Wednesday, January 20, 2021
Jan. 20, 2021

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Manufacturers in Northwest say finding skilled labor is greatest challenge

Thompson Metal Fab, Vigor Industrial among companies facing workforce shortages

By , Columbian business reporter
Published:

Pacific Northwest manufacturers across a broad spectrum of industries are optimistic about the future but concerned about the ability to grow their workforce, which is seen as the biggest challenge facing Northwest manufacturers.

That’s according to the results of an anonymous survey of 104 company leaders in Washington and Oregon conducted earlier this year by Portland-based DHM Research on behalf of Washington law firm Schwabe, Williamson & Wyatt and consulting firm Aldrich Advisors.

The survey results paint a picture of a tight regional labor market in which a majority of manufacturers are seeking to grow their workforce but face challenges in attracting and retaining skilled employees.

“The number one issue that is facing manufacturers, bar none, is workforce,” said Jennifer Campbell, industry group leader at Schwabe, Williamson & Wyatt. “And that’s consistent with the national numbers as well.”

Sixty-two percent of respondents in the survey said they plan to increase hiring in the next year compared to the previous year, and 73 percent listed improving their workforce as the biggest upcoming challenge for the company. Fifty-five percent also expressed concern that their organization was unprepared to overcome its biggest challenge.

Shortage of skilled labor

When asked about the challenges to workforce growth, 72 percent cited a lack of available skilled labor. Fifty-five percent cited competition from other employers, 31 percent pointed to a lack of nearby affordable housing and 26 percent cited an inability to offer competitive wages.

“The issue with tracking and retaining employees is an ongoing struggle for our local manufacturers,” Campbell said. “And it’s not just manufacturers — it’s also construction and some other industries that are facing this. It’s an issue that’s not going away.”

For some Vancouver manufacturers, those results sound familiar. Portland-based Vigor Industrial operates a fabrication site along the Columbia River in Vancouver, formerly known as Oregon Iron Works. Vigor spokeswoman Athena Maris said the company began partnering with Portland Community College to open a training center at Swan Island, the site of another Vigor facility.

“For Vigor, the challenge is threefold: Finding and retaining skilled workers, the cost of doing business in our region of the country given higher labor and environmental compliance costs and the uneven nature of the new construction pipeline,” she said. “This last point feeds into the difficulty of workforce retention, which can be problematic for the project-based nature of new construction.”

Michael Moore, vice president of business development at Vancouver-based Thompson Metal Fab, said the company is seeing a high number of workers retiring from upper-level positions at a time when most of the industry’s workers are already employed and not seeking new jobs. The company has been focusing on trying to create opportunities for its own workers to develop new skills and advance internally, he said, because entry-level positions are easier to fill from outside. It’s also been trying to align itself with trade schools and high schools where workshop and metal fabrication classes are being held.

“We may not get our hands on these students for five-plus years,” he said, “but that’s OK because we’re going to need them in five-plus years.”

Campbell said manufacturers in the survey pointed to retirements, low unemployment and bad perceptions of manufacturing jobs as some of the other causes of the workforce struggle. Some of the respondents said they were trying to push back on those factors with a number of strategies such as expanded apprenticeship programs, flexible work schedules and making new connections at local high schools and community colleges.

Manufacturers also see the Pacific Northwest as an asset when it comes to recruiting new employees. Food and beverage manufacturers in particular said they found a good fit with a regional appreciation for natural and organic foods.

On the other hand, manufacturers said operating in the Northwest also creates challenges due to a high cost of living and high taxes, particularly in Oregon. Still, the pluses appeared to outweigh the minuses: 94 percent of respondents said their companies plan to remain in the region for at least the next few years.

“The issue with workforce is not a Pacific Northwest issue, that’s a nationwide issue,” Campbell said. “But there are so many pros that our clients found with being in the Northwest that keep them grounded here.”

Positive outlook

Despite the challenges, the overall outlook among business leaders appears to be positive. In Washington, 25 percent of survey respondents rated the business climate as excellent, and an additional 56 percent described it as good. In Oregon, 13 percent described it as excellent and 70 percent rated it as good.

There were some areas where opinions about Washington and Oregon differed: 67 percent of respondents described Oregon’s state tax policy as anti-business, compared to 38 percent in Washington. More Oregon companies — 48 percent of respondents — also reported seeing employee departures due to lack of available advancement, compared to Washington’s 19 percent.

A survey question about last year’s federal tax bill highlighted a split between small and large businesses. Sixty-four percent of businesses overall said they approved of the bill with 36 percent disapproving. But among respondents from companies with fewer than 50 employees, 46 percent approved and 54 percent disapproved.

Participants were also asked about emerging technologies and their potential impacts on the organization in the next few years. Thirty-seven percent said that automated manufacturing would have a large impact, and 18 percent said the same of advanced data analytics. Only 8 percent expected automated vehicles to have a major impact in the next few years.

The survey results also showed a significant percentage of companies that appeared to be unprepared for a change in executive leadership: 24 percent of respondents reported having no transition plan in place, and 35 percent said they were developing one.

Matthew Bisturis, an attorney at Schwabe, Williamson & Wyatt, said it’s important for manufacturing companies to think about the current generation of leadership’s goals and prepare potential successors for transitions, and to make the plans in advance to minimize disruption when the time comes.

“I think it’s at the top of businesses’ list if they’ve experienced an unplanned transition,” he said. “It doesn’t jump up on most people’s list above things like workforce unless it reaches a pain point and is recognized as an issue that’s causing operational problems.”

The survey included responses from officials in more than 10 manufacturing industries, including wood products, electronics, medical, outdoor gear and machinery. The industries with the most respondents were food and beverage at 20 percent, metal fabrication at 11 percent and aerospace at 9 percent.

According to the authors, approximately 68 percent of the participating organizations are located in Oregon, compared to 20 percent headquartered in Washington. In order to keep the data anonymous, the survey didn’t identify the manufacturers by their location.

The survey’s authors said it was designed to be statistically reliable with regard to the opinions of particular groups and described it as a valuable way to get a sense of the attitudes of Washington and Oregon manufacturers.

Campbell said the survey was prompted by what her firm saw as a lack of specific survey data available for the Pacific Northwest. The sponsors plan to continue conducting the survey every two years.

“They were not all near-term questions, so our goal is to do this survey once every two years to keep it fresh, because things are changing,” she said. “There are certain issues that are going to exist always, but they have new shapes depending on what’s going on with the economy and in politics.”

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