The record growth being forecast in the coming year for domestic rubber and plastics manufacturers is being threatened by what has become another critical problem for a large portion of American business and industry: A shallow labor market.
Industry analysts say the refrain from processors is all too familiar: Production is down due to a lack of qualified, trained workers, which in turn forces companies to outsource certain production needs.
"We've had a tremendous amount of churn in our employment population since the federal government began their incentive programs for employment security, which has continued despite the elimination of the extra unemployment compensation payments," said Jeff Schad, CEO of Union City, Pa.-based Snap-Tite Hose, which has about 100 employees producing municipal, agricultural, fire and industrial hoses from rubber and plastics. "This has caused disruptions in our ability to complete customer orders in a timely fashion, which has resulted in a reduction of sales revenue."
While the causes of The Great Resignation appear to be many, the results are similar. Significant talent is being lost and not replaced in companies of all sizes, leading to production areas declining or being dropped entirely, like automotive or other major sales segments.
And when demand is at record levels and already cannot be met in many cases due to the ongoing trifecta of supply chain disruptions, inflation and raw material availability, the situation evokes the memorable quote from National Lampoon's Animal House: "Thank you, sir, may I have another?"
Certainly, the reality has been more tragic than comic.
"This is a very common story among processors where the work is there to be done but there aren't enough employees to get it done," said Tony Robinson, analytics director with the Association for Rubber Products Manufacturers.
The ensuing wage war that is taking place across the country is predictable, Robinson said, as one employer plays its wages and benefits against another.
"While the extra [government] payments were going to employees, it was pretty obvious that many made more cash income by staying at home than going to work," Schad said. "Since the extra payments have stopped, employees seem to be 'shopping' for the highest wage without considering other benefits [of health care or retirement]."
In just the fourth quarter of 2021 alone, 56 percent of processors increased their operator wages, and these increases were consistent throughout 2021, according to data from ARPM's recent State of the Rubber Industry Report.
These increases are in concert with wages that have been steadily rising since the start of the pandemic, Robinson said.
And in many cases, consumer-facing service industry jobs have starting wages that are higher than those in manufacturing.