New Ways Forward

 

 

Another Musing at The Wealthy Ironworker

 

I have been talking about the growing labor shortage in the skilled trades for a long time, now. What’s more, that shortage, in the next decade, will grow significantly larger – with some estimates of around 2 to 3 million.

We aren’t even replacing those retiring – much less the manufacturing onshoring and infrastructure investments we’re seeing.

Make no mistake, here: We will pay a heavy price for not taking the time to really understand – and do something – about this.

 

Case in point for Manufacturing

 

Manufacturing Dive, citing a study done by Deloitte and Manufacturing Institute, says the manufacturing industry could see a 1.9 million shortfall if the labor shortage isn’t addressed.

The article notes that Millenials and Gen Z are more likely to switch jobs; missing from the discussion, however, is the reason.

And avid readers/supporters/listeners know why: sheer opportunity. There is far more opportunity for those generations today compared to their “loyal” older generation counterparts. Loyalty has always been a myth. The only real reason Baby Boomers and older Gen Xers stayed was a lack of opportunity.

 

Related: Read Passion Vs. Opportunity

 

Consider one of my absolute favorite examples that I’ve used several times already – this tweet by Mr. Beast, the most famous YouTuber, from early 2024:

 

 

And that is JUST YOUTUBE! This has nothing to do with the rest of the internet.

So, on a few podcast episodes as well as musings, I’ve asked the question:

 

“With the massive amount of money out there for people to earn on the Internet, why would young people come to work for manufacturing and construction firms?”

 

I’ve yet to hear an answer.

And the reason why?

No one in the respective industries (construction and manufacturing) is seriously looking at just how complex this whole thing is. Most people pick low-hanging fruit (think “young people don’t want to work”) – which does nothing to actually address the problem, by the way – and keep on doing the same old same old.

And their results?

The same old same old.

 

Opportunity Means Competition – in a Different Way

Ever seen competition disliked?

 

With the unprecedented amount of opportunity out there in the market, also comes competition – but not in the way you think.

Ordinarily, when you hear someone tout the positives of competition, it’s usually about product, and how this ultimately drives the price down.

A dirty little secret of capitalism, though, is that while that type of competition is applauded, the competition I’m referring to – industries and companies competing for workers -is not.

Companies may be used to competing with others in their respective industry, but they don’t want to compete for workers overall – but that’s exactly what we have in today’s economy.

AND IT WILL ONLY INCREASE IN THE NEXT TWO DECADES.

It’s interesting to note that companies are exploring different strategies to try and recruit/retain workers – and do you know what ranks at the top of workers? Competitive employment benefit packages.

Peter Drucker, all the way back in 2002, predicted this in Managing in The Next Society:

 

“Of course knowledge workers need to be satisfied with their pay, because dissatisfaction with income and benefits is a powerful disincentive. The incentives, however, are different. The management of knowledge workers should be based on the assumption that the corporation needs them more than they need the corporation. They know they can leave.” – Page 282

 

These “knowledge workers” are technicians – and in the case of manufacturing, they are key. I’d also include the skilled trades of today in that group, too.

The reason? Supply and demand, Oh, and, of course, the experience they have trumps education.

Hmm, where have we heard this before?

Oh, that’s right: The Wealthy Ironworker has been saying this.

For a LONG time, now.

 

Ideas for Long-Term Success

We need to bridge the gap in our current approaches

 

The complexity facing these industries is enormous – but not completely insurmountable. There ARE new ways forward.

First – and perhaps most importantly, the idea of Shareholder value (where companies are ONLY or MAINLY concerned with providing shareholders with returns – often at the expense of other stakeholders like employees and customers) needs to be replaced with a more robust policy. That policy should place significant value on employees.

What’s more, I’m not alone in this.

Peter Drucker said it needed to go.

And so did Jack Welsh – former CEO of GE. CBS reported:

“On the face of it, shareholder value is the dumbest idea in the world,” Welch said. “Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products.”

Former CEO of Costco, Jim Sinegal, in striking a balance between shareholders, managers, employees, and customers, embodied a rebuke of it, too.

Forbes has a great article about shareholder value – and, perhaps, the cherry on top is American Compass, a think tank that has conservative Republicans like Marco Rubio and Jeff Sessions in it. They say, and I quote,

 

“The defense of markets, though, has at times made us overly solicitous of businesses. As we advocate for owners and managers in their pursuit of profit, and celebrate the enormous benefits their efforts can generate for us all, we must accord the same respect to the concerns of workers and ensure that they too have a seat at the table. In a well-functioning and competitive market, participants meet as equals able to advance their interests through mutually beneficial relationships.”

 

For my part, I believe there should be greater cooperation between manufacturing companies and unions. Organized labor has a vested interest in the success of the company/contractor because their members ARE your employees. They are stakeholders in your success.

A comprehensive plan, adopted by manufacturing associations, companies, and unions, for trained manpower could be a panacea for all involved.

To be sure, this is a novel approach, but you know what? We keep doing the same thing over and over, and things don’t just stay the same – they get objectively worse.

Gallop reports that support for unions is the highest it’s been in decades – and it’s not going away, either.

American Compass, which was mentioned earlier, advocates for workers to have a seat at the table – and in their publication, they discuss the varying organizational union structures from other countries as models we should discuss, compare, and explore.

A tight labor market, like the one we are in the midst of and will see for the foreseeable future, is one of the best times to discuss ideas and potential solutions. This applies to both manufacturing and the construction industry.

 

 

 

In the end, however, I doubt any of the ills openly known in the manufacturing and construction industries will be solved until there is, as a friend of mine is fond of saying, “More pain required.”