MRO TODAY’s First Critical Issues Survey

Fear and hope on the factory floor
Outsourcing, unions and immigration remain critical

by Tom Hammel

MRO Today’s first Critical Issues survey reveals the fears, hopes and gut feelings of manufacturing and maintenance workers across the United States on the biggest issues facing the industry today: outsourcing, labor relations and illegal immigration. They continue to pose the most serious threats to productivity and job security. And because these problems can seem too large to control, some manufacturers have yet to face their hardest decisions.

But hope shines through the gloom.

Outsourcing
The big kahuna of manufacturing retains its fear factor, but it also no longer has the same bite it once had. A sobering 48 percent of our survey respondents have outsourced jobs in the last five years. The good news, if there is any, is that of that 48 percent, 27 percent moved plants to other states, while just 21 percent moved production out of the country. The positive spin on this is that a bare majority, 52 percent, have not outsourced any jobs in the last five years.

And the lessons of outsourcing appear to have sunk in here at home. The trend is slowing and those manufacturers that have not already jumped ship express staunch support for keeping jobs here. A promising 53 percent of respondents believe their companies are “highly committed” to keeping jobs here; another 25 percent believe their companies are moderately committed; and a further 18 percent feel their companies generally back the idea. Just four percent have no faith that their employers would take any steps to keep jobs here in the United States.

True, we have been wrong before but perhaps the best indicator of the worker’s gut feeling is the fact that 71 percent believe there is either little or no cause for alarm that any more jobs will be lost in the near future.

Unions vs. management
Labor relations, which for this discussion means “companies with union shops,” remain the trigger many manufacturers use to shoot ourselves in the foot. Just 25 percent of the companies responding to our survey are union shops. Of these, 58 percent of the union employees responding feel their corporate counterparts are either highly or somewhat open to working with the union.

However, on the other side of the coin, just 38 percent of corporate managers feel their union representatives are somewhat open to working together, and it declines from there. Some 39 percent feel their union reps are inconsistent in their cooperative efforts, while 23 percent feel union reps are either somewhat or completely uncooperative. Room for improvement? Let’s get to it, folks. The simple, brutal reality is that either we learn at last to play together or the owners will just move the team out of town.

Immigrants: yes, no, maybe
We knew this would be a hot button. Nineteen percent of companies responding say they have immigrant workers in their plants; 70 percent say they don’t, and 11 percent aren’t sure.

Of the 19 percent that employ immigrant workers, just four percent admit to knowing that some are working illegally. Most respondents (53 percent) decided this was way too sensitive a question to answer.

The remaining 43 percent believe all their workers are legal or don’t know their status.

Buying “American”
There are some clear bright spots in the survey, though. On the question of whether MRO buyers prefer to buy products made in the United States, 54 percent said, “Yes, whenever we can.” Only 10 percent said country of origin made no difference and just 12 percent said they would buy American products only if they were the lowest cost. The remaining 24 percent said they would “buy American” if they were the best products for the money.

Clearly, cost is not the primary concern for the majority of buyers, rather, perceived product quality and the convenience and peace of mind of purchasing “locally” drive most purchasing decisions.

The military question
When Johnny comes marching home, then what? Of our survey respondents, only 20 percent have military service backgrounds. This private sector mindset also seems to be at play in hiring policies: Just eight percent of respondents say their companies actively favor returning veterans.

Nineteen percent say their companies have policies but that they do not really work to favor veterans. Thirty-five percent say their companies have no policies regarding jobs for veterans, and an even larger 38 percent don’t know.

This is a very interesting dilemma, one we suspect may begin to play out differently as more young veterans exit the services and more baby boom workers begin to retire. There are obviously opportunities here for the military and manufacturers to work together. After all, not everyone can become a government contractor after discharge.

Workforce planning: sort of
The coming retirement exodus is common knowledge, so what are companies doing about it? Well, for one excellent source, see the above paragraphs. That said, we do see encouraging news here: 47 percent say their companies have plans in place to fill jobs as they are vacated by retirees. Another 20 percent say the issue is moot as they have plenty of applicants. The final 33 percent aren’t sure what their company is planning.

Of those with plans in place, 24 percent believe their companies are doing a good job of working with associations and trade schools to develop and recruit new workers, but a further 25 percent say those programs are either underdeveloped or not as effective as they could be.

In direct correlation to this, a total of 66 percent are either highly (30 percent) or moderately (36 percent) concerned about their firm’s ability to attract and retain quality workers in coming years.

Better news: an up market
Shifting to current events, namely how well their company is doing, 30 percent expect their 2007 business volumes to be on a par with 2006, but 56 percent expect better revenues than last year (slightly better: 36 percent; much better: 20 percent). Only 14 percent expect business to be softer this year.

This optimism translates directly into new hire estimates. Mirroring their business volume expectations, 45 percent expect hiring levels to stay about the same as last year, while 49 percent expect to add employees in the coming months. Just 6 percent expect a few layoffs within six months, and none see large layoffs ahead.

Job security: looking good
Feelings of job security (and insecurity) are also trending in line with respondent impressions of their company’s performance. Thirty-three percent feel their job is secure for the rest of the year; 43 percent believe their job is secure into next year and beyond; and 20 percent more expect to stay until they retire.

On the prospect of training and career advancement, a solid 76 percent feel their companies’ programs and career ladder opportunities are satisfactory or better.

More plus than minus
Overall, we see the survey result tipping the scales in a favorable direction. Workers feel pretty good about their job security, their companies are doing well and training and advancement opportunities are there for the earning.

But hefty negatives remain in the balance: outsourcing, labor relations and immigrant worker issues all pose tipping points, and for too many companies, their next generation of workers hasn’t even entered the weighing room.

Want to try again? Take our purchasing habits survey on page 33 in the printed issue of June/July MRO Today magazine.

This article appeared in the June/July 2007 issue of MRO Today magazine. Copyright 2007.

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