The Scotts Miracle-Gro Co. has always had a very talented workforce, says Mike Lukemire, the 5,000-employee company’s president and COO. Finding good people is something the company has always been good at.
“We’ve just never worked together,” Lukemire says. “The enemy was us. We would compete in our own space.”
The company’s brands weren’t working together to create the best solutions for consumers. When that’s the case, it’s hard to reach your full potential. Fortunately, the problem has been addressed and the result is a workforce that feels a lot more like a team. Collaboration has grown and everyone has a stronger sense of purpose.
“We’ve never really had that, and I’ve been here 21 years,” Lukemire says.
Whether you’re a small or large manufacturer, your workforce is critical. From finding talent to building a culture of collaboration, people are a differentiator.
Every SMG business unit overproduced in the first quarter of 2017 and the company is using that spirit of collaboration to work better with retailers, such as taking inventory out of the overall system.
Chairman and CEO Jim Hagedorn says there’s always room for improvement. But the company is happy with its strategy of focusing on its North American core, reconfiguring its portfolio for fast-growing areas like live goods and hydroponics, which is utilized by the cannabis industry, and remaining shareholder friendly.
“I think the best company we could buy is us. I like our company,” he says.
At the other end of the spectrum, Columbus Canvas Products, which only has 12 employees, also focuses on its people.
The custom manufacturer has increased its prototyping so it can grow new product lines, such as covers for the foam pads at trampoline parks or radiology straps for health care providers. These custom products are then sold business-to-business, rather than business-to-consumer, which means larger production runs.
President Jan Kellogg says the company added automated equipment to handle the larger orders. But more technology and automation didn’t cut back its workforce.
“It sounds like we might be reducing labor, but actually the labor shifts. It shifts to a younger group with computer understanding and CADD drawing,” she says.
The trick is finding people who are passionate and want to learn, because then you can teach them anything, Kellogg says.
“Change does not come without some growing pains, certainly, but we have a great workforce that has been very interested in figuring it out — and that has made all the difference in the world.”
Personnel is the most critical part of a business, but it can also be the most challenging to address. Some companies struggle with finding people. Others find it difficult to take those people and build a strong culture. The best organizations develop a plan that remains fluid and adaptable to a changing environment, but always has the end goal of putting the best people in the best position to succeed.
Start with the recruiting
Kahiki Foods, a manufacturer of Asian frozen foods, is growing quickly enough to expand its workforce. President Martin Kelly says the company just finished adding people so it can run three production lines on both first and second shift, with an ability to go up to five lines in the future.
“It’s important to start with understanding what it is you’re trying to build from a cultural standpoint, which then focuses your recruiting efforts,” he says. “The ability to retain the people you bring in is a direct function of how well you hire for your culture and the work that’s being done.”
Over time, Kahiki has gotten better at this. It surveys people two to four weeks after they are hired. Recently, those people are happier about their decision to come work for the company because the upfront screening has improved.
Columbus is a very desirable place for businesses to locate — so companies are coming to the area.
“That creates more demand for a lot of jobs,” Kelly says. “That’s a risk for the established folks who have ongoing needs. There’s more competition, so you have to have your game on in order to be competitive, whether that’s having competitive pay, a supportive environment or just thinking through what’s important to the group of folks you’re trying to recruit into your organization.”
Kahiki truly understands its culture; it spends a lot of time on it. Kelly says when the company first started hiring it used a third-party agency to help with recruiting, but that third party wasn’t as tuned in to its culture.
“We were on a parallel path. We were recruiting on our own and we were using a third party — and the difference was pretty stark,” he says.
Kahiki was better at marketing itself. It knew it wanted to hire for attitude and aptitude.
“Attracting the entry-level staff is part science and part art — and that’s really the emphasis on understanding the culture and the skills that you’re hiring for,” Kelly says. “If you go about this just trying to get people in the door, you’re going to have more trouble. Once you really understand the nature of your team environment and the culture you’re creating and the work that’s really being done, and then hiring for that, it goes much more smoothly.”
But it does take work to find those people, he says. Kahiki has had to not only advertise for those, but it also has developed partnerships, such as The Arc of Ohio and veterans programs.
Another important factor is having the right training focus in place, whether that’s using a buddy system where a new hire is paired with a more experienced employee or training from management. Kelly says Kahiki does both.
“That’s made a big difference in getting these lines up to the expected level of efficiency,” he says.
Look around the next corner
Buckeye Shapeform, a metal fabrication company, also faces challenges with the need to find skilled labor.
“We’re in a labor market where those talents are not readily available. Certainly, from a machinist and tool and die maker standpoint, it seems as those skilled trades are dwindling, as far as kids coming up through trade schools,” says President Ken Tumblison.
In addition, he says the company recognizes that much of its 50-person workforce is approaching retirement age.
Not only has Buckeye Shapeform made connections with the trade schools and local universities, it’s also providing internal training, such as sending employees to learn CNC programming.
“We’re attempting to be cognizant of the needs that are going to be around the next corner, and try to prepare ourselves for what’s coming at us,” Tumblison says.
The company, like many manufacturers, might be hiring a general labor position, but it’s looking for somebody who has the aptitude to move into a different role down the road.
Buckeye Shapeform has four very different and diverse product categories, so Tumblison and his team work hard to not lose sight of the overall business model.
“Any one of these product categories can be in a down cycle,” he says. “But we have to not get caught up in that particular situation and keep pushing forward in our marketing, in our talent development, in doing our skills assessment of our employees so that we keep them engaged in our business.”
If a business leader starts to see a business category decline, his or her first instinct can be to start cutting people and expenses. But it’s not as black and white as that; the leader needs to make educated decisions.
“You have to stay cognizant of the fact that these cycles always turn and you don’t want to cut to the bone and lose talent that you’re going to need once the recovery starts,” Tumblison says. “That’s the important thing in my mind — to keep looking around the next corner.”
It’s not easy, but Tumblison is cautiously optimistic, with the company’s 2017 projections pointing to moderate growth in most business categories, and more robust growth for its military contracts.
He also hopes that the political rhetoric around bringing manufacturing back to the U.S. will be realized.
Buckeye Shapeform focuses on quality and customer service because overseas manufacturing is often cheaper.
“We’ve had people say, ‘No, cost is important to us’ and they’ve gone overseas, and several, if not all, have eventually returned,” Tumblison says. “Because they have found that pricing is just not everything.”
A bird’s eye view of manufacturing risks
Central Ohioans, especially those in Franklin County, don’t always identify as a manufacturing base.
“We don’t really think of ourselves as manufacturing, but we are,” says Eric Burkland, president of the Ohio Manufacturers’ Association. “Part of that is some of the buildings you drive by, you don’t know they are a factory; they just look like a building. People would be surprised at the equipment that is operating in those plain, old buildings.”
Pressures to watch
Although Burkland hears most Ohio manufacturers expect modest growth this year, important risks include a strong dollar, human resources and technology investment.
Ohio manufacturing is an export-oriented industrial base, Burkland says. The Asian and European economies aren’t growing as fast, which will dampen some Ohio manufacturers’ sales.
“The protection from the global cost pressures, including this strong dollar, is a continual focus on expense reduction. Successful manufacturers are continually examining their cost structures,” he says.
The shortage of skilled workers is an ongoing concern that will continue to generate innovative workforce recruitment and retention programs.
Another concern is staying up with the technology investment curve to have the most modern machinery and equipment.
Manufacturers, generally, are conservative about their cash positions because it’s an expensive investment, Burkland says. Most watch their cash flow very carefully and have a process of prudency for ROI, which usually means an 18-24 month ROI before making a major investment. They don’t want to have too much cash tied up should there be an economic downturn.
The explosion of knowledge and technologies can put a strain on smaller companies, in particular. While they can be more agile and adapt more creatively, in order to do that, they need access to capital, either through investors or lenders.
“So, it’s a critical question for smaller manufacturers: Do they have access to capital and can they maintain that through down economies?” he says.
OEMs often have the technical know-how and capital, but it’s much more difficult for manufacturers in the supply chains to adapt to new technologies, Burkland says.
The risk of the unknown
OTP Industrial Solutions’ entire customer base of about 13,000 are manufacturers — the company distributes industrial equipment, pumps, bearings, fluid power, finishing, power transmission and electrical products — so President and CEO Philip Derrow keeps a close eye on the sector.
“Every single year there are companies that struggle for a variety of reasons, having to do with their performance, the overall market, changes in the market, regulatory environment, and so on,” he says. “But the number of companies that are struggling is smaller than the number of companies that aren’t — at least from my observation.”
While Derrow still hears about tighter labor markets, he believes most manufacturers have found or are finding solutions to that problem. Often, that means training people internally.
In his mind, a more emerging risk is the uncertainty and availability of cheap energy for energy-intensive manufacturers under a new presidential administration. That can include those that use primary metals like steel and chemical manufacturers.
“The regulatory risk factor is also always present, and again there will be change and nobody knows what that’s going to be either, like with energy costs and availability,” Derrow says.
But overall the mood in the sector is positive, he says.
“Our customers are generally positive about 2017, and most expect to have a better 2017 than 2016.”