Navigating lingering industrywide concerns that make bottom-line sense
Courtney Silver, president of Ketchie Inc., has adopted a workaround for the skilled labor shortage. Ketchie hires less-skilled workers and brings them up to speed in house—at a cost.
“That means that it’s a longer onboarding and training time frame, and there’s a higher potential for scrap parts,” she said. “And there’s a higher potential for machine downtime. So, when you talk about profitability and productivity, there’s a pretty direct impact.”
The initial impact is negative. But Silver has adapted with strategies and technology to compensate. She estimates it takes about six months for new employees to have made enough different parts to become proficient in Ketchie’s job shop in Concord, N.C., where workers do precision machining and make custom gears and bearing products for numerous industries. The six-month timeline compares with a previous training window of 30-90 days.
But with a turnover rate she describes as “low,” and some employees with 30 years of experience, Silver is willing to suffer a short-term penalty for a long-term gain.
The chronic shortage of skilled labor, along with supply chain issues, recession worries, inflation, geopolitical tensions, and a lingering COVID hangover have shop owners casting concerned eyes on production volumes going out the door and revenue coming in. Like Silver, some are devising strategies to maintain their productivity and profitability.
Other manufacturers also are hiring less-skilled employees to keep pace with customer demand, noted Ryan Kelly, general manager of AMT — The Association for Manufacturing Technology’s Tech Lab in San Francisco. In general, shops have an unusually high number of orders with not enough people to do the work, he said.
“I think that they’re broadening their definitions of who might be eligible candidates,” Kelly said. “And so they’re fishing in different pools and also may be lowering the barrier of entry and hiring people who might not exactly fit the requirements that they have, but they’re people who are going to want to come in and work.”
Other trends Kelly sees include managers pitching in on work assigned to shop floor workers. Shops are also adding automation, robots, and software—his areas of expertise. One type of software he’s talking about, though, is for support functions such as websites, accounting, human resources, payroll, inventory, and customer service. These are relatively inexpensive applications that automate non-shop-floor tasks and streamline operations overall. They take some time and effort to implement, and productivity may take a temporary hit, but they improve efficiency in the long run, Kelly said.
“I don’t want to say that there’s not lots of opportunity there on the shop floor (with ERP and MES software), but those tend to be higher cost,” he noted.
“I’m saying look at the low-hanging fruit that’s more on the administrative and customer-facing side, that could potentially free up time. So that then you can look at some of the harder problems that are going to require more bandwidth, like implementing automation.”
Another kind of software—for automation—can be added to the multimaterial metal additive manufacturing (AM) machines from FormAlloy Technologies Inc., Spring Valley, Calif. FormAlloy offers its proprietary DEDsmart suite to run with its 3D printers, and the company makes parts as a service.
“I think the biggest thing that has really impacted our efficiency and productivity is autonomous operation of the machine,” said CEO Melanie Lang, who is also a founder and president of FormAlloy. “We no longer need machine operators whose primary responsibility is to stand at the machine to monitor and make adjustments.”
Not only does DEDsmart control and monitor builds in the machines, but once the build is complete, the app produces a full data package that shows exactly how the part was made, and any anomalies in the build. It’s a built-in quality control mechanism, Lang asserted.
“Putting our smart, data-driven DED (directed-energy deposition) systems to work is really how we are highly productive because that enables our engineers and machine operators to focus on high-value activities such as working with customers to further optimize their components,” Lang said. “Bottom line, we don’t have the cost or time constraints associated with fully attended machine operation. Instead, we are able to run more autonomously, resulting in cost-effective and repeatable operations.”
Investment in the kind of technology FormAlloy produces, along with other machine tools, automation, robots, and the like is what distinguishes the successful manufacturers among his 1,100 members, said Roger Atkins, president of the National Tooling and Machining Association (NTMA) in Cleveland.
“I think it’s just technology-driven,” Atkins said. “If you haven’t been upgrading your equipment with the latest in technology and automation, and taking advantage of the software out there today ... (that) are helping you do more work with the same number of people, you’re struggling.”
A factory owner must replace old equipment and add new technology on a regular basis to remain productive and profitable, he said.
“You can’t wait 10 or 15 years to recapitalize because you just can’t replace your whole shop,” Atkins said. “And those who have not been diligent in keeping up to date with technology, those are the ones that are struggling to be competitive versus somebody who’s got the latest technology and automation. They may be a smaller shop, but they’re doing more work than you are.”
Atkins’ remarks are in tune with Silver’s strategy at Ketchie. She just bought the shop’s first machine-tending collaborative robot from FANUC, and said it’s likely she’ll be buying a second one.
The NTMA leader’s sentiments may also resonate with Markus Stolmar, CEO and president at United Grinding North America Inc., Miamisburg, Ohio. United Grinding’s product portfolio is comprised of nine machine tool brands that produce precision manufacturing technologies that support grinding, eroding, laser ablation, optical measuring, and industrial 3D-printing processes, said a spokesman for the company.
Stolmar is a proponent of universal machinery that can maintain productivity and keep contributing to the bottom line when economic conditions take a downturn. Such machinery can accommodate a wide range of workpieces, operate with various robotics, switch between different palletizing systems, and has versatile workholding, he said.
“I think all these things you need to consider today to make sure you have flexibility when a change comes,” he said. “When I look back to the start of the pandemic, we had some customers that were pretty heavy in the aerospace industry and it pretty much collapsed overnight. But they were flexible enough to take on other work from other sectors and they made high-quality products. For them, it was very easy to make something else: their workforce was very skilled and their whole shop was pretty flexible.”
Stolmar contrasts his aerospace customers with the automobile industry, which he said is highly specialized and can’t easily make the switch to take on other work.
“But job shops can make parts for any industry,” Stolmar pointed out. “And I think these are the guys that if they’re flexible, have a good workforce and have automation they can adjust pretty quickly, no matter what.”
Stolmar touched on an issue that’s bedeviled American manufacturers for years, with no end in sight—a shortage of skilled workers. He also mentioned the COVID pandemic, which has made the lack of workers in many industries, manufacturing included, worse.
Priorities have shifted in recent years, added Mark Lado, a manufacturing operations consultant based in Greer, S.C. Lado, who authored the book, “Building a Showcase Culture; Powerful and Practical Keys for Manufacturing,” said workers no longer are just interested in landing a good job and getting ahead—there’s more emphasis now on putting themselves and their families first.
“Going back a couple of years, when many families lost significant others and relatives due to COVID, it made them think more about work-life balance,” Lado said. “They realized they’re mortal and said, ‘I’m going to spend time with my family.’ That has definitely impacted people willing to work now.”
Prior to COVID, the primary mission for many families was to make as much money as possible, even if it meant working long hours at multiple jobs. But that’s no longer a driving force, Lado pointed out.
Even though shops need more workers, recent recession fears may be putting a damper on hiring. So, how can management keep the shop floor humming and maintain or increase productivity with existing staff?
Lado suggested a seemingly easy fix to promote more engagement between leaders and their workers—walk the shop and office floors every day and often.
“Observe the various business processes for improvement, take notes, commend people’s efforts, question, challenge, but more importantly listen to their issues and ideas, and then leave them with some encouraging motivational words,” he said. “This seems simple to do, but, surprisingly, many leaders fail in doing this regularly.
“I think that when you’re doing that, the productivity naturally will increase just because you’re paying attention,” he said. “Obviously, most companies have some sort of KPI (key performance indicator) for productivity, and obviously profitability. But I’m saying that from a soft skill side, saying, ‘You’re doing a great job today, guys, I appreciate all the hard work,’ goes a long way.”
What Lado described is known as a gemba walk. It’s defined on www.safetyculture.com as, “a workplace walkthrough which aims to observe employees, ask about their tasks, and identify productivity gains. Gemba walk is derived from the Japanese word ‘gemba’ or ‘gembutsu’ which means ‘the real place,’ so it is often literally defined as the act of seeing where the actual work happens. A gemba walk is a simple yet powerful lean method done by employers to promote continuous improvement.”
Walking the floor is even more important today than it was 10 years ago, Lado asserted. However, he said, leadership is doing it less because they aren’t prepared to answer difficult questions from workers, who can easily leave for another job. In addition, other areas are requiring more management attention, including supply chain issues, new business pursuits, COVID-related problems, and other time-consuming factors.
At Ketchie, Silver takes a straightforward tack to promote a workplace culture that fosters productivity: transparency.
“We’re transparent on our metrics like revenue, shipments per month, gross profit, and margin goal,” she explained. “I think everybody likes to know if they’re on a winning team, and you know if you’re winning if you’re transparent with metrics.”
Another transparency-related strategy features productivity charts for all shop-floor employees. Posted every week, these reports chart an employee’s time spent on each job, including setup and run time, compared with a standard or with how the work was quoted, according to Silver.
Workers have set goals, and every week if the individual worker has met the goals, he or she earns performance points redeemable for gift cards.
“That’s been really, really neat to see not only our profitability and productivity increase, but also the effect that has on morale,” Silver said. “The company is doing well in fulfilling our mission for making it easy on our customers.”
During team meetings at 6 a.m. every Wednesday, workers can nominate a peer who’s done a good job. Winners are announced via company-wide emails. Regularly celebrating small and large achievements, and involving the team in the process, goes a long way in fostering a positive outlook environment throughout the company, Silver said.
The job shop goes even further with a Ketchie Motivator Award that’s bestowed twice a year “for someone who’s living our core values in everyday work life,” she said. Implemented in 2022, the award features a company breakfast with a video showcasing the winner and why the person was nominated. The winner’s spouse also is invited to the event.
“We gave them an extra day of vacation and a gift card to the Marriott to go on a vacation just so they can make memories with their family or whoever they choose,” Silver added.
To mitigate international supply chain issues created by the COVID-19 pandemic, some American manufacturers are looking to add domestic suppliers and fortifying their pipeline of suppliers whenever possible.
“We have been very intentional about sourcing as local as possible,” FormAlloy’s Lang said. “And we continue to do that. But we have also had to identify backup suppliers, because in some cases, there were components that all of a sudden had a lead time that was months long instead of days long.”
Even when components may have been available, the logistics of getting them to FormAlloy was challenging. But such problems are lessening, Lang said in March. “In the past couple of months it has been improving. So we’re hoping things get back to normal.”
Localizing a factory’s supply chain may be made even easier with the movement to reshore American manufacturing. In February, United Grinding announced its sponsorship of the Reshoring Initiative, a nonprofit organization founded in 2010 that supports efforts to bring business back to the U.S.
“The case for reshoring manufacturing is more compelling than ever,” Stolmar said in a press release. “Rising labor costs, increasing lead times, and the ongoing COVID-19 pandemic have highlighted the risks of relying on global supply chains. Additionally, tariffs and trade tensions, as well as a desire for improved quality control and faster response times to market changes have made reshoring more attractive.”
While acknowledging the benefits of trading with other countries is important, Stolmar said it’s vital to strengthen domestic capabilities. “When it really is critical to our infrastructure, our politics, our military, it’s very important to make things in our country,” he emphasized in an interview.
Stolmar’s greater worry about threats to his company’s productivity and profitability centers on global politics and protectionism. Specifically, he mentioned China, whose relations with the United States are becoming increasingly tense.
“I’m a little bit worried about getting back into bloc building, where maybe the Western and Eastern fronts have more trade protections,” he said. “You can see it already starting when you look at the semiconductor industry.”
In an effort to thwart China’s development of a chip industry and military capabilities, the White House imposed restrictions on the export of chips used in artificial intelligence and supercomputing, and tightened the rules on the sale of semiconductor manufacturing equipment to any Chinese company.
Stolmar is concerned the restrictions may grow to include other products, namely machine tools like the ones United Grinding produces.
“Let’s say certain machinery cannot be exported to China anymore or to India because of protectionism when it comes to technology,” he said. “When that starts, there’s no government that’s going to say, ‘Oh, you’re not allowed to ship this, but we’ll make up for the difference (in revenue).’ That is for me a bigger risk than a recession or other things.”
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