Bloomberg News Roundup
Brooke Sutherland at Bloomberg
March 22nd 2024 .. 11:31 AM
Written by Brooke Sutherland ... Bloomberg
Have thoughts or feedback? Anything I missed this week? Email me at bsutherland7@bloomberg.net. Also a programming note: There will be no Industrial Strength next week because of the holiday in the US. Look for the next one on April 5. To get Industrial Strength delivered directly to your inbox, sign up here.
Welcome to school. It's actually a factory
“If anyone knows a great welder or a great machinist, please send them our way,” General Electric Co. Chief Executive Officer Larry Culp quipped last year. He meant it: There were still more than 600,000 unfilled US manufacturing jobs as of January as the lingering effects of the pandemic disruptions exacerbate the industry’s longstanding challenges with recruiting and retaining workers. But barring an influx of calls from attendees at the Citigroup Inc. conference where Culp was speaking, GE and other manufacturers will have to lean into a quirky but necessary side gig: school operator.
GE, for example, has expanded a welding training program it runs out of a Beavercreek, Ohio, factory that makes tubes and ducts for its aerospace engines. Welding and machining roles are extra difficult to fill because they require more specialized training, particularly when it comes to precision manufacturing work. Not just anyone can weld super-alloy sheets that are thinner than two business cards stacked together to make jet-engine parts. Like many aerospace manufacturers, GE laid off a significant portion of its workforce during the pandemic and has struggled to bring those employees back. Before Covid, the Beavercreek plant might need to hire at most 10 welders a year, largely to backfill retirees. At the onset of 2024, the factory needed 31 welders. The people it had laid off had mostly found other jobs, says Brian De Bruin, site leader for GE’s Dayton-area aerospace manufacturing operations.
Read more: Aerospace Suppliers Need to Be More Resilient
So the company hired another instructor and added more training booths for its welding school; the program is now capable of churning out at least 24 and as many as 48 fully qualified welders a year, depending on how much experience new recruits have when they come into the program. This is more of a finishing school than basic boot camp; it’s not for welding newbies but primarily for people who had some training in high school and need to perfect their skills for the specialized subset of aerospace manufacturing. If someone can’t quite pass the basic test needed to qualify for the on-site school, though, GE will pay for that candidate to attend classes at the nearby Hobart Institute of Welding Technology — and also still pay them an hourly wage, albeit one that’s a few dollars less than what its fully certified welders make.
Manufacturers have always played a role in training workers, whether that’s through on-site education, apprenticeship programs or partnerships with technical schools. But as workers have become harder to find, these pipelines have become more important and companies have had to get more creative about filling them.
Siemens AG, for example, has recruited a team of former high school principals and teachers to work alongside its manufacturing veterans running an on-site training program for its new $150 million electrical infrastructure plant in Fort Worth, Texas. Manufacturers have traditionally relied on a significant amount of on-the-job training for positions that don’t require specific certifications. But for employees who might have previously worked in a restaurant, that can feel like they’re being “thrown to the wolves,” said Khourie Jones, who previously taught special education and then served as a school principal before becoming the training manager for the Forth Worth facility.
The plant now has a standardized training protocol, with new hires spending about five days in a classroom before moving on to a learning lab where they spend two weeks practicing their skills. The program has helped Siemens tap into a wider pool of job applicants, including those who have never before set foot on a factory floor. “The new generation coming in, a lot of them don’t know how to read a tape measure, much less a blueprint. That skillset is just no longer there,” Monique Chambers, who oversees the people and organization aspects of the Siemens Fort Worth plant, said in an interview. “We felt a need to build out a robust training program in order to get those individuals.” Other Siemens plants in the US are evaluating ways to set up similar training programs, she said.
Read more: Why Build a New Factory in US? Not Politics
GAF, the roofing-product manufacturing subsidiary of industrial holding company Standard Industries, also runs its own training academy — not for itself but for the contractors that use its products. Even before the pandemic construction boom, roofing contractors had more work than they had people to carry it out, GAF Chief Marketing Officer Chris Rector said in an interview. Helping those companies, many of which are small businesses, fill their positions “changes the relationship from just product and price to a real partnership, and that partnership is an investment worth making,” Rector said. Contractors “become the tie breakers for the homeowner when it comes down to what product goes on the roof. The homeowner trusts that contractor and if that contractor is willing to recommend GAF,” that can make a big difference in the company’s business opportunities, he said.
GAF officially launched the roofing academy in 2020. More than 3,000 people have taken the course — which is fully funded by GAF — and the company has helped place about 1,600 in roofing-related careers. To help improve its placement rate, the company is thinking beyond the literal roof and steering some students toward jobs such as fork-lift driver and sales representative. “Not everybody wants to be on a roof in 90 degree weather or 40 degree weather,” Rector says.
GAF partners with other organizations — including the Labor Department’s Job Corps program and groups focused on at-risk youth — to build a pipeline of candidates. In South Carolina, it’s working with local contractor Aqua Seal Manufacturing & Roofing Inc. and the state’s Department of Corrections to provide training to non-violent offenders who are close to release. The goal is to reduce recidivism rates by giving former convicts a speedy path to stable jobs and also to ease the roofing industry’s labor shortage. “It’s a crash course to take someone with zero knowledge to a certain level of proficiency,” said Mills Snell, chief operating officer of Aqua Seal. “In those four days, they learn as much as six months of osmosis on the job. It’s a huge head start.”
In a similar vein, Craig Arnold, CEO of electric-equipment giant Eaton Corp., teamed up with JPMorgan Chase & Co.’s Jamie Dimon in 2021 to co-chair an initiative that aims to foster employment opportunities for Americans with criminal records and provide a forum for member companies to share resources and advice. Other corporate participants in the Second Chance Business Coalition include railroad Union Pacific Corp., United Airlines Holdings Inc., General Motors Co., Microsoft Corp., Bank of America Corp., McDonald’s Corp. and Walmart Inc.
Graduates of GAF roofing academies at the South Carolina Department of Corrections or elsewhere are more likely to stick around than someone hired off the street who may not fully appreciate the physical toll and environmental hazards of roofing, Snell of Aqua Seal said.
Attracting and retaining a quality workforce continues to outrank economic, financing and other cost concerns among companies queried by the National Association of Manufacturers, according to the latest update of the quarterly survey. If companies build more factories in the US, job applicants might come. But if companies invest in properly training those applicants, they might actually stay.
Chart of the Week: Dismantling an Icon
GE, the quintessential American conglomerate and a 131-year-old industrial icon, will soon complete the final piece of its slow moving breakup. GE HealthCare Technologies Inc. was spun off last year and the GE Vernova energy business will join it as a standalone company in early April. The new GE will just be a manufacturer of jet engines, essentially, with a few random money pits left over from the old conglomerate, like insurance for elder care and a Polish mortgage business.
Much of the company’s voluminous sprawl is long gone — from washing machines to credit cards, plastic resins and TV advertising slots for NBC’s Super Bowl broadcasts. GE was still too big and too complicated for its own good and investors were getting burned by its conglomerate form more often than they were benefiting from it. Still, the prospect of three successful, standalone GEs — focused on aerospace, energy and health care — was only possible because CEO Larry Culp tightened up the company’s industrial operations, one factory line process at a time, and injected a much-needed sense of humility into the management ranks.
“We like to tear down monuments,” Culp says.
In one sense, Culp is dismantling a monument to American capitalism. In another, he's restoring GE to its original identity as a manufacturer — one who knows its primary job is to bring good things to life.
This is the inside story of GE’s turnaround, told by myself and Ryan Beene. Read more at TVM#26441.
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