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Welcome to This Week in Benefits, a new biweekly podcast from Mployer Advisor, the company that is changing the way employers search, evaluate, and select insurance advisors online.
In each episode, our team will bring you the latest news and industry updates in the world of employee benefits. We will break down top headlines, bring you interviews with industry insiders, and highlight market trends and stories we’re following.
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Date: August 10, 2022
Episode Season and Number: Season 1, Episode 10
Episode Title: Could Rethinking Employee Benefits Help Bridge the Manufacturing Industry’s Skills Gap?
In this week's episode, Abbey Dean sits down with Jeff Reinke, the Editorial Director of Industrial Equipment News and an expert in all things manufacturing, to discuss the skills gap and why industry leaders must invest in solutions to attract and retain new talent.
To listen to Episode 10 of This Week in Benefits, click here.
Today in Manufacturing Podcast
Deloitte’s 2022 Industry Outlook for Manufacturing
Employee Benefits Summary for the Materials Manufacturing Industry
Tips for Attracting Prospective Employees in Manufacturing
Download Your Complimentary Customized Report to Compare Benefits in Your Industry
Abbey Dean: Hi everyone, and welcome to this week's episode of This Week in Benefits, a podcast from the team at Mployer Advisor where we discuss all things employee benefits. I'm your host, Abbey Dean, Mployer Advisor's, Director of Content, and thanks for being here today. In this episode, I am very happy to be joined by my friend and former boss, Jeff Reinke. He is a longtime expert in B2B publishing, but specifically around the manufacturing and distribution space. And I've asked him to come on the show because I wanted to think about what employee benefits meant in a more isolated space In the past. We've discussed things as they're happening nationally in trends, and so I thought it would be interesting to take a closer look at one and see what the world of employee benefits and HR management and everything looks like. So he was very generous and even took a few bad jokes for me in stride. So forever grateful to Jeff. So yeah, here is my conversation with Jeff. Hi everyone, and welcome to this week's episode of This Week in Benefits. I'm very excited today to be joined by my friend and former colleague Jeff Reinke. Jeff, thank you for being here today.
Jeff Reinke: My pleasure. Abbey, just can't get away from you.
Abbey Dean: I know, yes. Well, should we give some context, Jeff? How do we know each other?
Jeff Reinke: Well, not too long ago we were looking to expand our editorial team, and we looked down south and found a rising star in the journalism ranks by the name of Abbey Dean, and she was able to venture north to the great winter lands of Wisconsin from her home in Tennessee to join us here for a short period of time on manufacturing.net. And it was a joy working with her for a couple of years, and then she ditched us because apparently, apparently she just could not stay away from her roots down south. So
Abbey Dean: That's a fairly accurate portrayal of what happened. But yeah, and Jeff has been working in the manufacturing industry in B2B publishing for, oh, actually I don't know how many years, Jeff?
Jeff Reinke: <laugh>? Wow. Yeah, we just talking before, how to make him feel old here, Abby. So I've been here, I know B2B publishing for almost 25 years 23 years in the manufacturing sector for just over 15. So yeah.
Abbey Dean: So you know your way around a little bit.
Jeff Reinke: Well, you better, I've faked it really well to this point. <laugh> You just caught me, so one of the two is accurate.
Abbey Dean: Okay, well I'll see if I, we can cut you now. Okay. So tell us, well, for everyone listening, tell us your title and who you work for as well.
Jeff Reinke: So I wear a lot of hats here at Industrial Media, one of which is working on the editorial team basically helping develop some strategic content both that we use for our websites a little bit in print. And then as well for video. Basically we have a collection of different brands here in the industrial sector, the most prominent of which is industrial equipment news or ien.com. That's been around for about 90 years. It was really sort of a pioneer in the B2B publishing industry for the industrial and manufacturing sector. So that's kind of one of more of our flagship type brands. Bookending that we also have manufacturing.net, which has been around for only about 20 years, but was really one of the first to really go all digital in covering the industrial sector from a B2B perspective. And in between we've got a lot of other vertical brands that cover manufacturing business technology, food manufacturing, industrial distribution, industrial maintenance and plant operation. And we've also launched a couple of brands as well that you can get into cannabis equipment, as well as medical design and development. So a lot of things covering the industrial sector from both a production supply chain and product design perspectives.
Abbey Dean: So what Jeff and I are going to talk about today is looking at the manufacturing industry from sort of a bird's eye view and how some of the themes we've been seeing in general across the employee benefit space, how those might be manifesting themselves in manufacturing and distribution as well. So to start with, Jeff, for listeners who do not work in the manufacturing industry or are perhaps less familiar, are there maybe two or three issues really affecting the industry right now, or are there things you would say are keeping leaders up at night?
Jeff Reinke: Yeah, I, and a lot of these don't change dramatically from the 50,000 foot view, but then when you start getting more granular, there's different elements that kind of pop up with within some of these topics. So just I think when you look at the top three, I think one of the first that comes to mind right now is just investment strategies in terms of automation and robotics and a lot of what we would call industry 4.0 type technologies, whether you get into artificial intelligence, remote monitoring, software upgrades, all of those types of things. And looking at it from both a particular product line perspective as well as sort of the enterprise-wide perspective. So investment strategies and understanding what to invest in, what technologies make the most sense for your enterprise or your business is always, it's one of those real core issues impacting manufacturing always will be.
I think right now one of the things that's come that's always been around but has really come to the forefront due to the pandemic and a lot of shutdowns and everybody's feeling this on multiple levels are supply chain disruptions. For manufacturers, this means being able to source materials, components any number of different things that they need just to produce the products that they sell and make money on. In addition to that, it's been coupled with logistics issues in terms of the shortage and long haul truckers. There's been issues with railroads right now and those folks potentially going on strike. So there's a lot of supply chain things that have always been challenges but have now even become more challenging because of how the world has changed over the last two and a half years. And I think the last one that's always been there, and Abbey when you are covering working on manufacturing.net, this is something we talked about a lot and it is what we call the skills gap in terms of there's a lot of open positions in manufacturing, but there are not a lot of individuals applying for these positions that have the right training, like technical knowledge to take on these responsibilities.
So manufacturing, I think one of the things that will always keep leaders within the industrial sector up at night is finding enough skilled people to really lead their business going forward.
Abbey Dean: Actually there's a recent or fairly recent report from Deloitte, it's sort of a manufacturing overview, and they did a survey of about 500 high-ranking manufacturing leaders or C-suite leaders. And part of the report found that, and this is a quote "record numbers of unfilled jobs are likely to limit higher productivity and growth in 2022. And last year we estimated a shortfall of 2.1 million skilled jobs by 2030. Talent scarcity is compelling, more manufacturers to consider raising pay." So that's just a snippet of the report, but that speaks to what Jeff is talking about, which I mean it's not wild to me that this is still such an issue, but it seems to me that how the pandemic has underscored, it seems like it would be more of a heightened sort of concern, I imagine.
Jeff Reinke: And it's compounded by a couple different factors. And obviously when the pandemic, there was a lot of people reevaluating sort of what they were doing in terms of you had folks with kids saying, okay, we've made it this far. Do we really want to go back to work and handle daycare, increased costs and things like that. So are we going to stay at home and just not go back to work. Yet, other folks who realized, you know what, I wasn't working during the pandemic and now I've got options when I go back and I look at a service type job versus a manufacturing type job, those service jobs really up their game in terms of pay and benefits and what they're doing to attract and retain people. So put manufacturing really on an unfamiliar grounds of almost being on the lower tier in terms of what they were paying people and the benefits they were providing.
Plus when you consider that working at Starbucks versus working at an assembly type position, those are two very different work environments, more demanding, more time needed. So manufacturers have really been working hard to increase wages to become more competitive with their wages and with their benefits and understand that it's really a different dynamic in terms of attracting and retaining workers than it ever has been before. And a lot of that has been brought on by the pandemic. A lot of it is just a shift in sort of culture and the way that people look at what they wanna do and how they wanna spend their working hours right now.
Abbey Dean: And that's something that seems to ring true across just about every industry, those same sort of sentiments. And that same survey I mentioned from Deloitte 38% of those 500 senior manufacturing leaders who were surveyed, 38% of executives reported that attracting new workers was their top priority for the production workforce in 2022, this was followed by 31% saying retention and then reskilling at 13%. There was also a quote following this that said, the industry may need to deploy creative solutions to improve workforce perception and experience. So that seems to really underscore what you were saying as well. Those few percentages, 38%, 31%, 13 for rescaling, do that, do those numbers kind of surprise you or is that kind of in line with what you were expecting?
Jeff Reinke: They're surprising in that they're not higher, I really would've thought. And really they need to be higher, especially when you look at retaining workers, I believe say that one came in at 31%. Yeah, I mean that's one of the biggest issues we have right now because as it is with any business or any industry, whether you're talking about customers or employees, it's always more cost effective and more efficient from an operational perspective to keep what you have as opposed to finding new. So that should be a higher, it seems to me like that should be a much higher priority in terms of retaining, especially because we're seeing a lot of really interesting dynamics right now. One of the biggest, I don't know if it's a trend or an issue or a challenge, however you wanna phrase it with U.S. manufacturing, is how much competition it's seeing from Mexico.
There's a lot of US manufacturers seeing lower cost production in Mexico, and you can still realize the benefit of being very close to the US market. Well, as some of these plants may decide to move to Mexico or someplace else, those workers at those facilities come under intense competition. There are other plants in that area then who are just seeking these folks out from a competitive perspective and offering them better wages. So they come to our plant, plant A instead of going to plant B. So retaining those employees that you have should be a higher priority because there is more competition out there for them. And I would think, again, it just makes sense when it comes to recruiting new employees. I think that should also be a much higher percentage here because we have something in, I know you've covered this as well when we were working together, but you have this dynamic of the machine whisperer, which is the older more experienced worker, whether it be on a maintenance or operations perspective that just have a ton of organic knowledge and understanding of how things work when things need to be repaired, how things need to flow to keep the plan going smoothly.
And they're retiring, these folks are leaving the workforce. And Covid really reinforced that and brought it into a greater light because more people said, you know what? I've got health concerns. I'm on the cusp of retirement the way it is. I'm just going to get outta here early and I'm not coming back. And that made retaining a lot of those employees that had some of that information or had at least been working with those machine whisperers before they retired, even more valuable. So I think when you look at both of those numbers, the 31 and the 38 in terms of keeping and finding new workers, it seems like they should be higher. Again, maybe it depended on the day these folks were asked this question because if you're dealing with having supply chain issues and dealing with inflation and things like that, maybe that was just the flavor of the day. But overall, I'm very surprised that those two numbers were not much higher because this has been an ongoing issue that was really compounded by the pandemic.
Abbey Dean: They referred to creative solutions or thinking of ways to deploy creative solutions to improve workforce perception and experience. Do you have an idea of what some of those creative solutions might be?
Jeff Reinke: I think there's a couple things, and we've talked about you can increase pay, and we've seen manufacturers really respond and increase what they're offering entry level workers significantly. I mean, we're seeing entry level folks come in at $20 to $25 an hour, which is very competitive with other industries, and then you realize that they can go from there. So they've done some things there. I think they're getting better in terms of benefits and understanding the cost of medical insurance and how important that is. We've seen a number of labor strikes focused almost exclusively on that particular area of employee benefits, just talking about the companies covering a bigger share of medical insurance and dental insurance. And I think manufacturing is stepping up. I think some of the more creative things they're doing though, is focusing on what this new generation really looks for. In addition to pay and benefits, they wanna know that they're part of a team, they wanna really feel included, they wanna be empowered.
And I think what smart manufacturing leadership has done is really focus on those things when selling the company and selling the culture and developing a culture that does offer even those folks coming in the door, the opportunity to feel like they're a bigger part of something. They're not just there punching a clock, putting widget A into box B and so on and so forth. But they're there because they need to play an important part of quality controls and making sure the customer's going to be happy and being in the line making a lot of those key performance indicators, indicators available to them so they understand how they're doing, how the company is running, how well they're achieving their goals. So I think some of the more creative things that have been done is just making a lot more of that data available to plant floor workers and helping to stress the importance of it and their role in hitting those goals.
Abbey Dean: We also mentioned reskilling. For those listening who are unfamiliar with that term, can you tell me what that is and also if you've seen more manufacturers focus in this area recently?
Jeff Reinke: So I think reskilling, it can take on a little bit of a different meaning depending on the size of the facility, what the company produces or manufacturers and so on. But generally speaking, we're talking about taking folks who have been doing one job in a particular facility and teaching them something new. In most cases, we're talking about upskilling if that's maybe a better, more appropriate way of saying it for the manufacturing side of things and offering them more responsibility and more opportunity to be, play a bigger part in what might be a more technical part of the operation, a more crucial, more vital part. So getting away maybe from general assembly and getting into working with a cobot or in more product fabrication or machining or something like that. Maybe if facilities having difficulty attracting some skilled labor that they need in terms of producing parts, again with using robotic equipment or with machining, seeing sea machines and other things of that nature. Teaching these folks who are already there, these different positions that offer them an opportunity to make more money, again, play a bigger part in what the company is trying to do. And I think it's a vital part of what manufacturers are attempting to do, again, in retaining more of that talent that they have within the facility because it makes a lot more sense to do that than to try to go out and recruit and compete with some of these other very competitive entities out in the job market.
Abbey Dean: About 65% of manufacturing companies offer short-term disability insurance and long-term disability. They're both far above the national average. Also far above the national average is the fact that 91% of manufacturers offer employees access to medical insurance, something Jeff mentioned as well, and that's above the national average at 69%. Somewhere, however, where we or I noticed that they falter a bit is providing access to paid family leave. Right now they're at 18% and the national average is just above 20. Also, about 33% of manufacturers offer consolidated leave plans, which is just slightly below the national average at 44. So I mean aside just quick glances mean we're looking at again 50,000 foot view, but manufacturers offer really good benefits and good pay. It looks like an area of improvement just generally speaking would be in the paid leave and paid parental leave area. However, it's also worth noting that three quarter, which is, it's not going to surprise Jeff <laugh>, about three quarters of the manufacturing workforce are men and the median age is 43. So I just wonder if manufacturers are looking to diversify their workforce and recruit multi-generational talent including more women too, I feel like at some point they almost might have to change the types of benefits they offer to attract that talent they need. Does that sound fair?
Jeff Reinke: I mean, absolutely. Okay. If you want to change, if you wanna see change, you have to be change. You have to implement things that are different than what you're doing right now. That what's challenging here from the manufacturing sector when it comes to these paid leave elements, and this is where it gets tough when you try to lump manufacturing altogether because there are so many different sectors putting together an airplane is a lot different than processing pie filling. So it's a lot of differences there in terms of quality controls, how you plan out production, things like that. So when we look at, for example, when you bring up the leave, the paid leave consolidated, leave paid parental leave, again, depending on the time of year in a food manufacturing facility, it just might be really, really difficult to say to make some of those concessions.
If you have somebody working on the quality control perspective or quality control line or role somebody working in packaging, whatever the case may be, it may be difficult to say, hey, yeah, we're going to give dad six months off or six weeks off to handle mom when they have a new kid. That just may be difficult from an operational perspective because those plants operate on such tight margins and because it's maybe seasonal and because there is a definite expiration date on when they get that fresh product in, it could be more difficult to give those types of, if you will, concessions or make those types of changes. On the other side, if you're looking, working at an automotive plan where you can see things coming in and there's a pretty steady flow, I mean pre pandemic and this <laugh> semiconductor microchip shortage and all the other crazy things that are going on in automotive, but it's a fixed product, it's got a fixed process, you can plan a little bit more there.
So if somebody's going to be out for an extended period of time, you can accommodate for that. So I think it's going to be something manufacturing is going to have to continue to evolve and deal with, but it is more difficult sector by sector, facility by facility. The other thing that you have to keep in perspective is 85% of all manufacturing companies in the U.S. have 60 or fewer employees. Okay. So when you're looking at really some of these small manufacturers, now in this instance, again, I'm looking at General Motors or Ford, that's one company. Those are still the vast majority of where the manufacturing employees and the size of the facilities and all that come into play. But those individual companies, there's a lot of small manufacturers in the us. So again, they can do things from a pay perspective, they can try to be competitive from a benefits perspective, but when it comes to time off when you're a smaller company with fewer employees, those things become difficult and they probably skew some of these results a little bit and maybe don't take into account some of the other flexibilities that may be available because it is a smaller company.
So it's a bit of give and take little, you just have to be aware of some of those things when you look at some of these numbers that take all the manufacturing into account because of the prominence of some of those smaller entities as well as just the difference in sectors and how they operate.
Abbey Dean: No, I think that's wonderful context. Thank you for saying all of that. I think that's also, this is also an important juncture to enforce to listeners that you are a employee benefits broker, they should be specialized in whatever industry you work in. <laugh>, like whoever if Ford or whoever or the smaller mom and pop manufacturer is working with an employee benefits broker, I very much hope that it is because they have expertise in that area and they're used to serving the needs of workforces in that area. So some of the challenges and the complexities that Jeff and I are outlining, those are made a lot simpler when you're working with someone who already understands and intuitively can sort of calculate the risk and reward of doing, of trying certain things for your workforce. So just a bit of context there, but no, Jeff, I completely agree with you. I'm glad you mentioned that.
Jeff Reinke: Absolutely.
Abbey Dean: So I know we've already covered a lot, but what other trends or issues around talent, recruitment, labor or maybe employee benefits are you predicting will shape the industry in the weeks or months ahead? I'm assuming inflation is something that is on the minds of a few of your readers.
Jeff Reinke: Yeah, I mean absolutely. The economics of everything is, it's just such a weird time right now and mentioned supply chain already. That's a huge consideration. It just touches so many different things right now, even in terms of how many people you actually need in the facility at a time. I mean, we're seeing some of the big automakers doing some long term shutdowns just because they don't have components in place right now. So that's where retaining those individuals becomes really important because they're obviously not making as much money if they're not actually in the plant working, and there's going to be somebody out there potentially poaching them because there is such a demand for skilled labor in the industrial sector. So it'll be interesting to see how that plays out. Inflation is obviously a huge consideration. What happens with the markets even from a political perspective, some of the things that are going on with the fence cuts, that can definitely impact a number of different manufacturers in a lot of ways.
China is always a concern, what's going on there? And some of the hostilities in terms of how it seems like a lot of the hostilities now start economically and then can go into a military perspective. But right now there's a lot of things going on in China I think, that have US manufacturers either concerned about their operations there, concerned about potentially expanding there in terms of a market that they could capitalize on or just if they're still sourcing there. I think that's led to a lot of people looking at how do I get my products closer to my key markets? One of which is, or the biggest of which is the United States. And that's why manufacturing in Mexico I think is going to continue to grow. So there's a number of interesting elements that are taking place. Obviously the stuff going on in Ukraine is impacting food manufacturers in a great deal. It's impacting the energy sector significantly. So there's a lot of international factors, I guess, that are really influencing what's become such a global sector in manufacturing. It's always been that way, but even more so probably in the last three to four years.
Abbey Dean: Is there anything that we have not talked about yet surrounding retention, labor, anything at all that you think is important to mention?
Jeff Reinke: Well, I think too, I mentioned technology investment and how important that is and what a critical issue it is, and it keeps people up at night. I think the biggest one of those is software. There's so much software out there now that can help manage the enterprise in different sectors of it, but you need to have people who understand how to use that software effectively. And I think that goes into some of the up training things that we talked about, some of the skills gap elements we talked about. So really someone who understands how to implement and utilize and show people how to make the most out of a lot of these software investments that are going out in manufacturing is going to be another critical issue, and that could really infect the workforce in a dramatic way. I think that's part of the bigger training challenge that a lot of manufacturers face in retaining employees by keeping them upskilled and giving them new things to do and really leveraging the abilities that they have.
Abbey Dean: Well, Jeff, thank you so much for your expertise and your insight, and I will take any excuse to talk to you, but this wasn't especially good one.
Jeff Reinke: No, my pleasure.
Abbey Dean: Thank you very much. Can you tell everyone where to find you if they want to follow your work or learn more about IEN?
Jeff Reinke: Sure ien.com. Very simply, you can see everything we're doing there. We produce a daily video called IEN Now talking about different news stories within the manufacturing sector manufacturing.net, and on both of those websites, you can also find our podcast today in manufacturing podcast, which is also available on all of your platforms. So if you're not listening to Abbey, maybe you can switch over and listen to us and check us out and stuff that we're talking about.
Abbey Dean: It's very good.
Jeff Reinke: Also, I tweet about maybe twice a week. So you can always find me on Twitter at Jeff Reinke.
Abbey Dean: I'm, I'm actually surprised you tweet that much, Jeff, and that is our show for today.
If you have not yet, please subscribe to the podcast, leave us a review. You can even leave us a voicemail message if you want to suggest ideas or have follow up questions to past episodes. Thanks to everyone for listening. Of course thanks to Jeff for coming onto the podcast, and we will see you guys next time.
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