Labor and Employment

Attracting and retaining a quality workforce has long been a top business challenge for manufacturers. The Parts Life Inc. family of companies is no different—but its variety of workforce strategies have led to considerable hiring success.

The Moorestown, New Jersey–based manufacturing group—which consists of engineering firm Parts Life, armament support manufacturer DeVal Lifecycle Support and electrical manufacturer LC Engineers—offers a number of inducements for new and existing workers, President and CEO Sam Thevanayagam explained. Together, they are helping the companies, and their workers, thrive.

The plan: “We create an environment where [people] can achieve their God-given potential,” Thevanayagam told us.

• After being inspired by several books—David Docusen’s “Neighborliness” and Hernando De Soto’s “The Mystery of Capital” among them—Thevanayagam sought to provide workers with a range of benefits, some of them unusual for an employer to offer.
• “In ‘Neighborliness,’ [Docusen] realized people need education, a job, health care and housing to be successful and build community,” Thevanayagam said. “So we are making sure we are offering these things to our people.”
• For example, Parts Life recently devised a financial program called Help U Buy, which helps workers buy their first homes. 

Helping the whole employee: Parts Life offers its employees a variety of educational opportunities to help them advance at the company and better their lives.

• Approximately 40% of the workforce at DeVal Lifecycle Support is made of immigrants to the U.S., according to Thevanayagam.
• To help employees learn the language, the Parts Life companies offer no-cost formal English courses with a trained Teaching English as a Second Language instructor. “It’s helped them not just at work, but in being better neighbors, parents and citizens, too,” Thevanayagam
• The businesses also offer free basic financial management classes for workers.

Upskilling: Several years ago, when a nationwide shortage of trained machinists began to impede the companies’ operations, Thevanayagam devised a fix. Parts Life would “create” its own machinists.

• “As difficult as it is to find a trained machinist, it’s even harder to find teachers” for machining, Thevanayagam said. Once Parts Life found and hired a machinist instructor, the company had him begin training other employees.
• “Now he’s working with about 10 of our machinists—upskilling them, teaching them everything” they need to know, Thevanayagam said. “He’s sort of like a pitching coach, working with them on their technique and speed. That’s the model we’re using. … It really increases employee engagement and retention.”

Talent in the community: The Parts Life family of companies is also building relationships with local schools in an effort to find potential hires.

• These include partnerships with technical high schools that offer welding and machining training and partnerships with local colleges and universities to source engineering and business talent.
• “I look at [the partnerships] as building an entire ecosystem,” Thevanayagam said. “These are ways to be able to recruit and retain good people.”

Veterans: Lastly, Parts Life has had success in hiring from another pool: veterans. One of the reasons? It is willing to provide needed accommodations.

One recent veteran hire, a former U.S. Marine, had post-traumatic stress disorder and a substance-abuse problem when he was brought on board and “we were able to … get him counseling and get him a support system through veterans organizations,” Thevanayagam said.

• “We try to be veteran-ready,” said Thevanayagam, adding that veterans now account for about 3% to 5% of Parts Life companies’ workforces. “These are people who have sacrificed for our country—and I want to make sure we are an environment where they can achieve.”

The last word: “The fact that we’re able to create meaningful work for people so they have the ability to … become part of the American dream—it’s a big part of who we are,” said Thevanayagam. 

Read more: As the 501(c)3 nonprofit workforce development and education affiliate of the National Association of Manufacturers, the Manufacturing Institute is a trusted adviser to manufacturers, equipping them with solutions to address the toughest workforce issues. Visit the MI’s site for workforce solutions insights and resources.

Industrial production declined 0.5% in June for the second month in a row, the Federal Reserve reported today, according to Bloomberg (subscription).

What’s going on: “The June index of production at factories, mines and utilities decreased 0.5% for a second [consecutive] month, Federal Reserve data showed Tuesday. Manufacturing output declined 0.3% in June, the most in three months.”

• The central bank’s index of manufacturing output has dipped 0.3% from June 2022, with production hamstrung “by lackluster export markets, efforts to work down inventories and more limited consumer spending on merchandise.”

The details: Consumer goods output declined 1.3% in June, the biggest drop in more than two years and a reflection of decreased production across a wide swath of categories, including automotive vehicles, apparel and appliances.

• Materials output also declined, while production of business equipment was flat.

Some good news: “[M]anufacturing may benefit some in coming months as retailers get inventories more in line with sales and the pace of goods inflation slows. Separate data on Tuesday showed retail sales rose by less than forecast, while an underlying measure of household spending pointed to a more resilient consumer at the end of the second quarter.”

U.S. wages are now growing faster than inflation for the first time in two years, helping workers but muddling Federal Reserve attempts to lower price increases, according to The Wall Street Journal (subscription).

What’s going on: “Inflation-adjusted average hourly wages rose 1.2% in June from a year earlier, according to the Labor Department. That marked the second straight month of seasonally adjusted gains after two years when workers’ historically elevated raises were erased by price increases.”

• In manufacturing, wages are up 5.6% over a year ago, according to NAM Chief Economist Chad Moutray.

More to enjoy: “In addition to enjoying solid wage growth, Americans are taking comfort in slower price increases for everyday items—such as gasoline and groceries—that have the biggest influence on their perception of inflation.”

• However … Adjusted for inflation, pay growth “remains below the trend in the five years before the pandemic,” one source told the Journal.

Why it’s important: If wages continue to surpass cost increases, they could encourage more spending, which could help the economy avoid a recession.

• In recent months, Journal-polled economists have been less confident that there will be a recession in the next 12 months. However, Americans in general continue to expect a recession, according to the article.

The Fed’s role: The Federal Reserve has increased the benchmark interest rate 10 times in the past 16 months and has indicated it will raise it again later this month.

• “‘It’s great to see wage increases, particularly for people at the lower end of the income spectrum,’ [Federal Reserve Chairman Jerome] Powell said [in June]. ‘But we want that as part of the process of getting inflation back down to 2%, which benefits everyone.’”

The last word: “With manufacturers continuing to cite workforce challenges, even in a cooling labor market, wage growth remains significant,” Moutray said. “The average manufacturer pays $26.41 [an hour] nationally for production and nonsupervisory workers, up 5.6% from one year ago, a very solid rate. Relief on growth in consumer inflation will allow those employees to realize the purchasing power of those dollars more fully.”

Further resources: For more workforce solutions and insights, check out the resources of the Manufacturing Institute, the NAM’s 501(c)3 nonprofit workforce development and education affiliate.
 

California’s port system will get a $1.5 billion upgrade, according to Sourcing Journal (subscription).

What’s going on: “The Port of Los Angeles has been awarded $233 million in grants, while the Port of Long Beach received $383 million. The Port of Oakland got $119 million in funding, and the Port of Hueneme received $80 million.”

• “$1.2 billion will go to 15 projects designed to increase the capacity to move goods throughout the state’s global trade gateways while lessening environmental impacts on neighboring communities.”
• At Los Angeles, grant-funded improvements are set to include “a project that augments an existing partial roadway that directly serves 10 percent of all waterborne containers entering and exiting the entire United States.”

The background: The investment announcement by California Gov. Gavin Newsom late last week came less than a month after the Pacific Maritime Association and the International Longshore and Warehouse Union—dockworkers and their employer, respectively—reached a tentative six-year labor agreement at all 29 West Coast ports.

Why it’s important: The grants will decrease port congestion, boost business, add jobs and help operations use more zero-emissions energy, sources told the publication.

What we’re saying: “These types of congestion- and capacity-focused upgrades will ensure that ports across California remain operationally sound for years to come,” said NAM Director of Infrastructure, Innovation and Human Resources Policy Ben Siegrist.

• “As with the historic investment funded by the bipartisan infrastructure law, these improvements will keep products flowing and manufacturing lines open.”

Washington, D.C. – The leading organizations representing manufacturers and millions of manufacturing workers in the United States, Mexico and Canada released the following statement on the three-year anniversary of the United States–Mexico–Canada Agreement (USMCA/T-MEC/CUSMA)

“On this three-year anniversary, we recognize the substantial value that the United States–Mexico–Canada Agreement has represented for our industry’s competitiveness, our economies and North American workers. Manufacturing is critical for the entire North American economy. Our closely integrated supply chains contribute more than $3 trillion annually to the North American economy, and more than $2 billion worth of manufactured goods cross our borders each day.

“Free trade has benefited manufacturers across North America for decades, and the USMCA helps to secure those advantages. The USMCA can only reach its full potential if it is fully implemented in a manner that upholds its letter and spirit. The National Association of Manufacturers, the Confederation of Industrial Chambers of Mexico and Canadian Manufacturers & Exporters continue to strongly and respectfully urge political leaders of all three countries to work together to live up to the commitments of the agreement, which garnered broad support in the U.S., Mexico and Canada. Full compliance with the agreement will provide certainty for the more than 23 million manufacturing workers in the United States, Mexico and Canada and boost our region’s ability to take full advantage of the one-in-a-generation opportunity to strengthen our supply chains though the attraction of new economic activities to North America.

“The strong and unique partnership between the U.S., Mexico and Canada goes beyond our economic alliance. It is rooted in our shared values of democracy, the rule of law, transparency, free enterprise and opportunity. As we see those values under attack around the world, it is critical that we strengthen our regional alliance to elevate and defend those values—for the good of our people and people around the world, as well as for our economic and national security.”

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.90 trillion to the U.S. economy annually and accounts for 55% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.

The U.S. economy grew more robustly in Q1 of 2023 than previously calculated, according to a large upward revision from the Commerce Department on Thursday, CNBC reports.

What’s going on: “Gross domestic product increased at a 2% annualized pace for the January-through-March period, up from the previous estimate of 1.3% and ahead of the 1.4% Dow Jones consensus forecast. This was the third and final estimate for Q1 GDP. The growth rate was 2.6% in the fourth quarter.”

Why it’s important: The news may indicate that the U.S. is not headed toward economic recession.

• A separate report released this week shows that layoffs were below expected levels, “indicating that labor market strength has held up even in the face of the Federal Reserve’s 10 interest rate hikes totaling 5 percentage points.”
• Unemployment claims were down last week, too, according to the Labor Department.

The NAM says: “While the latest NAM Manufacturers’ Outlook Survey  revealed that most manufacturers predict a recession in the next 12 months, it is also possible that the U.S. economy could achieve the ‘soft landing’ that the Federal Reserve and other policymakers have been seeking,” said NAM Chief Economist Chad Moutray.

• “This is particularly true if the labor market remains solid and if spending continues to hold up. The current outlook is for the U.S. economy to expand 1.7% in 2023, with 1.2% growth in 2024.”

Anheuser-Busch has a solid history of supporting its U.S. facilities and partners, and now it’s expanding those efforts.

What’s going on: The beer giant will give financial and other assistance to its wholesalers, distributors and frontline workers, it announced in a memo and regulatory filing with the Securities and Exchange Commission this month.

• Aid to partners and workers will include wholesaler financial support and sales incentive payments, reimbursements for freight and fuel surcharges and extended lines of credit though the end of the year, as well as financial assistance for local marketing efforts.

“Beer is for everyone”: The financial announcements came just days before the release of Bud Light’s “Easy to Drink, Easy to Enjoy” campaign.

• Other components of the campaign are weekly $10,000 giveaways, Fourth of July weekend rebates and chances to win tickets to local shows in the national Bud Light Backyard Tour, which will feature country music artists Seaforth and Tyler Braden.

Origin story: Today Anheuser-Busch launches its “That’s Who We Are” effort to show where the company’s beers come from and who’s involved in making them. More than 140 growers, employees, wholesalers and other partners participated in the filming of the campaign’s first ad.

The last word: “As we move forward, we will focus on what we do best—brewing great beer and earning our place in moments that matter to you,” Anheuser-Busch CEO Brendan Whitworth said in the memo. “We are a beer company, and beer is for everyone.”

Consumer confidence hit its highest level in nearly a year-and-a-half in June, Reuters (subscription) reports.

What’s going on: “The Conference Board said its consumer confidence index rose to 109.7 this month, the highest reading since January 2022, from 102.5 in May. Economists polled by Reuters had expected the index to climb to 104.0.”

On jobs: The survey’s labor market differential, which comes from respondent views on the difficulty of getting jobs, increased to 34.4 in June from 30.7 in May—a sign that many still view the labor market as tight.

• This finding is in keeping with a key data point in the NAM’s Q2 Manufacturers’ Outlook Survey, in which the majority (74.4%) of manufacturers cited attracting and retaining a quality workforce as a top challenge.

What we’re saying: The latest consumer confidence index is good news, according to NAM Chief Economist Chad Moutray.

• “Americans felt more upbeat in their assessments of both current and future conditions, with improved prospects for jobs and a strengthened overall economic outlook, including for household finances,” he said.

In other good news: Sales of new homes increased to a 15-month high in May, up 20% from a year ago, bolstering hopes that the U.S. economy might avoid a recession.

Anheuser-Busch has a solid history of supporting its U.S. facilities and partners, and now it’s expanding those efforts.

What’s going on: The beer giant will give financial and other assistance to its wholesalers, distributors and frontline workers, it announced in a memo and regulatory filing with the Securities and Exchange Commission this month.

• Aid to partners and workers will include wholesaler financial support and sales incentive payments, reimbursements for freight and fuel surcharges and extended lines of credit though the end of the year, as well as financial assistance for local marketing efforts.

“Beer is for everyone”: The financial announcements came just days before the release of Bud Light’s “Easy to Drink, Easy to Enjoy” campaign.

• Other components of the campaign are weekly $10,000 giveaways, Fourth of July weekend rebates and chances to win tickets to local shows in the national Bud Light Backyard Tour, which will feature country music artists Seaforth and Tyler Braden.

Origin story: Today Anheuser-Busch launches its “That’s Who We Are” effort to show where the company’s beers come from and who’s involved in making them. More than 140 growers, employees, wholesalers and other partners participated in the filming of the campaign’s first ad.

The last word: “As we move forward, we will focus on what we do best—brewing great beer and earning our place in moments that matter to you,” Anheuser-Busch CEO Brendan Whitworth said in the memo. “We are a beer company, and beer is for everyone.”

The Protecting the Right to Organize Act would “devastate workplaces” if enacted, the NAM told the Senate this week.

What’s going on: The PRO Act—introduced in February by Rep. Robert C. Scott (D-VA) purportedly to expand labor protections—would do significant harm to manufacturers, NAM Director of Labor and Employment Policy Brian Walsh told Committee Chairman Bernie Sanders (I-VT) and Ranking Member Bill Cassidy (R-LA) Tuesday.

What it would do: The PRO Act contains “proposals that would constitute the most radical rewrite of our nation’s employment laws in nearly 100 years,” including:

• Removal of the right to a secret ballot in union elections and the institution of “card check”
• Elimination of right-to-work statutes in the 27 states in which they are law
• Forced payment of union due even by non-union-supporting employees
• A ban on employers talking to their workers about unions without the involvement of a union representative

What should be done: Walsh urged the committee members “to oppose this misguided attempt to fundamentally restructure American workplaces” and instead put their support behind measures that truly support employees.

• “We look forward to opportunities to continue working with members of the [c]ommittee … on legislation such as the Employee Rights Act (S. 1201) to advance productive solutions that meet the needs of today’s workers,” he said.