Arkansas’ top job recruiters empathized with manufacturing industry leaders today concerning the growing U.S. jobs skills gap that is hurting productivity and leaving thousands of key positions unfilled just as the economy picks up steam.
Arkansas Economic Development Director Mike Preston and Arkansas State Chamber of Commerce President Randy Zook shared those concerns during the Arkansas Manufacturer’s Executive Roundtable panel discussion, held Wednesday (Aug. 22) in downtown Little Rock at the Statehouse Convention Center. The two-day event, sponsored by industrial technology giant Rockwell Automation, brought together dozens of manufacturing and production professionals, equipment builders and system integrators together to discuss and display new industry innovations.
In his brief speech, Preston first shared his normal economic development pitch about how the state’s manufacturing sector has been the leading edge of nearly 391 economic development deals that AEDC has closed since Gov. Asa Hutchinson took office in January 2015. Preston then told the roomful of manufacturing executives those same agreements with global companies that have boosted the state’s economy by $8.3 billion have also helped to max out the state’s labor pool with a near-record jobless rate of 3.7% and a peak civilian workforce at more than 1.2 million workers.
“So, we are literally at full employment. You want a job in Arkansas right now, you can have a job,” said Arkansas’ chief job recruiter. “Our problem is actually finding the people who want jobs to come in and fill them – that’s our biggest challenge to get through right now.”
Preston, who was headed to Washington, D.C. after Wednesday’s event to meet with Trump administration officials to discuss the impact of ongoing trade tariffs on Arkansas companies, said AEDC is prepared to compete with other states and countries for good-paying manufacturing jobs but must find answers to help Arkansas employers fill key jobs.
Highlighting an oft-cited 2015 study by Deloitte Consulting and the Manufacturing Institute that predicts nearly 3.5 million manufacturing positions will be needed by 2025 to keep pace with the nation’s ongoing economic expansion, Preston challenged the industry executives to invest in new technologies and better worker training and education to help Arkansas get its share of those jobs.
“When you look at it, for every one dollar spent in manufacturing, another $1.40 is added into our economy. In fact, (manufacturing) has the highest multiplier effect of any economic sector, so when we are evaluating an economic prospect and we are doing our … cost benefit analysis, we look at things like that,” said Preston, adding that manufacturing contributes $2.7 billion to the state economy annually.
On the other hand, Preston said the 2015 Deloitte report also forecasts that 2 million manufacturing jobs will likely go unfilled over the next decade if Arkansas and the rest of the U.S. don’t solve the job skills gap.
“Arkansas has to keep pace, better yet Arkansas must lead in this if we want to be able to fill those jobs,” said Preston, mentioning Gov. Hutchinson’s workforce training, computer coding, data analytics and technology-related job initiatives.
BUSINESSES ARE ‘CONSTRAINED’
Following Preston’s exit to catch his flight to the nation’s capital, Zook continued the same “jobs unfilled” theme by sharing several anecdotes he’s culled from many of the chamber’s 1,200 members across the state.
“It has gotten to the point where businesses are not just scared, they are not just challenged — they are constrained by the lack of available talent and people that are willing, able and ready to work at the right places at the right time,” said Zook, who is also the chief executive for the chamber-affiliated Associated Industries of Arkansas, Inc.
The state chamber CEO told manufacturing leaders from across the region there was now over 60,000 “open jobs” in Arkansas that need to be filled. Of that total, 30,000 are related to normal worker turnover and attrition – leaving another 30,000 vacant positions that are tied directly to lack of skills or no work history, education and failed drug tests.
“How in the world do you deal with that?” Zook asked rhetorically. “We’re trying our best, along with many good solid businesses across the state, to sound this cry about how difficult this challenge is and what it means, and how it translates into slower economic growth …”
Later in his speech, Zook told a few anecdotal stories of manufacturers investing to build new or expand older factories in Arkansas that have been unable to meet job recruitment thresholds necessary to reach full production capacity or meet customer demand. For example, Zook said a South Arkansas lumber company that invested more than $75 million to bring a shuttered sawmill back online has been unable to reach its AEDC incentive commitment to hire 130 people at an average annual salary of $60,000. On a tour of the new facility, Zook said the plant manager said the company has topped out at 112 workers with “help wanted” signs everywhere to fill the remaining 18 jobs.
“We screened 1,000 people and we can’t get past 112,” Zook said, repeating his recent conversation. The longtime chamber executive said most of those job applicants were eliminated as potential hires because of failed drug tests, no work history, long periods of unemployment, and lack of 9th-grade level reading skills needed to operate factory machinery.
“Those are our three biggest challenges. Other than that, it is fantastic,” Zook said as the crowd roared with laughter.
Besides Preston’s and Zook’s stories, two Rockwell Automation executives and Ken Stuckey with Pace Industries also served on the roundtable and gave presentations that offered a sobering look at the industry’s struggles across Arkansas to find workers to fill key positions in manufacturing and other key sectors.
Tom Bradbury, Rockwell’s regional vice president of sales and services, said his company has undergone a decade-long transformation to prepare for the “connected” economy and innovations that most manufacturers are now facing.
“I think in the industrial operations space over the next five years, we will see more radical change happening than we did in the last 20 years,” said Bradbury, citing the workforce challenges, global competitiveness, risk security and implementation of network of connected devices and technologies known as the Internet of Things, or IoT. “This is a significant thing to think about because change does come quick in our space.”
Bradbury said Rockwell’s transformation began after the world’s largest company dedicated to industrial automation and technology completed several key international acquisitions more than a decade ago. That buying spree left the company with dozens of locations and manufacturing plants across the globe with disparate technologies and operating systems, he said. Today, the Milwaukee-based industrial conglomerate now has more than 22,000 employees who work at more than 22 fully-integrate plants across the globe. Bradbury said that companywide transformation has helped the company improve efficiencies and productivity by 4 to 5% each year.
And although Rockwell helps other companies develop, implement and support plant-wide automated systems that improve performance and productivity, Bradbury said the industrial automation giant still faces the same challenges of its customers and competitors in finding and keeping high-skilled workers on payroll. To highlight that dilemma, Bradbury said 65% of the employees who report to him are near or at retirement age. In compounding that problem, the Rockwell exec said two of his longtime “boomer” employees recently announced plans to retire by year’s end.
“That hit me square in the forehead this week. I have two employees that announced their retirement. That’s 70 years of intellectual knowledge walking out the door, so I’ve got to figure out how to replace that,” said Bradbury, joking that those workers will be replaced by a millennial “who has never seen a corded phone and probably doesn’t known what a typewriter is.”
“Yet, that is who is going to replace this person who’s just left with 36 years-plus experience,” he said.
The Arkansas manufacturing conference comes on the heels of a St. Louis Federal Reserve report released last week that predicts 60% of the jobs across the expansive 8th District could face automation over the next 20 years. The St. Louis Fed District stretches over all or parts of seven Midwest states, including Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.