind is bigger picture, is your view and WMEP's view, is the experience that we've just spent the last 15-20 minutes talking through of that manufacturers are seeing, is it a temporary or transitory issue? Will it be resolved in the next year or two? What's your perspective on that?
George Bureau:
Well, the sheer numbers alone mean, mathematically, we're going to see this for at least five more years.
Kevin Kane:
Okay.
George Bureau:
Again, I highly encourage any manufacturer, if you haven't dealt with this yet, this is a good time to do it, because it's going to remain a challenge, and so just from a workforce numbers of people challenge that we have. Then, if you look at the supply chain and other issues, again, they may not be short-lived. Inflation is an unknown right now as to how long, but all the things we're talking about, to really firm up, to define what it's like as a place to come work for, to recruit, that we really move to upskill people and add value, and use automation and other methodologies to do more with less, and really work to engage and retain, that's winning formula for regardless, Kevin, where we see the market two or five years from now.
Kevin Kane:
Got it. Got it. Good advice. Any other final thoughts or advice you might have for our listeners, the manufacturers here in the state?
George Bureau:
The one last challenge I have for any one of us is pretend you're a person applying to your company. Find out what the experience is like. Find out whether the phone is answered. Look and see whether the hiring sign has rust on it because it's been out there for the last 14 weeks. See if your website's updated and doesn't have a job posting that went up last May. Look at it and say, "Do we have an exciting story to tell?" Ask people how the onboarding process is going. Really find out the stay interviews, as to why people stay here. Keep working on those things incrementally, and you'd be surprised how quickly you can make improvement.
George Bureau:
That would be my last thought. Don't wait for this to go away. Grab ahold of it, and control what you can control is what we'd certainly recommend.
Kevin Kane:
Sounds good, so incredibly complicated and complex topic, and we've really barely scratched the surface, I would say. To that end, we're planning several more installments, podcast installments, in coming weeks on this topic. George, if I can pass it back to you for a moment...
George Bureau:
Certainly.
Kevin Kane:
Can you give us a little bit of a sneak preview about the next few episodes and the themes that we're going to address?
George Bureau:
Exactly. Well, the next episode, we're going to talk... Again, we've mentioned three R's several times, to keep it easy. I like to simplify things. We're going to talk a little bit about recruitment, particularly, how do we position our company? How do we set ourselves apart? How do we win differentially in the marketplace? We've got some experts that can help in that area and offer some advice and some stories.
George Bureau:
We are going to come back and talk about, from a redeploy perspective, Kevin, and that is really how do we use automation? How do we use other methods, continuous improvement, in order to allow us to close unfilled positions, but more importantly upskill people, offer growth opportunities? Because it could be a real win-win, take some pressure off of some of the supply chain challenges.
George Bureau:
Lastly, we'll come back and talk about retention. Again, retention really first starts with engagement. We haven't talked a lot about it, but there's a really important role of leadership in all this, particularly first time leaders, and then the purpose-driven organization, Kevin. We'll come talk about the engagement, and then what things we can do around retention. Again, those are the three areas that we see that manufacturers have the most control over. Other areas, they could influence, but this is certainly where we'd suggest is the biggest bang for right now.
Kevin Kane:
Sounds good, and to your point, we'll have some additional guests joining for those three podcasts here in the next three or four weeks. George, thank you again for joining us today and for sharing your insights on this. It's a huge issue. It's the number one thing, again, that we hear about. We appreciate the partnership that First Business Bank has with WMEP. You guys are doing terrific work, and it makes a huge difference. As well, I'd like to finish by thanking those that are listening to the podcast. Be sure to visit us at firstbusiness.bank to explore some of the other resources we offer business owners and leaders to help them succeed. We invite you to experience the advantage with First Business Bank. Thank you again, George, very much appreciate it.