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Manufacturers confront a human-capital crisis

Austin Polytechnical Academy, Chicago’s newest high school, looks to refresh manufacturing’s image and encourage students to pursue careers in an industry ailing from a lack of skilled workers.

 

Manufacturers confront a human-capital crisis

by Liam Martin
May 27, 2008

In early 2007 Ronald Bullock, chairman and CEO of Bison Gear and Engineering Corp., realized he needed to invest more heavily in a unique aspect of the company’s financial statement — its human balance sheet.

Grappling with a skilled-worker shortage that threatened to stunt Bison’s growth, Bullock decided to build his own source of labor.

The St. Charles-based motor and gear manufacturer last year joined with 12 local businesses and the College of DuPage to create a training program in core manufacturing skills — such as applied math and manufacturing practices, usage of more complex hand tools, and machine safety skills — needed to get prospective employees up and running in today’s high-tech manufacturing environment.

When the so-called Skilled Workers Initiative celebrated on May 9 the graduation of its 12-student pilot class, Bullock hosted the ceremonies, and afterward gave graduates a tour of Bison’s facilities. He — and each of the local businesses that attended the event — walked away with at least one prospective employee.

Bullock’s efforts to expand and better educate his workforce, even one worker at a time, might come as a surprise given the prevailing public image of U.S. manufacturing as a struggling, outdated industry.

In reality, it's far removed from your father’s greasy shoproom floor or manual-labor-intensive assembly line. The Midwest states, inaptly still termed the Rust Belt by national political reporters, are home to increasingly high-tech, highly-efficient and high-income manufacturers. Sophisticated modern machines are continuously enhancing companies’ productivity, and the folks who can operate them are earning impressive wages.

In Illinois, while increased efficiencies have prompted more than 240,000 job cuts in the past decade, industry workers who qualify to remain are bringing down an average of $53,000 a year. Indeed, as the Bison case highlights, growth in the industry’s new technologies has outpaced its ability to meet the corresponding demand for workers capable of operating them.

Where welders once needed to know only how to use a gas flame and an electric arc, they now must be able to perform maintenance, repair and operations (MRO) duties on the robotic welders that have replaced them, tasks that require training in electronics, mechanical systems, computer hardware and programming.

Where welders once needed to know only how to use a gas flame and an electric arc, they now must be able to perform maintenance, repair and operations (MRO) duties on the robotic welders that have replaced them, tasks that require training in electronics, mechanical systems, computer hardware and programming.

Thus far, manufacturers have struggled to locate workers with skill-sets that broad and advanced — a result, industry officials say, of a failure to train employees according to those changing demands.

“We’ve let this problem persist because we haven’t adequately aligned the public training systems that are out there with the private needs of companies,” said Juan Salgado, executive director of the Instituto del Progreso Latino, which runs Chicago ManufacturingWorks, the industry’s regional workforce center. “Training programs need to be flexible with the changing demands of employers.”

A 2005 survey from the Washington, D.C.-based National Association of Manufacturers reported that 81 percent of respondents were experiencing a shortage of qualified workers, a gap that threatens to widen as baby boomers head for retirement. The average employee in the industry is 55 years old, according to NAM spokeswoman Laura Narvaiz.

A study released in January 2006 by the Workforce Boards of Metropolitan Chicago found substantial deficits of workers across every major manufacturing sector, and forecast the situation will worsen in coming years. The metal and plastic machinery segment, for example, is expected to fall 2,243 jobs short of demand by 2010, in the Chicago area alone.

The specter of a shortage that severe has prompted an aggressive campaign from manufacturers and state officials alike to revamp their training practices.

ManufacturingWorks, founded in October 2005, has set to work connecting labor demand with supply, collaborating with training centers and schools to develop programs that meet the needs of area manufacturers. It then helps relay the finished product — skilled workers — back to employers.

The organization’s success in running that operation is indicative of the industry’s dire needs. Since its inception, ManufacturingWorks has placed more than 1,500 workers, with 93 percent of placements going to return clients. Its interview-to-hire ratio is 1.2 to 1, and the average wage of its recruits has vaulted 33 percent to an expected $12.77 per hour in fiscal year 2008, ending June 30, from $9.58 in 2006.

Other state-backed organizations like the Chicago Workforce Board, Chicago Manufacturing Renaissance Council and Jane Addams Resource Corp. have begun assisting manufacturers in training and recruiting qualified employees.

Community colleges, meanwhile, such as DuPage, Richard J. Daley College and Wilbur Wright College, are revamping their manufacturing programs, placing greater emphasis on robotics MRO and computer numerical control (CNC) machining, a technology that allows for faster, more precise cutting and drilling, but also requires a high level of skill to operate.

“There’s about $1 billion spent per year within just Illinois for workforce development,” said Rob Hoffman, director of business development at the Chicago Workforce Board. “That’s not all for manufacturing, but you have so many people and groups involved, there’s quite a lot of money going around.”

Some industry officials worry that the mad rush for recruits is leading manufacturers to sacrifice quality. “The world thinks we ought to pour money on the problem,” said Keith McKee, director of the Manufacturing Productivity Center at the Illinois Institute of Technology. “We’ve spent tens of millions of dollars in Chicago alone, but the problem is if you really need skilled workers, you can’t use people who aren’t skilled. Because we’re taking everyone, we’re really not allowing or encouraging people who have any great motivation or talent to go into the occupation.”

That has certainly been the case at Bison. According to Bullock, about 50 percent of applicants are rejected because they can’t do eighth-grade math. Training programs, meanwhile, are still struggling to draw qualified applicants. Mohammed Siddiqi, executive director of the Manufacturing Technology Institute at Daley College, said his classes are routinely undersized.

The failure of programs and companies to recruit talent, officials contend, is a function of manufacturing’s lingering image problem. Prospective workers, particularly young people, aren’t inclined to seek employment in what many still view as a manual-labor, rigorous industry.

“The image of manufacturing gets a pretty bum rap,” said Colette Buscemi, vice president of operations at the Alliance for Illinois Manufacturing. “If you look at college counselors, few of them are looking at manufacturing as a first option for their students. Parents are the same way. That’s the message our kids are getting.”

Manufacturers have launched a variety of efforts to revamp that message, touting the industry’s high-paying, high-tech career opportunities, and focusing their energies particularly on high school students, a group that likely cannot immediately fill skilled positions but could serve as a major pipeline for future demand.

Bison, for one, has been meeting with Springfield officials to advocate the expansion of its program to juniors and seniors in high school. Quality Float Works Inc., a Schaumburg-based metal-floats manufacturer, is working with local high schools, including Bartlett and Palatine high schools, to develop internships for students interested in manufacturing careers.

At the city level, Chicago Public Schools has launched an Education-to-Careers manufacturing program and opened in September 2007 the Austin Polytechnical Academy, a technical-education school that exposes students to both traditional academics, such as English and social studies, and a pre-engineering curriculum that focuses on high-performance applications, including machine operations. The school currently has 129 freshmen, and will add one class in each of the next three years to total about 500 students by the 2010-2011 school year.

“Austin is a great success because we’ve overcome people’s stereotypes about manufacturing in order to get it done,” said Matt Hancock, project director at the Chicago-based Center for Labor and Community Research, which helps manage Austin. “And we’ve thrived. Our kids placed 10th in the citywide math competition. Other schools are looking to us to think about how they can go about doing this, too.”

Manufacturers have jumped at the opportunity.

According to Hancock, 37 area businesses have signed letters of commitment to work with the school. Chicago-based S&C Electric Co., an electric power-equipment manufacturer, hosts field trips at its Rogers Park facility, and might eventually offer job-shadowing and internship programs. Manager of Training Services Gene Cottini said the company runs its own in-house training program at an annual expense of $750,000; a supply of well-educated high school students could help cut some of those costs.

Still, as Austin Principal Bill Gerstein points out, while the school provides students with a background in engineering, it maintains a CPS college-preparatory curriculum, meaning some graduates won’t pursue careers in manufacturing, while those that do will likely require additional training, either in-house or at two-year colleges like Daley or Wright.

Moreover, as a non-magnet CPS program, Austin accepts any student in the neighborhood who wants to attend.

That, according to IIT’s McKee, is exactly the problem with the current system of training, at Austin and elsewhere. He asserts that programs with greater selectivity and more industry-focused curricula, though they might draw fewer applicants, would be far more effective in producing skilled graduates.

“The intent of Austin is good,” McKee said. “But the only way to beat the gap is to have qualification exams for people you let into the school. Otherwise, the least-qualified and least-motivated students will come into it.” According to McKee, most vocational programs draw students from the bottom 20 percent or 30 percent of their classes, a function of manufacturing’s image as a last-resort occupation.

What McKee advocates, instead, is a return to what he calls “the good old days of apprenticeship programs,” which require longer-term commitments from students and generally draw people who already have backgrounds in the trade. McKee points to the program run by Park Ridge-based Tooling & Manufacturing Association, a 1,250 member organization of precision manufacturing and supplier companies in the greater Chicago area, as a paradigm.

TMA President Bruce Braker notes, however, that enrollment in the program, despite its efforts to modernize, has declined steadily over the past four decades, sinking more than 93 percent from 1,500 students in the late 1960s to just 100 in the current class.

Unlike McKee, who admits his view is contrarian, Braker believes high schools like Austin will be integral in stanching those losses and rebuilding the manufacturing workforce.

“One of our major problems is that high schools are not as committed to manufacturing-related technology education,” Braker said. “We’re supporters of Austin. It gives kids a real positive exposure to manufacturing … Anything that can correct the perception that manufacturing is dying is a good thing. Manufacturing isn’t dying; it’s changing, and we need to change along with it.”

 

About Bison Gear & Engineering Corp.

Founded in 1960, Bison Gear & Engineering Corp. designs and manufactures fractional horsepower electric motors, gearmotors and gear reducers used in industrial and commercial OEM applications worldwide. Bison's strong engineering tradition and designs, based on Robusticity (TM) principles, offer products with up to twice as much torque in the same package size as competitors. Bison employees over 220 associates in its St. Charles, Illinois facility which produces gearmotors and reducers in parallel shaft and right angle configurations, as well as AC and DC motors, for applications where dependability and long lifetimes are important.