Is technology taking over manufacturing jobs? Where is the local stainless steel industry headed? To find out, Springfield Business Journal Features Editor Emily Letterman sat down with Custom Metalcraft Inc. co-owner Dwayne Holden, Custom Powder Systems LLC founder Mac McIntosh and Tank Components Industries CEO Dale Sandy.
Emily Letterman: In one word, describe the current manufacturing environment.
Dwayne Holden: Competitive.
Dale Sandy: Chaotic.
Mac McIntosh: Strong.
Letterman: Why chaotic?
Sandy: Well, we’re finding it very inconsistent. Our quota levels are all over the map from setting records month after month, like January and February, to 12 a week. It seems like we’re really hitting or not so much.
Letterman: The Missouri unemployment rate hit 4.3 percent in January, its lowest level since June 2001. In that, durable goods manufacturing added 1,300 jobs. Are your companies hiring?
Sandy: We’re trying to add jobs, but finding qualified people who will stay and do that work is going to be the hardest thing.
Letterman: Are schools not turning out enough people?
Sandy: Well, I think that’s part of the issue. Everybody has convinced everybody if you go to college and get an education you are set for life. People don’t tell you that you can make a living in manufacturing if college isn’t your thing.
McIntosh: We have an interesting thing going on right now between stainless steel and the [Springfield Area] Chamber [of Commerce]. The chamber is working hard trying to identify people and trying to promote the kinds of jobs we have. Our biggest problem is that we’re trying to find people who come out of school qualified. We wind up being the training ground for them trying to weld, trying to grind.
Sandy: They’ve never done the job functions that we’re doing and it’s hard to bring somebody in and invest the time and energy to train them to figure out, “I don’t really want to come every day here.”
McIntosh: The prime example is (Ozarks Technical Community College). When we asked them, “What are you teaching your grinders and welders?” They said everything they were teaching them was about grinding carbon steel. Well, we don’t do carbon steel, or very little of it. We now do the bulk of business as stainless. Now, OTC is trying to build up a program for grinding and welding stainless steel. So we’re making some progress.
Sandy: And they’re doing a great job, too.
Holden: The problem is they may produce a percent of qualified welders, but that’s as far as it goes. They can’t do fabrication or layout or redrawing. That’s what I’ve been working with them on. We need to take it farther to get more involved in the math side.
McIntosh: Mechanical engineering is where we’re having problems, we’re having a whole lot of problems finding qualified electrical people. Everything we do is fully integrated and that creates a problem, a unique situation for us. We need a haven for engineering talent in this community. It’s very hard to fill that void. We’re bringing in people from Rolla and we bring people from Tulsa and that’s difficult to do.
Letterman: Do you think students are interested in those types of jobs? If we had an engineering haven in town, would they use it?
Holden: I think you’re awful close to it now with Missouri State. If they just expand their program, just the enrollment, there are some good people, good fellas who come out.
McIntosh: We need to get the young people interested in those kinds of jobs and the skillsets needed. Engineering jobs are great jobs. Certainly, in this community, they are in the high $70,000 starting and that’s pretty amazing.
Sandy: They’re marketing the industry to the schools and to entry level students and I think that helps. Manufacturing as a whole has taken a pretty good hit if you look at the last decade. I mean people getting into manufacturing are worried about their jobs going overseas, manufacturing plants closing. It’s one of those things where we have to overcome that stigma that goes with manufacturing to understand that manufacturing is good, clean, wholesome work that this country needs and needs to stand behind. Taking raw materials and making value out of them is good, stable business.
McIntosh: Manufacturing jobs are going to evolve pretty dramatically. I think it’s very essential we stay with the fundamentals of fabrication because that will always be here. I think it’s good for manufacturing in the U.S. to advance the art to integration and to better jobs and to let those who are less adept at the art handle the automation.
Letterman: There are a lot of job-creation incentives at the state and federal levels. Are your companies using any of those programs?
Sandy: We did some Grow Missouri when we did our expansion, some new equipment and things like that in exchange for growing and offering X number of jobs. But there are actual better job-type promotion things like the Career Center down the street where they will actually help finance and pay for the training. We haven’t really participated in it. It’s difficult for a company our size, with 76 employees, because I don’t have the sophisticated (human resources) department to fill out a bunch of paperwork.
McIntosh: And it does require that.
Sandy: Any time you get involved with those programs, I mean you better be prepared. It’s going to cost you as much money in paperwork as it is going to benefit you.
McIntosh: We use a lot of the training dollars. We use them all the time because we have an HR lady who is really good with them and they are very valuable to us. I can’t even begin to tell you how many dollars that’s saved on the administrative side.
Letterman: Are you using those dollars to train employees you already have in new techniques or to train new employees?
McIntosh: Yes on both. The dollars, the training, is very versatile so long as we meet the training requirements. Again, it goes back to the mobility of our workforce today. Back in our day, when you had three jobs on your resume you were thinking, “Wow, that’s a lot of jobs.” Today, if you don’t have 20 on your resume, you haven’t traveled well. So, it’s a mentality shift.
Letterman: Are you all seeing more mobility in the workforce?
Holden: I don’t like to hire those.
McIntosh: I prefer the old way.
Holden: Our turnover is very, very minimal.
Letterman: Do your companies offer incentives for employees to move to the area?
McIntosh: We actually paid a couple of engineers’ moving expenses. As far as hourly employees and shop labor, we haven’t had any, but I know some people are giving bonuses to shop workers.
Sandy: A lot of our employees are coming from the surrounding areas anyway. A lot of our employees are farmers. They understand how to work hard; it’s a good fit.
McIntosh: The rural kids we’re getting are working very well and they are productive.
Sandy: We’re trying to bring technology into our business a little more to take some of the more skill necessity out for what we do. We operate six or seven robotics stations that typically require somebody to run a computer to do an operation rather than stand there and do it. We hope that this generation who loves playing on their phones will prefer using a robot to do things. That’s going to be our way of trying to stay competitive moving forward.
McIntosh: That will change the face of manufacturing dramatically when that really becomes more widespread.
Sandy: That’s the secret now. The technology is getting to the point to where you can buy a refurbished robot for $34,000 whereas before you’d have to pay $340,000.
Letterman: So, technology is becoming more accessible?
McIntosh: We have a water jet, for example, that was very affordable. I remember when they cost $2.5 million, and we bought a new one for $250,000.
Holden: Yes, with automation you’ll have more automatic quality, but it depends on the operators. Coming out of school, more technical people will require not just welding and grinding, but also computer skills.
Letterman: Does automation take jobs from employees?
McIntosh: It’s just a shift. You’ve got a robot, you need someone to understand the robot. The infrastructure and the manpower for modeling is already there, so now it’s a matter of building the machines that will download that 3-D model and print it.
Sandy: What we’re doing is creating better jobs and creating more than we had before because what we’re automating are mundane, dirty, simpler tasks that people would get bored doing or wouldn’t be able to do when they’re older.
McIntosh: I think that’s the challenge we’re faced with: How to change a labor force that’s primarily used to manual labor over to robotics and the advancement of the art.
Letterman: Will Springfield always be a stainless steel town?
McIntosh: Absolutely, this will always be a stainless steel town. We are the second largest stainless steel per capita in the world. Is that right, Dwayne?
Holden: I think so, yes.
McIntosh: It all goes all the way back to Paul Mueller. That availability of people who can weld and understand fabrication and drying, they’re all here.
Holden: We have such a nucleus of companies here, the attitude here is different than it was in the 1970s. We wouldn’t do anything for anyone else, and they wouldn’t do things for us. Now, all of us do things for other companies.
Letterman: Are you guys watching the presidential elections closely in terms of what different candidates could mean for the industry? Anybody you hate or love?
McIntosh: No, no and no. It’s not right to hate, so I don’t love any of them. How about that?
group laughter
Sandy: Yeah, that’s tough.
McIntosh: I think we need a president who understands how business works because, after all, the U.S. is the biggest business in the world. Unfortunately, I don’t think [Donald] Trump’s that person. I don’t believe he has the mentality and the personality to handle that job. But I do hope someday we’ll find a very well qualified businessperson who could get the White House.
Sandy: It would be interesting, but I think the problem you would face is that anyone from outside the circle scares the living daylights out of everybody.
McIntosh: The logical good thinkers in government are gone. The people who understand business go to Washington, they see the mess, they get tired of it, they leave. The people who stay are lifetime politicians who don’t understand. Here’s the good news: We’ve survived very well without any help from them for a long time. So, if the government would just not do anything bad, we’d be in good shape.
Holden: No more rules, please. You mention good programs they had, the Export-Import Bank, that was fantastic. [Rep.] Billy Long, [R-Mo.] fought hard for that. It made it easy to get credit.
McIntosh: You’re probably doing more export than the rest of us, I assume. We’re doing a big job in China. But it’s American companies so the Ex-Im would have nothing to do with that, but the Ex-Im has been good.
Holden: We’re shipping tanks to Australia, so we’re sending them in container boats and with the partnership some of us have, it’s really good.
McIntosh: You see, that’s what we’re anticipating doing with the Indians at some point if they can’t have them. We found a company in India that’s exactly like us. It’s a family company just like us. They want to build our equipment in India and ship it back to us, so we can both grow.
Letterman: Are you forming a partnership with them?
McIntosh: They wanted to do a joint venture, but we chose to do a partnership, a joint arrangement. We may do a joint venture with them in the future, but right now we’re buying stuff from them and they’re buying stuff from us.
Holden: To go back, you were talking about potential new ideas. You can take the portable tanks from the wine industry and now convert them into stills. So we’re into that industry.
McIntosh: Didn’t you do Mother’s [Brewing Co.]?
Holden: We did. We designed it, installed it, fabricated, all of it.
McIntosh: I like a man who will keep our spirits alive.
group laughter
Interview excerpts by Features Editor Emily Letterman, eletterman@sbj.net, and editorial assistant Barrett Young, sbj@sbj.net.
