August 26, 2013 The Good, The Bad and The Unknown

Volume 16 | Issue 7

Manufacturing is back, led by the recent trend of reshoring jobs that were sent overseas not too long ago. Nevertheless, hold off on breakin

Good things are happening in manufacturing nowadays. Dale Gehring and Paul Kuchuris know this firsthand.

How can they not? As the chairperson and president, respectively, of the Association for Manufacturing Excellence (AME), these two well-informed industry vets – with nearly 60 years of experience in everything from working the plant floor to managing and consulting for manufacturers – have ideal front-row seats.

A number of the jobs that were sent overseas not too long ago are returning. Varieties of natural resources that encourage domestic manufacturing – like shale gas – are plentiful and economical. Developing trends in innovation technologies are tremendous. Facilities are more smooth running and energy efficient today than ever before. Costs in various parts of production are lower. And, perhaps most importantly, manufacturing is finally getting the attention it sorely lacked no more than a half decade ago.

“The greatest positive trend in manufacturing is recognition that off-shoring is not the answer,” Kuchuris says. “Offshoring is not as financially rewarding anymore. The tremendous financial advantage is eroding.”

Aside from the costs of labor elevating in once dirt-cheap nations like China, Kuchuris says companies now need to have a much closer, geographical relationship between their engineering and manufacturing operations and supply chain. “That means you really do not want to go offshore for manufacturing when your design is over here, and you have the communication going back and forth on Saturdays and Sundays or at 10 or 11 at night,” he says. “These are all hidden costs that sneak up on you if you are not alert to them.”

Gehring echoes similar sentiments, saying, “I think that, in part, is what is driving the re-shoring trend. The total cost of ownership – if you look at transportation, time, and all the problems that go into long-distance supply chains – there are many hidden costs in it. It makes good economic sense to make certain things in North America, and we are seeing some manufacturers make good decisions and re-shore for those reasons.” He adds that manufacturers also see risks with having production overseas, particularly with intellectual property theft and a lack of innovation.

Both, in an interview with Industry Today, point to a number of factors contributing to the sudden boom in manufacturing popularity. For starters, labor costs in foreign nations like China are up, and new automation technology in the U.S. is, in many cases, simply dazzling. Domestic sources of low-cost natural resources are easy to find, and the list of supply chain hazards associated with offshoring has grown extensively. New entries are intellectual property theft, currency risks, and the sudden awkwardness of the geographical distances between design, manufacturing, and its supply chain.

In addition, the industry – every industry, really – is finally settling down after years of economic turmoil stemming from the Great Recession of the last five years, Kuchuris says.

However, while some may be ready to pop the champagne in celebration of an apparent manufacturing resurgence in North America, Gehring and Kuchuris are urging partiers to keep the cork in the bottle and the bottle on ice.

“It is certainly promising, but it is a little early to claim victory,” Gehring says. “There are challenges with bringing work back in terms of being able to produce it – both in quality and quantity, and with great speed – plus being competitive. With continued pressure from globalization, we are going to have to demonstrate that reshoring manufacturing is the right thing to do.”

Like a group of brawny and clever comic book heroes, those at the AME – a non-profit with over 5,000 members ranging from executives to senior and middle managers – have already assembled, if you will, and are on the case.

Closing the Skills Gap
Yes, a number of much-needed manufacturing gigs are coming back to the U.S. in bunches, but not all of them, Kuchuris explains. They really cannot. “We find more efficient ways to do manufacturing that involves technology,” he says. Enhanced technologies, deceases in waste costs via recycling, and plentiful shale gas not only lower production costs, but they also may lead to less labor, too.

Gehring adds that numerous would-be retirees are delaying retirement, blocking positions that, through the company ladder, would allow to companies to pick up new hires. “They probably would have retired two or three years ago, had we had a better economic climate,” he says. However, older workers, naturally, are also the most knowledgeable, which can be beneficial when times are tough and you must do more with a leaner staff.

Perhaps, in a dark way, none of the aforementioned employment trends really matter all that much, not when, according to Kuchuris, over 600,000 manufacturing jobs remain vacant as is, aching for qualified candidates to swoop in and snatch them up – except in many cases, only crickets can be heard.

Which, after previously mentioning the best thing happening in manufacturing today, brings us to perhaps the worst thing, outside regulation, of course: Jobs are coming back, but there are not enough qualified workers to fill them. The workforce is simply barebones in regards to skills, experience, and aptitude. “About 50 percent of young people coming out of high school cannot read or do math at grade level,” Kuchuris adds.

While some large manufacturers have the ability to do on-the-job training, most do not, Gehring explains. “The vast majority of manufacturers have 100 or fewer employees,” he says. “They get some skilled people, but they then leave for the big companies and the smaller manufacturers are left with no one because there isn’t anybody coming in behind them.”

Meanwhile, schools were focused on preparing students for college and they were not encouraged to go into manufacturing or the trades. It is too dirty, too physical, they think. The pay is probably low. Until recently, all the jobs were heading overseas. “Manufacturing was dying,” Gehring says.

Maybe their parents were in manufacturing, many moons ago, and maybe they painted something of an obsolete picture of a poor man’s life in regards to the industry. They wanted their children to have better lives than they did, not to come to work and clean soot off of their clothes like Kuchuris did in his very early days. Therefore, go to college, get a desk job, they advised.

Schoolteachers and counselors, for the same reasons, suggested the same. Kids, understandably, listened.

However, fast-forward to today, and none of the above is really the case with manufacturing anymore. “It is far from the truth today,” Kuchuris says. Instead, those in manufacturing are paid rather well, he says, and it is mostly clean, more brains than brawn. “You really get to test out your creative and problem-solving capabilities now,” Gehring concurs.

Since finding those resourceful and analytical masterminds has been problematical, AME is lending a helpful hand, countering the trend – and helping feed the talked-about manufacturing rebirth – by orchestrating an assortment of initiatives that helps:

• Develop keen and open-minded leadership;
• Jumpstart badly needed innovation;
• Encourage enterprise excellence.

Paint a more vibrant picture of how cool manufacturing truly is for future employment.

It is both an immediate – but also long-term – development remedy to the skill gap ailment, Kuchuris and Gehring says.

There is an adopt-a-school program, according to Kuchuris, that allows manufacturers to take grade school children on tours of facilities, speak to them in classroom, and brag about all the very awesome things going on in manufacturing – and why they should consider it a career path a few years from now.

“Think various frameworks for transition from high school into jobs, like internships and eight-week boot camps,” Kuchuris says. “We monitor students from a very early age and entice companies to get involved with their local schools, college, and universities.”

Industry has to get involved, Gehring adds, because schools cannot do it alone. “They do not have the hands-on knowledge to promote manufacturing,” he says. “It has to be more of a pull from manufacturing on our schools, telling them about these fairly innovative programs that are starting to emerge.”

Likewise, AME conducts numerous events around comprehensive communication and behavioral skills, which, Kuchuris, helps spearheaded inspirational leadership. “Leadership is extremely important,” he says, “and we promote people-centric leadership by teaching how to engage people in unrestricted ways, driving operational improvements and innovation.”

Leadership, he says, has changed over the course of the last couple of decades. In the past, the idea was to hire a raw but very capable candidate, then train and groom them into the kind of worker you wanted, have them think and act the way you wanted them to. However, such training regimes are not nearly as effective with the more youthful generations, Kuchuris says. Those workers, he says, are “more creative and geared toward thinking outside the box.”

“Manufacturing and businesses altogether tend to over restrict,” Kuchuris says. “We bring them in and make them our kind of guy. But maybe it is better that he or she is not your kind of guy. Let them be them, and maybe they can bring something to table, make improvements and suggestions that you didn’t see.”

He adds, rather straightforwardly, “It used to be that if it isn’t broken don’t fix it. The new version is if it’s not broken, break it anyway, because it may be the only way to stay ahead and be innovative, and leadership is one way to do that.”

The organization’s conferences, products, and services also provide plentiful opportunities for continuous improvement and the chance for companies and executives to learn from one another, while also using its improvement tools to help stir greater innovation. “Cultivating innovation in an unrestricted way is a key aspect to being successful,” Kuchuris explains.

Each initiative is no more than a single step in the right direction, a gradual chipping of ice, if you will. But it’ll make a big difference many years down the road, association members say, when companies have a workforce that is very adaptable to change and more innovational while producing materials and products better and faster.

“Years from now, manufacturing will be even more global and competitive, and the skills gap will still be there,” Gehring says. “But we are making the right moves, and the gap should narrow. The word is out that manufacturing is back, but we have to make sure we continue to do all the right things to keep it here.”

Kuchuris adds, “We are certainly on the right track, and we need to keep it going. However, we also need to keep coming up with better ways to do it. We cannot get complacent. Even if you are on the right track, you can be run over if you sit there. We have to make sure we keep the momentum going – and we will.”

About the Association for Manufacturing Excellence
The Association for Manufacturing Excellence (AME) is the premier organization for the exchange of knowledge in enterprise excellence. Members come together to explore Lean thinking and other enterprise improvement methods, exchange best practices and network in order to advance their careers and improve the competitiveness and overall value of their organizations.

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