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Manufacturers compete over shrinking labor pool

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Since the depths of the Great Recession five years ago, manufacturers in San Diego County have added nearly 7,000 workers to their payrolls -- an unexpected spurt of growth for a sector that had been losing jobs even before the recession began.

As of last month, the county had 99,000 manufacturing workers -- the highest number since March 2009 -- including 25,200 involved in producing foods, beverages and other nondurable goods; 24,300 making computer and electronic components; 7,200 in aerospace manufacturing, including drones; and 7,200 in shipbuilding and repairs.

The total is still far below its Cold War peak in 1990, when manufacturers employed 124,000 workers in San Diego.

But as the pace of hiring continues and the labor market tightens, manufacturers say it is getting harder to find skilled workers, which means they have to find new ways of attracting and retaining employees.

"At our company, we are competing for the same type of employees as Qualcomm and General Atomics, but we are not them and can't offer the kinds of wages and benefits that they do," said Keryn Leger, chief financial officer of Pacific Power Source, a producer of power conversion equipment with R&D offices in San Diego County and a manufacturing plant in Irvine.

Speaking at a recent manufacturing roundtable at the Daily Transcript, Leger said that to attract workers, she emphasizes the benefits of working in a relatively small firm with fewer than 100 workers, as well as the personal sense of accomplishment of watching a product being developed from start to completion.

"It's really fun to see a product that you've made go out the door," she said.

Leger said the company also tries to be as flexible as it can with workers' hours.

"You don't want to get into a situation where we're so flexible that employees feel like they can just tell us that they'll just work when they feel like it, but we often ask, 'How can we make this fit for you and for us?'" she said.

But she added that her firm's efforts to be more flexible have recently been stymied by regulations, such as the recent changes to overtime law.

"These laws were designed to prevent abuses, which is fine, but flexibility becomes an issue," said Bharat Naik, president of Reotemp Instrument Corp., a San Diego firm that makes industrial thermometers, pressure gauges and other equipment.

"A lot of times, employees want to have more flexibility with their hours and then you have to figure out how to work around the laws, which seems like an unnecessary burden," Naik said.

The manufacturers said that it is sometimes hard to figure out how to apply the laws, because there sometimes seem to be conflicts with federal, state and local regulations. And some laws are so complicated, the workers don't understand what they really say, which can lead to conflicts.

As an example, Christine Mueller, a labor and employment attorney with Pettit Kohn Ingrassia & Lutz in San Diego, pointed to the rules on sick days that took effect July 1.

Under the new rules, a worker can earn up to three days of paid sick leave per year. A proposal slated to go on the San Diego ballot next June would raise the sick leave for local employees to five days.

Because of the confusing way the sick leave issue has been reported in the news media, Mueller said, "some workers ask if they're automatically entitled to five days of sick leave as soon as they're hired."

Under state law, sick leave accrues gradually — at the rate of one hour for every 30 hours worked — and employers are not required to give workers any sick pay until after they have completed a 90-day probation.

But businesses also have had misunderstandings about the law.

"A lot of companies use very technical point systems for compensation, including penalties for people who are repeatedly late or absent, so they have questions about how the sick leave should affect their point systems," Mueller said.

"Companies can minimize their risks by focusing on having a good culture and having some flexibility about absences and tardiness," she said.

Naik said that beyond striving for flexibility, one way his company attracts and retains its workers is to focus on building "a strong, nurturing company culture," including awards ceremonies to recognize workers' achievements, picnics and barbecues for the staff and periodically bringing trays of fruit into the offices and plant.

"It used to be trays of doughnuts, but fitness has become a big thing for the workers," Naik said.

Brian Armstrong, client executive at the Barney & Barney insurance firm, said that responding to workers' interest in health and fitness is another way for manufacturers to keep attracting workers.

"Some wellness programs have been promoted as a way of reducing health insurance costs, but that works better at bigger companies than smaller ones," he said. "On the other hand, a simple step like having a game room for workers can help improve morale."

Peter Zien, founder of the AleSmith Brewing Co., said his company goes all out to attract workers, especially now that there are now more than 100 breweries in the county seeking the same type of employees.

Even before the Affordable Care Act, AleSmith was offering a full package of health, vision and dental care for its workers as well as a retirement program. He and his wife, who handles the brewery's payroll and benefits, periodically review how competitive their salaries are with other breweries.

"We want our workers to be among the highest paid in the county because don't want them leaving," he said. And he is examining the idea of instituting a four-day work week "to give our workers the gift of time."

The manufacturers said that one way of building a better workforce is to include more technical and trade courses in high schools and colleges.

"Not everyone needs to get a bachelor's degree from a four-year college, especially if they want hands-on work in things like electrical work or welding," Naik said.

Dorothy Rothrock, president of the California Manufacturing Trade Association, said there is growing bipartisan support for manufacturing education.

She added that one thing that might help attract more workers is to change the image of manufacturing in the state.

"A lot of manufacturing in California is high-tech, clean, fun and exciting," she said. "We're building some beautiful small businesses here that are at a risk of leaving if they find they can't compete."

Related content:

Managing employee absences in light of new sick leave rights

New IRS reporting rules: Are they threatening your business?


Roundtable participants

Brian Armstrong, Client Executive, Barney & Barney (Sponsor)

Keryn Leger, Chief Financial Officer, Pacific Power Source

Christine Mueller, Senior Counsel, Pettit Kohn Ingrassia & Lutz (Sponsor)

Bharat Naik, President, Reotemp Instrument Corp.

Dorothy Rothrock, President, California Manufacturing Trade Association

Peter Zien, Owner, AleSmith Brewing Company

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