Survey: The metalworking industry's search for skilled tradespeople continues

The FABRICATOR asked its readership: What keeps you up at night? Getty Images

The manufacturing economy in the U.S. is red-hot right now, and metal fabricators are trying not to get burned. The Institute for Supply Chain Management’s July Manufacturing PMI registered 59.5%, down slightly from the June reading of 60.6%. This marked the 14th month in a row of economic expansion in the sector since April 2020, the last month of contraction associated with the COVID-19-related recession. The PMI was over 60% from February 2021 to June 2021. (Anything over 50% is considered economic expansion.)

The fabricated metal products sector reflects this growth. The “Forming & Fabricating Job Shop Consumption Report” for Q2 from the Fabricators & Manufacturers Association revealed that shops reported capacity utilization around 72.64%, which is very close to the figure released by the Federal Reserve for the economy as a whole (75.3%). That’s a strong number for fabricators, who aim to have some slack on the shop floor to take on new jobs and to accommodate rush jobs for customers.

The majority of the 260 survey respondents also indicated that business for the foreseeable future looked solid. Fifty-five percent reported an expansion of new order activity in Q2, and another 31.4% reported that incoming orders were stable. It shouldn’t come as a surprise that 56.2% viewed the second half of 2021 as positive.

That’s the overview, but when you start to dive into the reality of keeping up with the business opportunities presented by this economy, you start to see some cracks. The FABRICATOR’s 2021 edition of “What Keeps You up at Night?” survey reflects these stress points.

Having read recent headlines and postings on social media, you might think materials prices dominate metal fabricators’ concerns. After all, the price of hot-rolled steel coil reached almost $1,800/ton in early July, which was more than triple the price for the same product only one year before. “Received my 19th steel price increase today. This is so very painful,” one fabricator wrote in a July email.

That’s not the case, however. The “What Keeps You up at Night?” survey revealed something else is occupying the minds of fabricators that aren’t sleeping well: the availability of skilled workers. Shown in Figure 1, 53% ranked that as their No. 1 concern, which largely overshadowed the worries about material prices, which 39% ranked as their No. 2 concern.

This has been the trend in the survey dating back to 2013, but 2021 marked the highest response rate for concerns over the availability of skilled workers. (Coming out of the Great Recession, the 2009 and 2011 survey responses mostly focused on the state of the economy.) Given that other economic sectors, such as hospitality and entertainment, are competing very aggressively for new workers, metal fabricators find themselves struggling even more than they normally do to convince people that a manufacturing career is a worthy pursuit.

When asked what they would like to see done to alleviate the worker shortage, some had their attention directly affixed to the additional unemployment benefits that were given as a result of the federal COVID-19 response package. Some 7.5 million people were expected to lose those benefits as of early September, and some survey respondents were quick to point that out.

But a vast majority pointed out that, although a particular sore point now, this wound has been festering for a while. As a result, they looked at any possible response to be a long-term one:

• “Do more at a high school level to get younger people interested in manufacturing.”
• “Have a national public relations campaign promoting manufacturing as a viable career choice.”
• “Re-engineer our educational system to teach real-world skills and how to actually think.”
• “Would like to see secondary schools start teaching that being in a trade or in manufacturing is every bit as lucrative and profitable as many jobs that come with a college degree.”

The Response Plan?

Fabricators are problem-solvers by nature, so don’t expect them to stop everything as they fret about how they can tackle new opportunities or expansion of work with current customers. They are still moving forward. Figure 2 shows that the industry is as optimistic as it’s ever been, with 65% saying they see their business growing in the next 12 months.

As part of The FABRICATOR’s “What Keeps You up at Night?” survey for 2021, subscribers were asked to rank a series of concerns from 1 to 13 that might cause them to lose sleep. Even with historically high steel prices, most of the fabricators surveyed see the lack of skilled workers as the No. 1 concern by a wide margin. That’s been the consistent response since 2013.

How are they getting parts out the door by deadlines and keeping customers satisfied without enough labor? Conventional wisdom suggests automation of certain fabricating tasks might be the answer, and the survey backs that up. At least, it suggests that there is an increased interest in adding automation (see Figure 3). More than half of the survey respondents said that they planned to add some sort of automation during the next 12 months, the largest such response since 2015, a time when manufacturing companies were riding high after years of clawing their way out of the hole created by the Great Recession.

The case to add automation can be tied to the size of a company, according to a recent research project (“The Impact of Automation on Metal Fabricating”) sponsored by Salvagnini and conducted by The FABRICATOR and its sister publication Canadian Fabricating & Welding. In a survey of both readerships, metal fabricators were asked if revenue generated over the past five years was dependent on employee head count or automation, and 69% said that it was employee head count. That, of course, explains the interest in trying to find new workers (see Figure 4); the faster a company grows, the more employees it needs to keep up with the work.

But that doesn’t tell the whole story. If you were to look at the size of the companies responding to that question, more companies with 11 to 20 employees said automation dictated revenue more than the number of employees. That makes sense because a piece of modern metal fabricating equipment can make a very big impact on a company’s productivity. Think of a 10-kW fiber laser cutting machine that can double the output of two older 4-kW CO2 laser cutting machines. With all of the advancements, such as automated nozzle changes, material handling, and parts sorting, one laser operator can oversee the laser cutting operation, instead of needing two for watching over two older machines. If you extrapolate that over two or three shifts, it’s a significant labor savings for a small company. (For more on the automation research report, visit here.)

In the end, a metal fabricating company’s success is defined by how effective it is in delivering parts to customers according to original specs and deadlines. That’s why (see Figure 5) you see answers such as “cost reduction” and “lead times, throughput, and product cycle” follow “automation” as areas that fabricators will be investing in over the next two years. Customers don’t care what raw material costs are or whether their suppliers have enough workers; they just want their parts.

Figure 6 reveals that metal fabricators are betting on the construction industry to grow in the coming months. They might be on to something as the U.S. Senate passed a $1 trillion infrastructure package in mid-August, which put the ball in the House of Representatives’ court, where they had to decide to move forward or wait for another bill focusing on social programs to pass the Senate. Whatever the result, the U.S. government is likely to inject millions into new construction and modernization programs all over the country, and that is going to buoy not only the construction market, but also heavy equipment. It’s also going to make the search for new employees even that much harder.

Can Washington Help?

About the best that elected officials could do for the metal fabricating community, according to the survey respondents, is to just stay out of the way. When providing an explanation as to what could be done to remedy their greatest concerns (see Figure 1), many responded with some variation of “Stop paying them to stay home and not work!” and “Reduce regulations!”

Well, that sentiment carries over to the belief that elected officials in Washington, D.C., simply don’t have the best interests of manufacturers in mind as they go about their jobs as representatives of districts and states (see Figure 7). Only 23% think the government is hearing the plea to implement policies that can help domestic manufacturing, which coincides with the arrival of the new presidential administration. Fabricators showed a real burst of optimism that things might change in 2017 after seeing the election of Donald Trump, but when that seemingly manufacturing-friendly administration leaves steel consumers with the Section 232 tariffs on imported aluminum and steel that contributed to the current high steel prices, metal fabricating businesses have a real reason to be distrustful of government.

When asked what Washington officials could do to help manufacturers, 27% said “invest in nation’s infrastructure” was the top action. (Respondents were asked to rank seven possible actions that the U.S. government could take to support U.S. manufacturing. Figure 8 shows the results.) Twenty-two percent said “support industrial technology educational programs,” which is something that the government does in a disorganized way with several different programs and grants. Another 18% suggested the best thing the government could do was to impose more tariffs on imported goods.

Still Worth Doing

Even with the concerns and the stresses associated with their livelihoods, 66% of those surveyed said that they are “satisfied” about their careers in metal fabricating (see Figure 9). Only 8% expressed dissatisfaction.

When asked if they would recommend metal fabricating as a career choice to someone in their own family, 80% said yes (see Figure 10). Was this because they truly believe in a prosperous and rewarding future in the sector, or are they simply looking for additional help—even if it is family?

Slide Show | 11 Images