Where will the food and beverage industry find its next wave of talent, from skilled, semi-skilled, and highly skilled plant floor employees to management?
This problem is top-of-mind for food processors and their suppliers alike, and it’s a problem that’s only getting worse. According to a 2016 survey commissioned by Land O’ Lakes, only 12% of adults would even consider a career in manufacturing and engineering. And that’s manufacturing and engineering as a whole! The number considering a job in food manufacturing is likely no more than a rounding error.
To learn more about why the industry is having such a hard time and, more importantly, what we can collectively do about it, we spoke with Diane Wolf, a former VP of Global Operations and Engineering at Kraft Foods turned independent consultant.
After engineering school, Wolf started her career at Procter & Gamble. Following that, she spent 35 years at Kraft Foods, working in six different business units and performing almost every role imaginable, including manufacturing supervisor, plant maintenance manager, plant engineer, and project management director. She was also involved in new product development and capital procurement. “I couldn’t keep a job, as you can tell,” she laughs. In her last five years with the company, she had a global role at the Kraft Global Center of Excellence for shared services including engineering, contract manufacturing, environmental health and safety, and sustainability, where she managed the Cadbury integration.
Today, Wolf helps food and beverage manufacturers, service providers, and equipment manufacturers develop business and supply chain strategies and is a Key Account Executive at South Africa-based Competitive Capabilities International (CCi).
Wolf’s variety of experience has given her a uniquely comprehensive perspective on the industry, which she describes as a “big picture supported by a strong foundation supported by detail.”
“I’ve worked across just about every supply chain function in North America and globally,” she says. “I can work with C-suite clients, but also walk the floor and work with engineering and plant managers. As a result, I have a holistic view of how things, people, and resources work — not just the U.S. view, where companies hire and fire at will, but a global view based on global experience.”
Big-picture workforce challenges
We hear a lot about the manufacturing skills shortage and the difficulty food and beverage companies are having finding talented employees. But we don’t hear much about why, other than the fact that the current workforce is retiring. The “Gray Wave” is certainly part of the story, but it isn’t the whole story. Let’s look at some of the principle drivers of today’s workforce challenges.
“I have a premise that the M&A activity level in business is driving a fairly significant negative when it comes to attracting and retaining people,” Wolf says, noting that the past two years have been two of the biggest for M&A in the food and beverage industry and consumer products as a whole.
“Here’s what happens: Inevitably, the acquirer pays a big premium for the acquired company, and resultant synergy goals roll down to the supply chain people to help pay for the acquisition,” she explains. “That involves asset restructuring, which means you close plants. Or you take a look at the procurement function to see if you can drive for consolidation to get better prices. Also, you need just one procurement department instead of two, or one VP of engineering instead of two. Cost reduction always means an upset in advancement planning and in roles and responsibilities.”
Wolf’s premise that this is bad for human resources is supported by research. Mergers and acquisitions are associated with stress and fear of job loss as well as low morale and decreased productivity. M&A activity can also negatively impact the local community. None of these outcomes is conducive to employee retention.
Manufacturing’s image problem
If you can’t hold on to your employees, then you need to be good at attracting new ones. Right now, manufacturing isn’t. “No one wants their kids to work in manufacturing, even as an engineer or an operations manager,” Wolf says. “And they definitely don’t want their kids to go to a trade school for a skilled position despite the high pay scale and demand. They want to send their kids to college.”
A huge contributor to this attitude is manufacturing’s image problem, which is largely due to a lack of information about what modern manufacturing looks like.
“People don’t know what happens inside the walls of a manufacturing plant, they don’t understand the jobs, and they don’t know about the excellent career paths that are available,” Wolf says. “Many manufacturing jobs pay much better than retail, but high schools, trade schools, local universities, even the local chamber of commerce often doesn’t know what manufacturing companies do and what skills they need.”
Wolf puts the onus for solving this problem on the manufacturers. “Rather than taking an insular approach, you need to pull back the veil and work with the community so that the community understands what you have to offer.”
Retiring Baby Boomers are leaving gaps in many companies — not just because they’re leaving their jobs, but because they’re taking specialized skill sets and institutional knowledge with them. These skills gaps are occurring everywhere from the factory floor to the engineering and management levels.
One solution many companies have turned to is automation. But this solution is incomplete. “You can’t automate your way out of the skills gap on the factory floor, because someone has to program the robots and perform the mechanical maintenance,” Wolf notes.
Another solution is looking to OEM partners for equipment support. This may be feasible in many cases, and it can be an efficient and profitable solution for both parties. But, in an environment where OEMs are also struggling to find talent, it just pushes the challenge up the line. “We all need to be in this together to come up with a solution,” Wolf says. “When there’s a skills gap, there’s probably a need on both sides.”
Wolf also notes that current public policy is making things difficult for both skilled workers and the employers who need them.
“I was recently at an event put on by the University of Houston Engineering program and attended by women from all over the world. They were talking about the fact that if you’re not a citizen, it’s very hard to get internships or permanent positions because companies don’t want to sponsor you. The result is that many talented people who might have come to the United States are now going to Europe or Canada because it’s easier to get a visa. There are some public policy things we’re doing as a country that are very frustrating for employers that need technical skills.”
Competition from other industries
Finally, Wolf suggests that manufacturers need to up their game to compete with other industries. Currently, a lot of competition is coming from the tech industry, but food and beverage has always had difficulties — many engineers choose to go into oil and gas because it pays more.
Where the competition really makes a difference, Wolf says, is for lower skilled jobs in less automated plants. She gives the example of when Amazon opened a new warehouse facility in southern Wisconsin. They hired hundreds of workers, which “blew away the market,” meaning that it completely reset the wage structure by adding $5 or $10 to hourly wages.
The area wasn’t without industry — SC Johnson, Johnson Controls, and many small manufacturers had operations there. But Amazon quickly lured away the workforce. “By paying what they were paying for maintenance and operator skills, Amazon devastated smaller manufacturers in the area,” Wolf says. “I knew factory owners who had 50% workforce attrition.”
Wolf stops short of suggesting that food and beverage manufacturers don’t pay hourly workers enough. “That’s a value judgment,” she says. But she also notes the huge lifestyle impact of low-skilled employees going from earning $12-15/hour in a food facility to $18-25/hour in an Amazon warehouse.
How companies can meet these challenges
There are two main philosophies companies can use to deal with skills gaps:
- Internal development
- External hiring
For the most part, Wolf says, food and beverage companies have focused on external hiring, which is a short-term perspective. “Companies think that if they run an ad or recruit on college campuses, they’ll have a lot of people wanting to work for them. They’ve been in the driver’s seat from a hiring perspective in the past, so they haven’t had to be creative with creating their own development programs.”
This is in contrast to companies like Procter & Gamble, which focus on the long-term strategy of internal development. “P&G doesn’t hire managers at mid-career,” Wolf says. “They hire out of school so they can train and develop their own talent. Very few companies do this — instead, they hire when they need them, which is difficult to do at a management level and even harder at a plant manufacturing level.”
Here are several ways companies can solve their workforce challenges by adopting a longer-term approach.
Partnering with external resources
One way companies can develop their own talent is through partnering with external resources like community colleges and universities.
Wolf’s favorite example of this is General Motors Institute.
General Mills Institute (GMI) was established in 1926 in response to the company’s growing need for trained engineers and plant supervisors. The model was based on the co-op system. GM would select talented high school seniors and sponsor them to go to school for 5 years at GMI, an accredited university where students would earn a degree while also completing 6- or 12-week work rotations at GM.
Wolf notes that the benefit of this model is that GM not only had a student workforce for 5 years, but that there was a very high probability that after graduation those same students would become full-time employees who could “hit the ground running” because they were already familiar with the company. “I like this model because it’s a partnership between industry and education to create the skills that industry needs,” she says. Unfortunately, most companies and universities (with some high-profiled exceptions like Northeastern) have abandoned the co-op model, opting for shorter-term internships instead.
Another, more recent, example is Lockheed Martin’s partnership with Metropolitan State University of Denver to develop aerospace engineers. The company not only pays students to split their time between work and school, but has also given money to build an additive manufacturing lab on campus. “The Lockheed Martin-MSU partnership has been a win-win,” Lockheed Martin’s John Heyliger, told Colorado Biz. “We came together because we both have the same goal: Develop a diverse, creative pool of outstanding engineers who learn and work in Colorado’s thriving aerospace industry.”
Of course, not every manufacturer can afford to create training programs on this scale. But that doesn’t mean they can’t build these kinds of partnerships. “On a small scale, every factory can with community colleges and economic development groups to define what they’re looking for in terms of skills,” Wolf says.
Companies can also band together to create cross-industry solutions, which is the goal of the Food Industry Technician (FIT) program. This program, a collaboration among several industry members of the FPSA Food Processing Education Consortium (FPEC), will provide education and training to develop service and maintenance technicians for food processing equipment.
Employing military veterans
Another great option for manufacturers to beef up their technical workforce is to employ military veterans. “People come out of the military with significant training,” Wolf says. “They have leadership skills and technical skills, and they’re accustomed to the non-standard schedule that manufacturing often requires.”
For companies that want to do this, Wolf recommends bringing on a consultant who can “build a translation from the skills and jobs of the military to the skills and jobs of industry to help people succeed.”
Appealing to Millennials
Like it or not, Millennials are the current force to be reckoned with — as both consumers and employees — and their influence will continue to grow.
Wolf recently attended a talk on what manufacturers need to do to attract the Millennial workforce. Here are the three main takeaways:
- Look at your website and your social media presence. Millennials spend a lot of their waking hours online, and in particular on social media. If your company doesn’t have a presence there, you’ll struggle to reach this audience. “Manufacturers should have a good external hiring website,” Wolf says. “Not something outdated, but something vital — a real career website where Millennials can see the opportunities your company provides.”
- Emphasize the ways you’re doing well by doing good. Sustainability is important to this group. Wolf notes that almost every major food and beverage company has sustainability initiatives, from lowering their energy consumption to reducing the waste they send to landfills. But, they don’t feature this information on their hiring website. “Talk about the good things you’re doing,” she advises.
- Offer training and development programs. One of the challenges of hiring Millennials is their habit of job-hopping. However, 90% of Millennials would stay in a job for 10 years if they had annual raises and upward career mobility. Millennials want to learn and actively develop their skills, and job training programs can help. Wolf gives an example of a training program that has engineers rotate teams (manufacturing, design, maintenance, continuous improvement, etc.), perhaps in different factories and even different cities. “This helps you get the skills you need and also helps younger employees feel like they’re moving forward. It’s a great way to develop a strong workforce that also fits well with the mentality of Millennials.”
The future: New approaches
Looking forward, Wolf believes that some things will need to change in the way industry both attracts and develops workers.
The Bernie Sanders effect
During the 2016 presidential election, Bernie Sanders hit a chord with young voters in part by talking about issues like escalating student debt. His solution is to make community college free for everyone and public college and university tuition free up to a certain income level.
“Two things are coming to a head right now: massive student debt and people graduating from college with skills that may not fit the market’s needs,” Wolf says. “We may not ever look like Europe, with its apprenticeships, but we need to rethink our training programs. Low-cost or free community colleges could help solve this problem.” Several states currently offer some kind of free tuition program for residents.
Advances in training technologies
Another area Wolf believes will change in the next few years is how companies train their workers on the job. She recently asked a group of food industry professionals about their OTJ training and found that most still do it the old-fashioned way, without using any new technologies like online learning.
Tools like computer-enhanced training and the Internet of Things can make training more effective, especially because the training can be easily translated for a workforce for whom English might not be the dominant language.
“‘Follow Joe training’ [referring to a training paradigm in which a new hire follows veteran employee ‘Joe’ around] isn’t effective anymore,” Wolf says. “It’s the way we used to do things because Joe had been there for 20 years and the person Joe was training would be there for 20 years. But now, the Joes aren’t there very long and the trainees aren’t there very long, so technology will need to be part of the solution.”
A new idea of work
Finally, Wolf recommends manufacturers re-evaluate their idea of work to better fit the desires and expectations of today’s workforce. “Sometimes you have to be creative with shifts and allow people to work from anywhere,” she says.
For example, Dell recently moved to an open posting system. The company looks for the best people, whether they’re in India, Canada, or Austin, TX, and then gives them the tools to work from anywhere. Wolf recognizes that this is “not a solution for all of manufacturing, because you still need to have people on the floor.” But, she thinks it could be part of the solution. “You can source talent globally, and maybe they don’t all have to relocate to Austin.”
Whatever the future holds for the food and beverage industry, it will likely look much different from what it does today. To stay informed on what the experts see coming in terms of the workforce and other current challenges, sign up for our newsletter.