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Manufacturing returns, but needs a facelift

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Much like San Diego’s burgeoning drone industry, the manufacturing scene, which is slowly trickling back after years of offshoring, is impeded by its moniker, which those in the biz say is too broad and carries an inaccurate connotation to today’s workforce.

“I think it’s a huge, broad term. When you say ‘manufacturing’ it connotes something different to every individual,” said Scott Dennis, president of D&K Engineering.

“I think that’s one of the issues we have in the public is that [if you ask] kids getting out of school ‘Do you want to be in manufacturing?’ they may be thinking machining or welding, and maybe that’s great for one person, and another person says 'I don’t want to be a welder that doesn’t sound cool to me at all.’ But they don’t have any idea that there’s clean-room manufacturing and high-tech, great paying jobs and a career ladder you can go up in a different sector.”

The old-fashioned notion of manufacturing as low-skilled jobs on a factory floor is taking its toll on the workforce. Several participants at a recent Daily Transcript roundtable said finding highly skilled technical workers such as welders has been a challenge; others say they have major trouble hiring engineers.

“The blue-collar jobs are very difficult: skilled machinists, skilled welders are very, very difficult to find,” said Juan Mora, vice president of operations at L&T Precision Corp. He said his company’s long-term solution is to partner with trade schools and colleges to develop the skills potential employees need. But, he added, the pace of output required by L&T’s customers doesn’t allow for individual training of these students as a short-term solution.

“So the avenue we’ve taken is we have been able to find and recruit several individuals from the programming side of things, and then we automate — so we’ve been able to get equipment … that really improves our quality and improves our ability to produce a product without having to have the skilled individual.”

Dave Grundies, CEO of GET Engineering Corp., and Dennis agreed that finding engineers is a factor of an insufficient amount of talent throughout the United States.

“I keep hearing and seeing articles about there’s no technical talent on the manufacturing side — we’re just not seeing that to be honest,” Dennis said. “We’re seeing plenty of bright people that are trained … that to date has not been an impediment to our growth. It’s been more on the engineering talent where it’s a very hot job market right now.”

Grundies said the engineering market is tight in general, but is especially difficult for GET, which does a lot of legacy contract work with the Department of Defense.

“Because we do some Navy legacy stuff, sometimes the hottest new engineer is not what you want — it’s someone who’s got some tooth,” he said. “I actually hired a guy who was over 70 who used to work for NASA as one of my hardware guys who’s been very wonderful.”

Russ Boelhauf, a consultant for Lunatec with a long history in manufacturing, said the lack of highly skilled technical workers that Mora is experiencing is also a result of a gap in our education system.

“I think education’s a huge problem, because they don’t understand the breadth of what is needed in manufacturing; they don’t understand materials control or that it even exists,” Boelhauf said.

“Unfortunately in the school system, things like shop have been relegated to the babysitters of the whole thing because every kid has to be somewhere. So if there’s an open period, he’s filled all his requirements, put him in shop.”

Boelhauf said there are plenty of students, however, who seriously consider this type of work for a career, who could use more support. He suggested leaders in the manufacturing industry work closer with both high school and college instructors — Palomar College works in this arena — to ensure they understand employers’ needs.

In addition to working within the education system, Joel Valenzuela, director of maritime operations for the Port of San Diego, said community outreach is also necessary to combat the disillusions about manufacturing work and the industry itself.

“There’s a challenge in that kids don’t kind of think ‘Oh I want to grow up to be a welder or something like that,’” Valenzuela said.

“But what we’ve always been sort of championing at the Port is San Diego is seen as this marble economy where you have a lot of these low-paying service jobs and then really high-paying high tech jobs, but not a lot of manufacturing blue-collar jobs that don’t necessarily require an advanced degree that most people don’t have an opportunity to get.

“So we do outreach in communities and let people know about these ship repair and shop building jobs — it’s just letting them know that they’re available.”

With San Diego seizing the moment to highlight reasons to manufacture here and attract more companies to do so — the city celebrated Manufacturing Week the first week of October — there is already lots of action. All roundtable participants said manufacturing has been trickling back from foreign countries over the last several years, particularly in high-tech.

“I think the landscape is really different than it was 10 years ago,” Dennis said. “The price — and I’m more talking about high-tech manufacturing here, like final assembly and integration of complex electro-mechanical complex — that profile of where it makes sense to build that kind of product has changed dramatically.

“And of course there are volume dependencies and labor cost as well, but it’s gotten to the point where if have a really good supply chain organization, you can pick partners globally and do your final assembly and integration here.”

Labor costs — and California’s labor law in general — is one factor, along with onerous environmental regulations and high real estate costs, that manufacturers say can make it difficult to set up shop in the region. But as Kevin Stotmeister, CEO of Federal Heath puts it, there’s still a heck of a lot of people here.

“It’s all about shipping,” said Stotmeister, whose company has four plants in the United States, one of which is in San Diego.

“Our end products tend to be big and take up a lot of space and are expensive to ship, so you want to be close to where those signs have to go in that case. So we’re here because there are 38 million people in California, and 38 million people like to bank and go to restaurants and all the things that need signs.”

As the manufacturing climate continues to evolve and aspects of production return to the United States and San Diego, Valenzuela said the Port is prepared to continue to see its import and export numbers fluctuate, but noted it isn’t a bad thing, simply a shift in opportunity.

“I think you’re seeing what everybody’s saying reflected in the flow of goods in and out of the region,” he said.

“A good example is windmill parts, where initially we saw a lot of manufacturing in Europe, then it moved to Asia and so we were getting a lot of import business out of that. I think today a lot of the manufacturing is moving back to the U.S., and the trend of near-sourcing, also Mexico — so it still offers opportunities for the Port, but it’s just shifting in terms of where the resources are coming from.”

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Roundtable Participants

George Agrimis, Retired Professor, National University

Russ Boelhauf, Product Expert, Lunatec

Scott Dennis, President, D & K Engineering

Keith Easler, Program Manager, Lumedyne

Dave Grundies, CEO, GET Engineering Corp.

Jenna Leyton-Jones, Shareholder, Pettit Kohn Ingrassia & Lutz (sponsor)

Juan Mora, VP of Operations, L & T Precision Corp.

Kevin Stotmeister, CEO, Federal Heath Sign Co.

Joel Valenzuela, Maritime Director, Port of San Diego

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