April 1, 2012

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Manufacturing

Utah Business Staff

April 1, 2012

Local manufacturers are operating smarter and leaner—and bringing processes back from overseas. But experts say finding skilled workers is still a challenge. The group discusses ways to overcome labor needs, global competition and material costs. 

We’d like to give a special thank you to Lew Cramer, CEO of World Trade Center Utah, for moderating the discussion.

Participants:

Kelle Stephens, Dixie Applied Technology College; Rob Brems, Utah College of Applied Technology; Mark Suchan, Malt-O-Meal; Tyler Kimball, Namify; Grant Foster, Holland & Hart; Dr. Ragula Bhaskar, Fatpipe Networks; Todd Brightwell, EDCUtah; Tom Dickson, BlendTec; Lew Cramer, World Trade Center Utah; Rob Despain, Petersen Inc.; Scott Bruce, Rio Tinto Kennecott; Mike Bouwhuis, Davis Applied Technology College; Steve Kieffer, Big-D Construction; John Dudash, Mity-Lite, Inc.; Spencer Burt, Futura Industries; Steve Seegmiller, Utah Manufacturers Association; Miguel Rovira, GOED; Collette Mercier, Ogden-Weber Applied Technology College; KC Ericksen, Orbit Irrigation

What are your greatest challenges for 2012?
BHASKAR: Probably the biggest thing that’s going to happen is labor shortages and increases in labor costs this year. Many of you have probably advertised in the newspapers and you’re not getting the same number of responses—especially in sales, marketing, engineering.

DUDASH: We have two challenges at Mity-Lite. The first and foremost would be material costs. We’re not in high-tech, and so while labor costs will likely go up, it will be less significant to us. But the fear of a significant increase in materials is something we watch very, very closely. It’s probably our No. 1 most significant detriment to any forecast that I have currently.

The second challenge would be the ability to bring jobs into the state, frankly, from overseas. We have hard assets, we have people, we have cash. To be able to bring it across the Canadian border and into the state and bring jobs into the state, we struggle with because of taxation issues.

BRUCE: We’re in a period of growth at Kennecott Utah Copper. And during the period of growth, we have our own stable, permanent employees and a large group of contracted employees. That presents quite a lot of challenge. The opportunities for us are also the uncertainties: direction of China, U.S. housing, all of those things. They reside in both buckets as our opportunities going forward and certainly our uncertainties. We’d also say the regulatory permitting environments are challenging.

ERICKSEN: Orbit Irrigation is tied to the home improvement industry, and housing being down is pretty devastating to the whole market. The other thing that we’re seeing is a lot of manufacturing labor shortages and also skilled laborers, technicians, and so on.

Are you losing them for a few dollars more to a competitor across the street?
ERICKSEN: I think that’s the name of the game. You get a guy that’s really good, and pretty soon he moves on and you get somebody else. It’s just kind of a fight back and forth to keep them.

Are you feeling wage inflation pressures as a result?
ERICKSEN: Definitely.

How is healthcare impacting you with all the changes on the horizon?
BURT: Our CEO, Sue, had a vision years ago with the increasing healthcare costs. And the vision was an on-site medical clinic, which we started four years ago.

And it’s not an urgent care; it is an actual medical clinic. We have been able to go self-insured because we’ve been able to keep our claims well below our premiums.

We have 260 employees, and we have a general practitioner, a physician assistant and a pediatrician. Our clinic is open from Monday to Friday and every other Saturday, and we’re pretty full. We actually absorb that cost. All of our employees who participate in our health insurance get free visits, paid for by the company, which has helped to offset those claims that we get.

I’ve been there for five years, and we’ve not had an increase in premiums. We actually had a 20 percent reduction in premiums last year.

The clinic is for all of our employees as well as their family members. Attendance has increased, productivity has increased—we have less sick people because we’re actually targeting and trying to get them better healthcare. They’re not taking a day off of work or half a day off of work to take their children to the doctor. Prescriptions now are delivered directly to our company, so you don’t have to go to the pharmacy.

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