A few years ago, John Newman ran into a young man working at a local restaurant.
The guy was in a low-skill, low-wage job, but his work hinted at a certain aptitude with his hands and his mind. So Newman, chief financial officer at Athena Manufacturing, struck up a conversation with him.
“He ended up being one of the smartest guys in our shop,” Newman said Thursday at a meeting of the Austin Regional Manufacturers Association.
So smart, in fact, he left the company to go to college. But before he did, he recruited his father, who still works for Athena, Newman said.
“We have a ‘help wanted’ sign in our front yard,” he said. “That’s where we start, and we’ll go anywhere from there.”
Recruiting, hiring and retaining skilled labor has become one of the most critical challenges for area manufacturers, according to the results of a new Austin Regional Manufacturers Association survey.
While Austin-area manufacturers added about 2,800 jobs over the past 12 months, according to preliminary data released Friday by the Texas Workforce Commission, many local factory managers said they’d add more if they could find people with the right skills.
The region’s exceptionally tight labor market doesn’t help. The workforce commission said the metro-area unemployment rate in October fell to 2.6 percent from 2.9 percent the prior month.
While the commission doesn’t immediately adjust metro-level data for seasonal workforce patterns, calculations by the Federal Reserve Bank of Dallas put Austin’s seasonally adjusted rate at 2.6 percent, down from 2.9 percent in September and at its lowest point since December 2000.
The market around the rest of the state doesn’t offer much slack, either. The seasonally adjusted jobless rate in Texas fell from 4 percent in September to 3.9 percent in October, its lowest in 40 years. The national rate ticked down to 4.1 percent from 4.2 percent.
In Austin, the tight labor market has started to slow what had been a sizzling rate of overall job growth. Local employers added more than 22,000 jobs over the past 12 months, an increase of 2.2 percent. However, over the past seven calendar years, metro-area payrolls expanded from a low of 3.2 percent in 2010 to a high of 4.9 percent in 2012, according to commission data.
Local factory payrolls have been more volatile, dropping sharply during the recession, growing slowly during the recovery and then going up and down in the past four years. However, local manufacturers could add more if they had a larger field of skilled labor from which to draw. According to the initial results of the study run by University of Texas’ Ray Marshall Center, 88 percent of responding manufacturers said recruiting qualified workers presents a challenge for their company.
Local factory managers cited the shallow pool of available skilled labor, the scarcity of relevant training opportunities and the broader labor market’s tightness. Many noted they’d searched outside Austin and Texas for workers with certain skills.
Once they get workers in the door, getting them up to speed often proves difficult as well, according to the report. Prior training often left candidates underprepared for increasingly technical factory floors, and most have limited in-house capacity for additional training.
Of the companies that responded to the manufacturers association survey, 93 percent said they will consider expanding their employee education and training offerings within the next three years.
“This is just beginning,” said Ed Latson, executive director at the manufacturers association. “This issue is not going to go away.”
HID Global, one of the more-recent large factory arrivals to Austin, has experienced the tight market already. Since opening its consolidated North American operations here in January 2014, it has grown to employ about 400 people at its North Austin facilities.
A lot of that hiring occurred in its first 18 months, said David Stewart, its vice president. Dell had closed one of its local facilities about the same time, so HID had ready access to a field of qualified workers.
After that, though, things got tougher, said Stewart, himself a former Dell employee, and the site’s leadership had to take a more active role in finding talent. For example, HID, which produces keycards and other types of physical security products, often needs to print designs directly on plastic. Experience with that is in short supply here, and the company had to recruit workers from outside the state.
“We had to get a lot more active, a lot more aggressive ourselves,” Stewart said.
And the company had to stay equally involved after bringing employees on board. The high demand for skilled labor leaves most local manufacturers competing over the same small pool of talent, so they often are forced to poach workers from other local factories to fill key positions.
Almost half of the manufacturers in manufacturers association’s survey said retaining employees had been a challenge for their company. Sometimes, that comes down to a simple question of wages, Stewart noted, but retention also requires a focus on treating employees well and recognizing their contributions.
For example, he said, one of the women who works at HID brought no formal engineering training, but she innately discovered more efficient ways to accomplish tasks on the factory floor. She’s so good at it, in fact, that the company has shot video of her processes and shipped it to factories worldwide.
That sort of on-the job learning is critical for factories as baby boomers get set to retire and while they work to ramp up more educational programs to develop a new wave of manufacturing workers.
The Austin Regional Manufacturers Association, its members and local educators — especially Austin Community College, which provides much of the vocational training in the region — already have launched various efforts to expand the pipeline.
The association is creating an internship program designed to expose more high school students to next-generation manufacturing jobs. Meanwhile, ACC and some local manufacturers have developed both broad and targeted programs designed to develop much-needed skills, said Gretchen Riehl, ACC vice president for workforce education programs.
Meanwhile, they’re all trying to foster greater awareness of the opportunities at area factories, especially among local high students. They want people to know the jobs are there, they’re not the same dirty factory floor jobs of decades past, and that many of them pay well.
“Our welders,” Riehl said, “make more than people with a (four-year) psychology degree.”