Reluctant to Reshore Due to Apparent Shortage of Skilled Labor? Don’t Be

by Dean Prigelmeier, President of Proactive Technologies, Inc.

These are relatively uncertain times for some manufacturers with supply chains that transcend borders to countries subject to punitive tariffs, and/or social, political and economic unrest. Knowing where to invest time and precious resources isn’t as clear as it was a couple of decades ago, yet that is the situation many are in.

We all remember how quickly companies relocated part (in some cases all) of their operations, and/or prodded their suppliers to do the same, to lower wage, lower regulation and lower property cost environments – regardless of the transport costs, and risks of regional instability and supply chain disruption. As those economies developed and the associated operational costs increased, those perceived savings continued to erode. And as regional instability rose, many employers started to plan their next move.  Once again, the U.S. looks like a viable site alternative.

One over-hyped and inaccurate factor in the U.S. is the shortage of skilled labor, which some workers see as a veiled attempt to justify importing labor who will take the job for significantly less. There are plenty of skilled labor available who were displaced during the Crash of 2008, or recently displaced by the trade wars, and who had to change career course to feed their families. Many of these workers are still waiting, and could be quickly and easily “re-tooled” for today’s manufacturing jobs with a focused structured on-the-job training program. Some are kept from seeking out these opportunities by wages and benefits for the job they once had now offered at 50% – hardly enough to attract skilled candidates back not to mention for retaining a “skilled worker.”

Some see this as a sort of hypocrisy; the publicized, frantic search for “skilled” and “talented” workers, while offering these skilled workers less for the job they once held with that employer or a similar employer in the industry. So, for now, many of those workers that are that skilled and talented abandoned the career of their choice for the career that pays the bills.

Unless employers can convince their shareholders that wages and benefits have to go up to attract the workers they prefer, employers will have to accept the candidates that remain of which there are plenty. These are the ones with the college degrees you see working in service positions, just waiting for an opportunity to apply their skills to a job with more substance.

There are many studies and tools available to employers considering reshoring to help them analyze whether the current cost savings of offshoring  is still as competitive as reshoring – even if labor costs grow higher. Factors often overlooked in such decisions have included dramatic reductions in supply chain transport costs, the loyalty, quality and consistency of local suppliers, the benefits of operating in a strong U.S. manufacturing-based economy and the ripple effects on local economies and communities, and the decreased costs of finding and developing workers.

Oh, and how about measuring each worker as an investment rather than a cost? Each worker’s value is in the skills they hone, the expertise and work wisdom they develop and retain, and the consistent quality of the output that is demonstrated. Why would any employer want to categorize an asset like this as a “cost” – a practice perpetuated since the industrial revolution by naive  accountants and economists that failed to study the value of labor in an age of rapid innovation and technological advancement.   

Employers should not try to convince themselves that workers can “self-train,” or that the local community colleges can train “plug-n-play” workers. That has never been an institution’s role. Their forte is developing a labor force with a strong core skill and industry-general skill foundation. It has always been the employer’s responsibility to take these candidates with their skill base capable of learning tasks and train them to perform the work needed to the level of expertise desired.

An employer who offshored cannot deny the costs of finding and training a skilled workforce in a developing country with no, or little, educational infrastructure, workers lacking relevant language skills and workers with no job-relevant skills to draw on, was a cake-walk. In some areas, the labor pool had little or no knowledge of even the basic concepts of manufacturing; much less than training farmers in rural Nebraska to become machinists.

Proactive Technologies, Inc.  has worked with employers since 1986 to develop workers in any type of job classification in many parts of the U.S., and know what a “gold mine” remains untapped . We have worked with European companies to replicate active European factory jobs in U.S. based joint ventures. This was done by thoroughly analyzing the existing job where it exists and customizing it for the new venue. We then set-up structured on-the-jobs to accelerate the transfer of expertise^TM and to share the data collected on the process with local workforce development agencies and providers to make sure they were selecting those candidates with the highest likelihood of success and developing them to the level employers could, and was willing to, build upon.

While I was hearing things from U.S. business and government leaders such as, “manufacturing jobs are leaving and they will never come back,” I saw foreign businesses and investors from outside the U.S. set-up huge factories in the U.S., taking advantage of the plethora of skilled workers. They saw U.S. off-shoring as the unfortunate Wall Street-driven trend that it was; to drive down wage costs in the short-term to raise shareholder wealth at great expense to the people, communities and country at large.

These foreign business leaders saw what was left behind – a skilled labor force to draw upon. When they moved into a community they managed to spare it from wreckage typical of these short-term solutions for investors that, when those marginal benefits evaporated and there was nothing more to cut, moved on and once again left wreckage in their wake.

Today, more and more companies are exploring ways to reshore their operations. Granted, the tariff wars and geopolitical uncertainties added to the timing of the move. But I believe pressures will resume on companies to come home. When that happens, finding skilled labor should not be allowed to become an issue when it has not been up to now.

If you recognize these challenges and have shed your fear of looking at other than tried and failed solutions, check out Proactive Technologies’ structured on-the-job training system approach to see how it might work at your firm, your family of facilities or your region. Contact a Proactive Technologies representative  today to schedule a GoToMeeting videoconference briefing to your computer. This can be followed up with an onsite presentation for you and your colleagues. A 13-minute promo briefing is available at the Proactive Technologies website and provides an overview to get you started and to help you explain it to your staff. As always, onsite presentations are available as well.