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February 10, 2017 01:00 AM

Survey: 9 in 10 processors say workforce top issue for 2017

Steve Toloken
Assistant Managing Editor
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    Adac Automotive
    Adac Automotive hosted 38 students from the Muskegon Area Career Tech Center at its Muskegon, Mich., plant during Manufacturing Day events in 2016.

    A new survey says workforce development has shot up the ranking of challenges facing plastics firms in the last five years. Now 92 percent of executives say it's a top issue.

    That's double what it was in 2012, when 45 percent of executives ranked it as a key challenge, according to the 2017 State of the Industry Report from the Indianapolis-based Manufacturers Association for Plastics Processors.

    Even with the heightened concern, it's not clear that companies are responding with big increases in spending on workforce development and training. There's some evidence that companies are directing more spending to automation.

    The survey, mainly of small and mid-sized plastics processors, said executives rank investments on expanding capacity, automation and continuous improvement as the top three spending priorities, ahead of workforce development.

    “I had also anticipated seeing workforce development higher on the [spending] priority list here,” said Ashley Turrell Burleson, MAPP's director of industry benchmarking.

    But she said that association members have “explained it to me this way, ‘It is an easy problem to identify, but the solution is very complex.'”

    She said, for example, that it's not as easy to calculate return on investment on staff or training as it can be on new equipment.

    Jessica Jordan

    “With all the advancements and changes happening right now in the industry, there just isn't a one-size-fits-all solution for recruiting or training individuals,” she said. “In many of the conversations I have had with members, patience and timing is key here. Recruiting people and changing perceptions about manufacturing isn't an overnight solution.”

    Still, even if companies are not sure how to address the problem, the association said executives “overwhelmingly” put challenges with workforce development ahead of their second-ranked problem, new business development and sales growth, which scored 27 percent.

    “To no surprise, workforce development challenges trump all others when respondents were asked to identify their top three challenges, issues or problems to be addressed by executive teams in 2017,” the report said, noting that workforce has been the top issue for six years.

    “The focus on this area has become increasingly high,” it said. “In six years, the percent of plastics processors who are focusing on workforce development in some capacity as a top challenge for their company has more than doubled.”

    Terry Minnick, president of consulting firm Molding Business Services Inc. in Florence, Mass., is not surprised. As business conditions improve, challenges shift from finding new orders to finding workers to meet those orders.

    “Many people out there who have a reasonable business are doing better than they have in a long time,” he said. “In 2008 and 2009, no one talked about how difficult it was to find workers.”

    MBS, which advises plastics clients on both recruiting and mergers, said companies can have problems recruiting skilled staff, he said.

    “A lot of people have had so much trouble finding people they have turned to other things,” including more automation, Minnick said. “In the plastics space, there is full employment now.”

    Another plastics industry recruiter said the survey reflects that companies are identifying workforce issues as a need, but it may not have risen to critical levels.

    “Managers are saying, ‘This is what I need, workforce development, but I'm not ready to pay for it,'” said Dennis Gros, president of Gros Executive Recruiters Inc. in Franklin, Tenn. “I don't mean to be critical. … It's a function of profitability. Profitability is hard to come by.”

    Pressure on profit has kept wages down, he said, even as companies report problems finding workers, which should push salaries up. But he does see pressure growing in 2017 for “slight upward” wage pressure.

    Gros said the MAPP poll results also may reflect the experience and more limited resources available to small and mid-sized companies. He noted that 83 percent of the respondents came from companies with $50 million or less in annual sales.

    “If you're in the plastics business, it's obviously capital-intensive,” he said. “You put another machine on the floor, you've made a significant statement of growth. It may impress the next customer.

    “When you make an investment in the workforce, it is an intangible investment that the bank won't recognize and your customers may not recognize,” he said.

    The survey also reported on economic conditions, with a general sense that “plastics manufacturers are anticipating increased or steady business activity and sales,” according to the report.

    More than 90 percent of the respondents said they expected first-quarter business activity to either remain the same or increase.

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