Posted by Jennifer Read | Oct 10, 2024 | Americas, EMS, Feature, HR and Talent, skilled labor shortage, Women in Tech
With more than 600,000 U.S. manufacturing jobs unfilled, the political promises of revitalizing the sector made by both Vice President Kamala Harris and Donald Trump face a significant challenge. To truly modernize American manufacturing, leaders like Karla Trotman, CEO of Electro Soft, Inc., say it’s time to address the root issues: attracting a diverse, younger workforce and breaking down cultural barriers. EMSNOW caught up with Karla, author of ‘Dark, Dirty and Dangerous: Building the Vibrant Future of Manufacturing’ to learn about her experiences championing manufacturing jobs.
EMSNOW: There has been a lot of attention focused on bringing manufacturing back to the U.S. But your company has been manufacturing electronics for 35 years. Tell us about Electro Soft – your customer base, your HR policies, your family story.
My father worked as the Director of Engineering for SmithKline and Beckham (at the time.) They decided to shut down their instrumentation department, where my father oversaw the design of blood-analyzing equipment, manufacturing, and software writing for the product. He took his 6-months severance and decided to spend some time off while figuring out his next steps. Someone reached out to him and asked if he could assemble a few cables. He reached out to one of the women who used to work for SmithKline in manufacturing. She and my father built the cables on the kitchen table. Interestingly enough, during my father’s tenure at the company, he suggested they outsource manufacturing to contain costs, but the management team didn’t want to put people out of work.
That small ask turned into several assembly jobs. At the time, I was in elementary school. When I came home, I would help out by measuring and cutting wires with a ruler and wire cutters. I made $0.25 per hour.
Our customers have always been in the Original Equipment Manufacturer (OEM) space, mostly industrial companies. We also did work for the Department of Defense and continue to do so.
Even though we have fewer than 50 employees, we opted to offer the same things a large company would offer its employees—healthcare benefits (which we pay 60%, regardless of single-payer or family), free dental, free life insurance, EAP, paid vacation, 401k Safe Harbor match, profit sharing, etc. We felt it was fitting to honor each person who invests their time and talent with us. We didn’t need to be forced to do so by government mandates.
We also offer free training and free certifications that are all portable.
Today, we have long-term relationships with industrial companies and government contractors where we are their outsourced provider of electronics assembly services. We assemble their printed circuit boards, cables, wire harnesses, panels, and box build assemblies – what I like to call the brain and central nervous system of a device.
EMSNOW: Everyone is trying to figure out how to spark young people’s desire to work in manufacturing. The government says it wants to help, at both state and federal levels. What policies work?
Manufacturing needs marketing help. We’ve done Manufacturing Day for years. We’ve also been part of community outreach programs to market manufacturing to students, but the parents were not accepting manufacturing as a career. They pushed their children toward four-year degree programs. Now parents are seeing that four-year degrees are not a panacea and trade schools are filled with students. We are turning the corner, and we now need a huge marketing push to show what manufacturing really looks like. It’s not the dark, dirty, and dangerous atmosphere that most people assume it is. In my company, the loudest noise is compressed air. The production floor is well lit. People work independently on custom manufacturing projects while listening to music and podcasts.
As for government assistance, pre-apprenticeship and apprenticeship programs are a great start, but the paperwork is a monster. Three-fourths of manufacturing companies employ less than 20 people. How does one find time to meet the rigorous reporting requirements while running a business? WedNet PA has been a great source of financial help as well. When we attract young people, we can actually give them up to $2000 in training that comes directly from the program and not from Electro Soft.
We are also part of an industry partnership called the Southeastern Pennsylvania Manufacturing Alliance (SEPMA), of which I am co-chair. This partnership allows all manufacturers in the partnership to discuss and resolve issues within the manufacturing sector. Our biggest issue has always been attracting talent to our industry, so we created a career pathways program and training initiative that allows adults to understand what it’s like to work in manufacturing. This program has been enhanced and is now deployed by Drexel University’s Goodwin School of Professional Studies. The program is called Manufacturing Career Accelerator Program (MCAP) and it is a six-week bootcamp that has had tremendous success. It is also offered as a pathway for high school students who need credentials to graduate. The problem is in the scalability of the program and funding. We would love to offer it throughout the region.
EMSNOW: Explain how diversity initiatives can address these challenges.
SEPMA contracted with Drexel Solutions Institute to help understand how and to whom we should be marketing our recruitment efforts in order to find employees. The report reflected that the future employees of manufacturing will be women, immigrants, and people of color. In targeting these populations, it will have a direct impact on employee census. While we have always maintained an extremely diverse population within our walls, Electro Soft has found tremendous success in casting a wider net into these diverse populations.
EMSNOW: Why do you think manufacturing has such a bad rep among these groups of workers? What can be done?
I think that manufacturing has a negative stigma attached because of bad marketing. You think “dark, dirty, and dangerous,” because of all of the movies reflecting workers leaving their industrial jobs with soot on their faces. We haven’t done a good job of opening our doors collectively to show what manufacturing is really like.
The Navy understands the need for manufacturers across their entire industrial base and has invested in an initiative called BuildSubmarines.com. They realized that there aren’t enough skilled workers to build their nuclear-powered industrial fleet and are helping the recruitment effort. The Navy is definitely taking the lead in resolving their problems upstream.
EMSNOW: Frankly do these jobs pay as well as they should to attract the talent?
According to Zip Recruiter, the average salary for a job in manufacturing is $52,000. Many manufacturing jobs start at $15 per hour, but also come with benefits, a consistent 40-hour per week daytime schedule, and the ability to acquire additional skills and certifications to grow at the company.
U.S. corporations have become reliant upon the cheap labor overseas because of the larger profit margins. But the tradeoff has been to the expense of IP infringement, supply chain delays, and long lead-times. There is a trade off when you use stateside manufacturing. The question is, what are companies and end users willing to give up or absorb for it.
EMSNOW: The EMS industry has always been a low-margin business. Can this business model support higher pay?
I think the low margins depend on a variety of factors. We are in high-mix, low-volume custom manufacturing where the margins are good and can support higher pay based on the complexity of the project. Companies had no choice but to adjust to pricing and tariff increases over the past few years. Adjustments can and should be made for a more secure supply pipeline and consistent flow of goods.
EMSNOW: What else do you want to tell EMSNOW readers?
One thing that EMS companies are fearful of discussing is the cash flow crunch we are all feeling. Corporations are forcing extended payment terms upon the manufacturer (and other suppliers,) mandating A/P terms move from Net 30 to Net 60, 90, 120+. From a manufacturer’s perspective, you want to make the corporation, your client, happy, however it is at the expense of cash flow. During the float period, the manufacturer pays for labor, materials, and has delivered finished goods. The extra 30+ days in terms causes manufacturers to lean on their lines of credit, which at the current interest rate can be quite expensive. In this situation, the manufacturer is forced to act as a lender of a zero-percent loan to their much larger client, giving the client the ability to have a stronger cash flow. This is a great strategy for large corporations, but it is oftentimes at the expense and financial health of their smaller manufacturing partner.
