ROUNDTABLE DISCUSSION
The Future of
Iowa Manufacturing
High-tech investments, training and workplace perks help employers stay ahead of the game
By Joe Gardyasz
Senior Staff Writer | Business Record
You can find manufacturers in each of Iowa’s 99 counties, turning out products as diverse as aircraft components, pharmaceuticals, industrial chemicals and heavy construction equipment. More than 6,000 manufacturers across the state employ nearly 216,000 Iowans, representing 14% of Iowa’s total workforce, according to the Iowa Economic Development Authority.
Manufacturing, which outpaces agriculture as Iowa’s leading industry, also plays a major role in the global marketplace. The majority of Iowa’s exports – 88% – are manufactured goods.
For a window of insight into the latest trends that are affecting Iowa manufacturers, the Business Record invited five experts in Iowa’s manufacturing industry to sit down for a panel discussion at our downtown Des Moines office.
About 50 Business Record members participated in the discussion. Business Record Publisher Chris Conetzkey and I moderated. The panel of experts consisted of Bill Adamowski, president, Iowa Startup Factory, Robin Anderson, senior global economist, Principal Financial Group, Kelli Gallagher, CEO, DeeZee Manufacturing, Mike Ralston, president, Iowa Association of Business and Industry and Dave Zrostlik, president, Stellar Industries.
Among the key takeaways from the discussion:
Tariffs and the ongoing trade war are hurting Iowa manufacturers by making Iowa-made products less competitive, and manufacturers in the state are hoping that the tariffs will be lifted as quickly as possible.
The talent shortage is spurring Iowa companies to come up with innovative ways to retain and recruit skilled employees. Among the strategies being used are offering on-site training, upskilling through the community colleges, and instituting work-based learning and internship programs to bring in talented students and keep them on.
Incentives such as employee stock ownership plans and monthly profit-sharing distributions are among the ways that manufacturers are showing they value their employees and want to retain them.
Iowa manufacturers are investing millions of dollars in technology upgrades to bring artificial intelligence and robotics capabilities to the production floor. What follows is a lightly edited transcript of the discussion.
What’s the biggest challenge or disruptor that Iowa manufacturers will face over the next five years or so?
Robin Anderson: I would say it’s probably labor shortages. The unemployment rate in Iowa is 2.4% — it’s the third-lowest in the nation. If you look at what metropolitan area in the United States has the lowest unemployment rate, it’s Ames, Iowa, with, I believe, an unemployment rate of 1.4%.
And if you look in the Midwest in particular, there would be 180,000 unfilled positions if everyone in the Midwest who was unemployed got a job. If you look at Iowa, there are only 40,000 unemployed Iowans, but according to Iowa Workforce Development, the current state job site has 64,000 job openings.
If you look at manufacturing in particular, according to a study from Deloitte, there could be 2.4 million manufacturing jobs left unfilled nationally, as baby boomers retire and skill gaps lead to shortages. So definitely not enough people to fill the jobs.
Bill Adamowski: If one of our greatest competitors in manufacturing is China, how many people think China is sitting there [saying], “Workforce is probably our biggest challenge?” How many think they’re sitting there going, “Training our employees and safety of our employees,” which is obviously a huge thing for us, right? Is it a priority for China? So what are they investing in? They’re probably investing in advanced technologies trying to move forward.
I go to that Gretzky quote: “Don’t go to where the puck is; go to where the puck is going.” So if [China is] our chief competitor, and they’re investing into advanced technologies and innovation, we need to absolutely take care of our labor shortage. Or you can’t play in the game if you don’t have that. But realize that to be competitive, we need to start thinking beyond some of that as well. So that would be my biggest disruptor — our ability to adopt really advanced technologies in the manufacturing sector fast enough to be competitive in the global marketplace.
Kelli Gallagher: I would agree that the labor shortage has been impacting our business for the last three to five years, but also the challenges of late with the increase in the tariffs on different components that we utilize. Because our customers — 85% of our business is [original equipment manufacturers] — they are looking to the future, and they are making their vehicle platforms global styling. And so there is a big push to localize some of the components. And so the tariffs are having a major impact, also.
Mike Ralston: Certainly, technology is something that’s going to be a disruptor; trade is a disruptor right now. When you think about technology and automation, too many times I hear people talk about the negative impact that will have on the workforce. And let me tell you, it won’t have a negative impact because people don’t have enough in their workforce; they need more people. So if they get technology or the automated process or a certain line that just allows those people to do something else, it’s probably a higher value in the chain anyway. So that’s what we need.
Dave Zrostlik: Being in rural Iowa, definitely labor is a big concern of ours. When we started the company 29 years ago, we seemed like we had a lot of people that grew up on the farm, knowing how to tinker with tractors and using a piece of twine and wire to make things work. As family farms have dissipated, that workforce has dissipated as well. And we just don’t have those people that are coming off the farms that have those skills. And people that are coming off farms, they’re going to Iowa State to get a four-year degree and going back to run those farms, which are now corporations. So they’re not coming to work for manufacturing companies like ours. So it’s one of the penalties I think we have being in rural Iowa is that we don’t have a big draw to bring people to our part of the state. But it’s also a benefit of being in Iowa because we do have very dedicated workforce, people that have experience that can come do things for us. As we see retirement start to happen, it’s going to be difficult to have people come in and fill those positions as they come back in.
So we are looking at more and more technology to take our place. Tariffs have been a big issue for us recently. Last year, we saw our aluminum and steel prices go up 35%. So for our domestic markets, we tried to not pass that along; we try to eat as much as that as possible. We increase our efficiency and our productivity and our factory to help dissipate some of that increase. But when you’ve got tariffs being felt here in the United States and not being felt by our foreign competitors, that just gave our foreign competitors bringing finished products that compete with ours a leg up on our products and more of an equalization with our products. And then try and take our products and export those to some countries around the world where we export to — Russia, China, Australia, South Africa. Now, all of a sudden our product became much more expensive. So tariffs are definitely not the way to go. And we’d like to see those things go away.
What other ways are the escalating tariffs on raw goods and materials affecting Iowa manufacturers?
Ralston: If you talk to an ABI manufacturing member, they’ll echo what Dave [Zrostlik] has said [about ending tariffs], and then we’ll try to probe a little further. We’ll say, “Well, how do you feel about what the president’s trying to do?” And they’ll say, “Well, we get what the administration is trying to do, and we support that, and we just don’t like tariffs.” And of course, as an organization, we don’t either. Then we’ll follow up with the final question, say, “Well, when do they have to come off? When is it?” So far, everybody seems to say, “We don’t like it at all. We want them off, but OK, we’re willing to go along.” So then we ask, “When do they have to come off?” and they always answer, “Well, we don’t know. But we’ll know it when we see it.”
Are manufacturers willing to accept the notion of short-term pain for long-term gain with tariffs?
Zrostlik: I think what we’re partly saying is we’ve got a reprieve area right here where the rest of the world, where we don’t export a lot. But the people we do export to, it will take some time for them to find different markets to source those products from. In that regard, it’d be good to have those tariffs go away as quickly as possible. As far as our steel tariff, we’ve had some reprieve in steel costs so far this year, nothing like the increase we saw last year. So our competitors are bringing in product primarily from Europe. They’re still having a very good year right now with the dollar versus euro being favorable to them, and our steel causes our prices to go up. So we’d like to see that get back to an equalized position as far as our competition as well.
What are manufacturers doing to help students be better prepared to work in the industry?
Gallagher: We participate in a program called Manufacturing Day every October; I think this will be our third year participating. It brings students from high schools and colleges to our facility for a tour. Last year we had a toolbox that is a do-it-yourself bolt-together toolbox. So we had each one of these student groups build that toolbox as the project while they were on-site.
The labor shortage or the lack of skilled labor is causing manufacturers to have to train from within, or work with the community colleges, as well as recruits. We also do some training for our leadership with some other manufacturers in the Central Iowa area, where we each send a group and they all participate in some of the training. So I think the days are gone of being able to hire somebody with some of those skill sets fresh out of high school or community college, but investing in that employee and training them on-site with your products is beneficial.
Ralston: Currently, if you go to elevateiowa.com, you’ll see our Elevate program. … It’s really a partnership with Iowa’s community colleges and four-year institutions to train young people. But also there’s a segment that gets young people into facilities, high schools included. I don’t know of a manufacturer that’s involved in our organization that doesn’t want to get those students and their parents into their facility, because they’ll take them right now.
Zrostlik: At Stellar Industries we actually have on-site training. So anybody who comes to us and wants to weld — if they’ve never welded before in their life or if they’ve been a lifetime welder — they go through our welding institute. It’s a three-day classroom program and as many days as required in a weld lab to meet our welding standards. They come out of there, and they’re going to be [American Welding Society] certified. And they can take that certification anywhere they want to go, but hopefully they’re going to stay at Stellar. We place a lot of value on welding; we weld lot of heavy metals in our company.
We have one of the only air-conditioned weld shops around the area. So last week, that was very important to those people. And we also have started, just about a year and a half ago, an internal assembly trainer. So where we put our equipment on the truck chassis, it takes a lot of mechanical skill. And we just assume that there are those kids that tinker with cars — well, to tinker with cars anymore, you have to plug in a computer. But [they] don’t know how to bolt things together and do things like that anymore. So even finding mechanics to come and work has been a challenge. So we’re addressing that and sort of doing that training analysis as well. So yes, we would appreciate any high school kid that wants to come work and show up every day. That would be great.
Adamowski: I’m on the board of a couple of manufacturing companies — one large and one small. … There’s a lot of resources out there that we should all reach out for. A couple of our operations are out in rural areas, and community colleges have been a lifeline for what they do, so [the manufacturers] sponsor a lot of things at the community college to get more involved. Because the whole idea is if you can get to the students earlier, your chance of actually recruiting them into it is higher.
The internships [through large engineering programs such as Iowa State University] are huge. A lot of [the students] go from internships to actually being able to [move to] more rural areas, because they actually liked the environment and liked the people. As opposed to showing up on career day and saying, “Please move out to Sumner, Iowa.” I mean, that’s a tougher sell than to say, “You get to work on this cool stuff.” [Through the internship] they’ve gotten comfortable and they get a good salary. It’s a whole different sales pitch. So to me, you leverage those different resources, because we’ve had to become a lot more creative and much more proactive in a lot of it to actually recruit those people.
Every industry is likely challenged for workers right now across the board. What do you think the manufacturing industry can be doing in order to compete for some of those jobs in comparison to other industries?
Ralston: I think you’ll find in most places, the manufacturers lead the pay and benefits scale. They’re the best paid jobs with the best benefits. But that’s sometimes not enough anymore. So they’ve got to be very creative on things like work shifts. Instead of an eight-hour day, maybe it’s a split four-hour, all sorts of different things. I was in northwest Iowa this week, and they’re sharing workers back and forth between the two companies. I never heard of that before, but I think all our businesses, as you pointed out, are getting very creative but manufacturers in particular are really trying to do whatever it takes to make that job meaningful and convenient for that worker.
I’m curious whether any of the Future Ready Iowa initiatives have been going forth, what the experience has been with some of those programs, such as the Work-Based Learning Clearinghouse.
Ralston: Well, we really believe the governor and General Assembly hit a home run with the Future Ready Iowa initiative. And the work-based learning initiative has been a big part of that. Dave [Zrostlik, past chair of Iowa ABI] and I were in the governor’s office a year ago when [ABI] formally joined that coalition. And you’ll find a lot of students already in work-based opportunities and manufacturers across Iowa. But the good news for Iowa is that Future Ready Iowa and everything has been very much a bipartisan initiative. And we’re actually going to spend money, spend it on people to get them trained. That’s a big part of Future Ready Iowa.
The governor and her staff, through Iowa Workforce Development, have developed a series of smaller seminars and forums that they’re taking out on the road all over Iowa this late summer and early fall. And it’s going to be a terrific thing. It will take these resources to the places that need them, and we think that’s going to be a good thing for Iowa, too.
What should Iowa do regarding taxes or just to promote a good business environment?
Zrostlik: As far as the business environment, that’s why we started in Iowa. We’re still in Iowa because we feel the business environment is positive in Iowa. Our community of Garner, Iowa, has been very helpful for us from a taxation standpoint, helping us [with tax credits] when we needed buying power. From a general taxation standpoint, as long as we’re competitive with the surrounding states, I feel we’re in good shape.
Gallagher: Well, as a business owner, we will take any decrease in taxes. However, I do think the state of Iowa does do a very good job with the programs that they offer through [Des Moines Area Community College] and through some of the training reimbursements. And they’ve done a great job at publicizing the STEM programs. I know we go to a lot of career fairs at different high schools and community colleges. And I think as they continue that focus on STEM, that’s going to help in the long term.
Adamowski: So I moved back to Iowa four years ago from the [San Francisco] Bay Area, so I was an entrepreneur in the Bay Area. And I think one of the things that we probably don’t do that well in Iowa is appreciate what we really have. It’s always the grass is greener on the other side. So wherever you are, it seems to be greener on their side. But Iowa has so many advantages. Cost of living, in fact the education systems, those are a lot of things that we need to continue to keep up, because those are things we probably take for granted here.
Bill, given your expertise with startups, what would you say is the appetite for entrepreneurs to really get into manufacturing types of startups? And how difficult is that in Iowa these days?
Adamowski: If you look at the cool technologies that are happening, the key is, where do you apply them? If you start looking at where the applications of those are, manufacturing is one of the core places. … To me, there are a lot of opportunities. Blockchain is another technology. But where are the true practical applications of Bitcoin? It’s inside manufacturing and the entire supply chain. It’s great if you’re with Google and you can work with these kinds of technologies, but if not, where do you go? To me, manufacturing is prime with opportunities for that.
A lot of startups aren’t sitting there and [saying]: “I’d really like to be a manufacturer.” They’re thinking about product, and then they get a customer and then they say, “Hey, now how do I build these?” Because one of the things you’ve got to think about as a business is, if there are only two people that want it, you’re just [using] a one-off job shop or something. Now, if you want to create thousands and thousands or even more, now you’ve got to start thinking about it.
So manufacturing always becomes that scaling point, of well, now I want to take this to market — how can I can deliver a bunch of these? I’m working with a startup that’s making a biocell battery that’s actually biodegradable. It’s cool for the environment because 97% of our batteries are thrown in the garbage today. So they’re going to have to produce millions of these if it really gets to market. That’s a manufacturing company, and it’s got to become a skill set.
Today, skills are current, but we’re in a rapidly changing environment and we’ll need a whole new set of skills tomorrow. What strategies do you have for upskilling your existing employees to be able to continue to be functional?
Zrostlik: We’re investing quite a bit in automation. Right now we’ve got about $6 million of equipment being installed in our factories to put more automation in our work. Because if people are hard to find to do the manual work, we can find machinery to help us do that more efficiently. But now that also means that people we’re having to get to run that equipment have to be much more highly trained.That’s why we’re getting the younger people coming out of high school. They’re used to doing things digitally on computers, and we’re finding out those skills are very applicable to running equipment, whether it be a laser, or a CNC machine, or whatever type of equipment we’re putting in their operation. So there’s going to be a change in overall training in the future.
Ralston: Some manufacturers for too long have complained about the school system and have said, “They’re not teaching kids what we need them to learn so they’ll come to work and be good workers in our facility.” And [some manufacturers], maybe for too long, were a little lazy about that. But I think manufacturers all across the state now know that they need to be a part of working with their local school district and they need to be much more proactive with their employees.
There’s a company here in town called Keystone Electrical Manufacturing Co., and they have something they kind of jokingly called Keystone College, where they take any employee and they train them on exactly what they need to know. And it could be a certain process on the line. It could be something related to something that’s not as directly tied to the manufacturing process, but they’re much more proactive about training the people and investing in training for their employees than they used to be.
Gallagher: I agree with the [idea of] training internally. Being a manufacturer with 1,200 employees, we have a variety of skill sets from non-skilled blue collar to white collar professional. We try to promote from within; we offer tuition reimbursement. We do many on-the-job trainings, offering them the freedom [to change jobs]. If they currently are a welder and they want to move to tool and die or they want to go into automation and robotics, we offer them a pathway to do so if they’re dedicated to see it through.
Adamowski: Adding on to that, what I’ve seen in a couple of the [startup companies] that I work with is, it’s actually a nice opportunity. Just think if you’re [at a startup] and you have those capabilities, and now we’re bringing in a robotic machine. Heck, yeah, it’s a career advancement opportunity, in terms of what your skill sets are and what you’re doing. And for rural Iowa companies, those [training] opportunities are huge because they’ve selected people internally and been able to give them even more job satisfaction, and that’s keeping them there.
Anderson: Another thing that’s important — we talked about technical skills, but also of increasing importance are soft skills like critical thinking, problem-solving and creativity that kind of augment the technical skills as well. I think as you eliminate more of the manual routine jobs, I think people may be forced into more of the positions that require soft skills.
Do you see existing manufacturers looking at some of those new technologies that might be coming out of the college and saying, can we actually physically manufacture the product?
Adamowski: So I guess I get on my soapbox a little bit. I think that’s one of the huge opportunities that I see for existing manufacturers and startups and universities to collaborate more. So once again, I didn’t know the university environment very well until I showed up four years ago. And I’d never worked with the university, never considered as a businessperson to work with the university, but having been there now, there’s a lot of talented people that don’t reach out. … It’s like getting free consulting from experts, and if you can create a project, then they love it because you can actually do sponsored projects that are much cheaper than if I hired a consultant externally. So that’s a resource that I see is under-tapped here.
The other [opportunity] is startups. So if you look at the Bay Area, everyone talks about startups. But if you notice that there are big companies like Google that are there, Microsoft that are there, Intel that’s there. Why are they there? Is it because labor is cheap? No. Why are they there? They’re there because it’s an innovation environment where existing companies work with startups. Startups have more nimbleness, they can do different kinds of things. So the key is buying companies, selling companies spinning off different IP, starting up business units, those are all part of this innovation kind of economy, which I’d like to see more from a manufacturing base. I think that’s a really big opportunity for us.
I’ve seen articles that Iowa is behind a little bit, behind the curve in getting our share of repatriated dollars from foreign investments back into manufacturing or other kinds of businesses. Where are we going in the future in taking advantage of the flow of money that can help address manufacturing issues?
Ralston: There seems to be, just speaking from my own experience, two types of businesses in Iowa when it comes to capital — those that don’t need it, and those that do. And the good news for Iowa and most manufacturers in our state, whether they’re located in urban areas or rural areas, they’re pretty well capitalized. It’s the startups that need capital. So we need to make sure that people like Bill are giving them the help they need.
But capital hasn’t been an issue for most of the established manufacturers in the state, as far as I know. I think we’re doing a better job. Bill, you’re in a better place to say this is true or not, but I think we’re doing a better job with startups, because of people like you and VentureNet Iowa. And I know Iowa Area Development Group does a lot with startups in rural Iowa. So I think there are a number of initiatives in place to help those folks, but most of you established folks I think are pretty well capitalized.
Have you seen any businesses bringing manufacturing back jobs specifically and/or operations back into Iowa here?
Ralston: I think the Wall Street Journal has another article every day about some company bringing jobs back to the country, and a number of big companies have done it, but a number of smaller ones too. And so right now we seem to be riding a repatriation wave in both terms of people and manufacturing processes as well as their money.
With Iowa specifically, you think?
Ralston: Well, I’d say U.S. specific and Iowa some. There are a lot of global manufacturers in Iowa. Stellar does business all over the world, I know. But when you think about global manufacturers in Iowa, you think about John Deere, Vermeer, Collins Aerospace or those kinds of companies. They’re doing it, they have plants all over the world, but they’re bringing a ton of stuff back home too. And some of that comes to Iowa.
With the workforce shortage in manufacturing, is there a branding issue when it comes to manufacturing for some of these kids, where they think, “I don’t want to go into manufacturing because that sounds like hard, dirty work and not very cool, not very techie.” I’m just wondering if manufacturing needs a rebrand?
Zrostlik: I think you’re on track, and we’re spending some time doing that. We’re reaching out to those high school kids and their parents and bringing them into our factories and showing them that we do have welding — in an air-conditioned shop, and the floors are clean. You don’t get filthy, dirty, greasy working in a manufacturing facility. It’s a whole different environment than what you think it might be. We’re spending more and more time on that. I mentioned earlier about all the people we hired, but after hiring all those people, we said what are we doing to spend time on retention of our people? Because we spend all this money hiring new people, but what can we do to retain people? That has become a big focus for us in the last year and a half.
And now we’ve actually fine-tuned that a little bit now to where just last month we started going out and having small huddle meetings with our employees in each area. We pass those checks out and say: This is what you accomplished last month as a team. This is what enabled you to have this check, or this is what you didn’t do to have the check come down a little bit.
Another program we put in to help people realize how important they are to us as a company — they’re allowed to have one tardy per month and one unexcused absence per month. And if they have more than that they take themselves out of the bonus program for the month. The first few months of the program, there were quite a few people that were not getting checks. But I think last month we had almost 85% to 95% of the people getting checks because they stay within the rules. So we’re finding out we have to get creative and find things to retain people and make us stand out from the other employers nearby.
Gallagher: It’s a little more challenging to do some of the latest and greatest trends in employment. such as flexibility or flex time, because when you’re trying to run a production line, you need 10 people on that line, and you need it to run three shifts a day at set times. As far as putting the glamor back in manufacturing, through social media we are trying to do more videos, putting it out there on things that the younger generation are looking at and saying, “Hey, consider this as a career field; there are opportunities here.”
We’ve also had to get very creative in our recruiting as far as diversity. We have a lot of diversity on our plant floor. In fact, we have about 20 different languages spoken. That in itself creates many challenges as far as putting out work instructions in different languages using pictorials. But if we hadn’t done that, we would really be hurting as far as labor shortage. We also did a partnership with DART, where the nontraditional workers who don’t drive a car have the ability to ride the bus to three of our different plants. We work with a lot of different places in Iowa like Bridges of Iowa to get people who may have a colorful past back into the workforce and learning a skill.
Ralston: We [at ABI] do a couple things with member companies to help people understand that manufacturing is not the dark and dirty thing that it used to be. One is with the Elevate Iowa program, a lot of social media. There are a lot of videos just like you said, Kelli. The second thing we do is we do an entrepreneurial camp for high school students. Every summer 85 to 100 kids come to the camp; this year it was at Central College. The point is to make sure they understand that they can have a great career manufacturing. When they come in on Sunday, they don’t want to be there. … But by the end of the week, they understand that manufacturing can be a terrific career. And so we keep trying to do anything we can to help them understand that.
Adamowski: One of the companies I work with, they’re an [employee stock ownership company] that’s 100% employee-owned. It’s a competitive advantage that they utilize, which is really cool. Because they can look at other jobs that are out there and they pay maybe the same hourly wage. But if they see some of their cohort, especially a lot of the older people who are retiring at this point walk away with something that’s pretty significant, that’s pretty big. That’s been a pretty big deal for this company in terms of growing, in terms of retaining people, hiring people, and in fact, even acquiring companies.
Anderson: So I think just some national statistics, so given that 2.4 million job gap in manufacturing, a lot of that’s going to come from baby boomers retiring and those jobs not being filled. So I think all that these companies are doing to encourage young people to move into manufacturing is a really good thing.
Back to startups, I’ve talked with a lot of startups that are doing both software and hardware. The minute that the hardware story comes out, all of a sudden the local investors get a little skittish around hardware. Is there a role for Iowa manufacturers to play by really focusing on venture in the hardware and manufacturing area?
Adamowski: I would say yes. I know a lot of investors in Silicon Valley, but most are software-related. … People come to me all the time and say, “I need to raise capital.” The best way to raise capital is to get customers, that’s what I always tell people. Because it’s a validation of what you’re doing.
Zrostlik: We’re in the process of investing quite a bit this year. We have a small factory out in Nebraska; we put the first laser cutting machine out there this summer. We’re putting in a fully automated panel bending and cutting line in one of our factories in Garner that’s about a $2.8 million investment. We’ve got two more welding robots that are coming online. And those will be fitted by another laser cutting machine. So we’re putting in a lot of automation this year, just because it’s needed. We’ve built some of our cranes. Over the last five years, we’ve become the largest manufacturer of telescopic service cranes in the nation. And we just can’t keep up doing the old process that we did before. We’ve got some contract manufacturers around the Midwest that have helped us out to augment, but at a cost. So now we’re bringing that fabrication work in house and using automation as much as possible to do it in house. So yeah, it’s changing things all around.
Gallagher: I think to stay current, you have to reinvest back into your company. Over the last 10 years, we have put millions of dollars back into the technology on the production floor. We have a number of different robotic cells, three different robotic welders for tanks and toolboxes, we have seven different robotics cells for running boards, both the fabrication and the assembly. If money was no option, I’d love to see more collaborative robots on the floor, and by collaborative, I mean, those who can work side by side right beside the human. As far as some of our automation, they have to be in cells, where if a human enters that vicinity of the robot, it stops.
When we talk about automation, I wonder if you could talk a little bit about some of the longer-term effects you see. If we push the time window out five or 10 years, what type of effects you’re going to see within your businesses?
Adamowski: One of the companies I work with, they basically build ambulances. So one of the things that automation has done is that each of these ambulances, believe it or not, they’re sort of customized. It’s all like built to order. So then how does that work with automation? It turns out that if you can create standardized parts, that you can then assemble in more customized ways. … And that’s where that automation now allows them to do that sort of mass customization, which is what they’re trying to do so they can sort of lower the cost with the automation, but still do then even more customization.
What would more automation mean from an employment standpoint?
Anderson: I think there’s a lot of concern; you see a lot of news articles about automation taking all of our jobs, and that could also be the case in manufacturing. But I think automation will lead to more jobs. The World Economic Forum said that automation by 2022, which is not that far along from now, will create 58 million more jobs globally than it displaces. So I don’t think robots are coming for our jobs. And I think that’s definitely the case in manufacturing. It’s just moving to more of those nonroutine jobs, more skilled jobs and also more the soft skills, creative thinking.
Regarding getting the younger generation involved. My wife is a teacher at Waukee APEX. We see that the parents have a one-track mindset that their son or daughter needs to go to a four-year college. How do you see us being able to create that environment that helps parents understand that they shouldn’t eliminate manufacturing as an option?
Ralston: That APEX program is a fabulous program. Waukee is a pretty professional community, so they do think about four-year degree programs right away. A lot of Iowa school districts are not quite that way. It’s all part of the problem that we’ve got to let these parents know that these are not only satisfying careers, they can be very rewarding financially, too. I’ll keep coming back to our Elevate program. We do parents’ nights events. Really, we’re after the parents because we need them to understand that these are great careers, and we do those all over the state. And a lot of times they think, “Well, this probably isn’t for my kid.” By the time they leave, they think, “Yeah, you know what, there are some things that would be a great career for our kids.” So we’ve got to do everything we can to get that message out.
Maybe there is something that exists like this, but obviously we’ve got the AgriTech accelerator and the insurance accelerator. Is there anything in the manufacturing realm right now or anything in the works potentially to try to do something like that here in Iowa?
Ralston: Well, I think there are a couple things. One, what Bill does is a big part of that but, two things I’d say — the Center for Industrial Research and Service, and you’ve got an entrepreneur [Bill Adamowski] running the startup factory at Iowa State; that’s pretty good. You’ve got an aerospace engineer running CIRAS; they do a great job of helping beginning manufacturers, all kinds of manufacturers. So I don’t know the concentration of resources that exist in the ag accelerator or the insurance accelerator, but we have the resources. Maybe we need to do a better job of making sure people are connected to them.
Adamowski: Another [resource at Iowa State] is Capstone projects. So if you want something built, [we can say] let’s go work with the Capstone team, which is a team of engineering seniors, and they’re looking for more projects. ... So in one semester or two semesters they build it, and it’s not going to be a production-ready device or machine, but it’s a prototype that now you can utilize and say, “Here’s what it is, does it actually do what we think it’s going to do?” So we’ve had several of those projects, but I see those as underutilized. I mean, some large companies come in, like Deere has a whole bunch of Capstone projects, because they’ve figured out this is a great way to A: recruit people, because they’re working on your stuff. And B: maybe some cool stuff comes from it. We’ve had some other companies who have a priority list. So the top 10, we’re going to do these internally, but number 11, 12 and 13, we’re not going to do but hey, let’s put some students on it, what the heck, and see what they come up with. So there are alternative ways that I think we need to be somewhat creative in terms of that, but it would be great to have a manufacturing accelerator. I want to think about that one.
We’re getting close to the end of our time today and one of the things that I continue to learn is that there are so many innovative and cool things happening within manufacturing. So I think it would be really interesting to just go down the line real quick and think about one of the most innovative things you’ve seen in manufacturing. It doesn’t necessarily have to be your business, but it could be something externally too.
Zrostlik: I just think the most exciting thing we see in our industry is the melding of metal and hydraulics and steel. And now with electronics and tying into the computers of the trucks, we’re working with GPS — it’s active on the trucks. Basically it’s a rolling workshop that used to be bricks and mortar, now it’s a truck, and that truck does everything that a brick-and-mortar facility did 10 years ago. And that’s what our customers want. So we’re getting out there and trying to partner with other companies that have that expertise and in the software side of things and the technology side of things. To bring all that information, all those services into our trucks. So we provide the customers what they’re looking for. That’s been pretty exciting to us.
Ralston: I’m really excited by the innovation not only in some of the machines and the work that’s done, but the processes. I mentioned the two companies that are sharing an employee and various processes on the manufacturing line. Iowa manufacturers are innovative, and it’s great to see that innovation take place. It’s exciting to see.
Gallagher: Manufacturers are bringing their companies together to brainstorm, to come up with the best ways to address some of the issues, even though we’re all competing for some of the same employees. There’s a lot of groups out there through HR, through technology, through engineering that are also coming together to discuss who has capacity in this area or this capability, and how can we work together to solve it?
Adamowski: So I’ll go a different direction, I guess. One is, as a tech guy, I’m very curious to see [how technology will unfold in the future]. Specifically, IoT sensors, along with 5G, so everything is connected, and how do we utilize all that data? How it’s going to impact manufacturing, we can’t see at this point. And to me, that’s the fascinating part. Because if you look at innovation and manufacturing in the United States, I think that’s going to enable us to take the leap forward beyond our other competitors. Because it’s not going to be about low labor costs, it’s going to be about who can actually optimize those kinds of variables the best.
Anderson: I guess for me, coming from a statistics perspective, [it’s] manufacturing going back to the U.S. The U.S. had the China shock after China joined the World Trade Organization in 2001. We lost between 1998 and 2010 over 6 million manufacturing jobs. But manufacturing has come back. We’ve added 1.2 million manufacturing jobs in this expansion. But those manufacturing jobs are different. And I think it’ll be really interesting to see how advanced analytics, internet of things and automation change the types of manufacturing jobs in the United States.