Recovering businesses finding a dearth of skilled workers

It may seem an excellent problem to have -- the challenge of managing a business through a period of rapid growth, especially in a struggling industry.

But Aaron Jagdfeld, president and CEO of Waukesha-based Generac Power Systems and winner of the 2011 Manufacturer of the Year award for the state's biggest companies, said success comes with its own unique pitfalls to avoid.

Chief among them, Jagdfeld said, is making sure your operation doesn't morph into something you no longer recognize.

"When you grow rapidly, you add a lot of people, so the preservation of your culture is really important," said Jagdfeld, who will describe what it's been like to run Generac -- a leading maker of backup power generators -- at this year's professional conference for Wisconsin manufacturers May 9 in Milwaukee.

Since November, Generac has announced plans to deal with booming demand for its products by hiring at least 550 people through 2015, at its corporate headquarters and at company facilities in Whitewater, Eagle and Berlin.

But the new hires will need to be nimble.

"What really sets us apart is our ability to move quickly," he added, noting the company needs to act fast to capture and serve new customers after unexpected weather events cause widespread power outages. Last year, Generac responded to what it described as "unprecedented demands" for emergency power after Hurricane Irene and heavy fall snowstorms in the Northeast.

"Innovation is absolutely key to what we do, so we look for (new employees) who are innovators," he said. "You just have to add the right mix of people while maintaining what's important to you."

With that, Jagdfeld also summed up the key problem now facing the state's entire manufacturing sector.

It's enjoying modest post-recession success with 30 straight months of expansion, but it remains hampered by an acute shortage of workers who can do the jobs that are slowly being created again.

Work force paradox

"The work force paradox issue is something that is just dominating the sector now," said Buckley Brinkman, who runs the Wisconsin Manufacturing Extension Partnership, a private, nonprofit organization that tries to help the state's nearly 9,000 small and mid-sized manufacturers be more successful.

WMEP is chief sponsor of the 15th annual Manufacturing Matters conference, a daylong event that will examine the skilled worker shortage and possible solutions in expert panel discussions and two keynote addresses, one by Jagdfeld and one by former Bucyrus president and CEO Tim Sullivan.

"The fact that we have around 7 percent unemployment in the state and yet we have hundreds of open manufacturing jobs where (employers) can't find people with the right skills -- it's that mismatch that's pretty frustrating to manufacturers and anybody who is really focusing in on how do we create more jobs in Wisconsin," Brinkman said.

Jagdfeld agreed skilled workers are in short supply, describing it as a deficiency born of manufacturing's own decline.

"As manufacturing has slowly dwindled over the last 20 years, unfortunately all these apprenticeship programs and technical programs, the numbers (enrolling in them) just got so low they weren't supportable," he said.

Labor returns?

But the recovery in manufacturing since the recession lifted in mid-2009 is accentuating the nascent need for skilled workers.

It's being driven in part by what manufacturing advocates call a mini-wave of some Wisconsin companies, such as Master Lock in Milwaukee, returning some of the production work they shipped overseas to take advantage of low labor costs over the past decade.

Reasons for the labor returns -- which aren't yet well documented beyond anecdotes and isolated instances that draw a lot of attention, such as President Barack Obama's visit to Master Lock in February -- range from rising labor costs in China and Mexico to a currency exchange rate that favors U.S. production right now.

Better quality final products and company improvements in operational efficiency involving suppliers and other areas also can help make domestic labor a better overall value, Brinkman and other experts said.

"They're seeing that (foreign labor) has inflated costs," Brinkman said. "There are a lot of things that can go wrong in a 12,000-mile supply chain that doesn't happen between here and Kenosha."

But Wisconsin needs more people trained to work in manufacturing to bolster resurgence in the industry, which generates about $47 billion annually, or 19 percent of the state's gross domestic product, but could easily contribute more.

"Here we stand with this need," Jagdfeld said. "We have opportunities for people, but don't have the skill set we need in the work force. They don't even teach basic industrial education anymore in high schools."

Prep problem

Similarly, Sullivan, the former leader at South Milwaukee-based Bucyrus -- a mining equipment manufacturer bought by Caterpillar for $8.8 billion in July -- said his biggest problem bringing that company back from near-bankruptcy in 2000 was finding skilled workers.

Managers in South Milwaukee still are looking to fill a few hundred needed jobs there, he said.

Sullivan traced the shortage to the 1980s, when he said high schools shifted their emphasis almost exclusively to college prep. Students still can graduate from high school and get the extra training they need for a manufacturing job at a two-year technical college, he acknowledged. But too many drop out of high school without exposure to technical coursework or other experiences that could point them toward a manufacturing career.

"We changed the whole system and we lost the pipeline of individuals willing to get involved in skilled jobs," Sullivan said.

At the same time, the nature of modern manufacturing operations -- which are much cleaner, more automated, computer-guided and precise than they were decades ago -- is driving the need for welders and machine operators with better math, reading and technical skills, like reading blueprints.

"It's not somebody standing on an assembly line just bolting together (metal pieces) anymore," Jagdfeld said.

A greater emphasis on customer service also means that even people working on a shop floor need to have good interpersonal or "soft" skills, employers said. Many applicants, especially those who didn't finish high school, aren't able to meet this hurdle, either.

"You've got all these young adults who have been disenfranchised, for two generations," said Sullivan, who is working as a special consultant to the state for business, education and work force development.

"You've got 700,000 people who don't have a high school diploma. We have to deal with that, and the current system is not set up to deal with that."

Vocational diploma

At the conference, Sullivan said he will share updates about efforts to solve these problems, including a new vocational high school diploma that school boards will be able to offer under legislation Gov. Scott Walker is to sign into law Monday in Racine.

Sullivan also will talk about plans to reach high school dropouts and the progress shown in three pilot programs set up between high schools and technical colleges in Madison, the southwest part of the state and the Sheboygan-Manitowoc area.

Under the programs, students take classes taught by college instructors in their high schools and use some equipment at the colleges to earn post-secondary credits, Sullivan said.

"So they have a running start (on a manufacturing career) once they graduate high school," he said.

Moving beyond what's not working to what could work is what's important now, Sullivan said.

"There's a lot of buzz right now around manufacturing," Sullivan said. "We know what the manufacturers need and want. We've had enough listening sessions. People are tired of telling us what the issues are. Now we need to decide how to make the necessary changes to fix the issues. I'm happy to be having a solutions session."

(c)2012 The Wisconsin State Journal (Madison, Wis.)

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