Episode Transcript
[00:00:00] Let's just talk for a couple of minutes about the tariffs that were announced this week because they impact hiring skills, location strategy, manufacturing processes, and many, many other things. Well, if you look at the job market in the United States, and I think there's a lot of analogies to the rest of the world, about 7 to 8% of the actual work in the United States is in the manufacturing sector. And manufacturing jobs include production jobs, manufacturing engineering, process jobs, and design jobs. I used to be an engineer, so I know about some of this. And those jobs tend to be semi technical, and they're usually located in cities where there are manufacturing locations. You can't be remote in a manufacturing plant.
[00:00:52] And the goal of the Trump administration, the way they've described it, is to move more of those jobs into the United States because they believe that that will improve earnings and standards of living here and create manufacturing capacity for security reasons and competitiveness reasons. And so the motivation for the tariffs is to force consumers to pay more for products that were not manufactured in the United States and therefore incent manufacturers, either foreign companies or American companies, to move their manufacturing into the United States. I think most of you know this. This has kind of been described a lot in the press. But the issue that you run into, and the semiconductor industry is facing this right this minute, in fact, as are the construction industry and others, is that the people that know how to build a manufacturing plant, design a manufacturing plant, operate a manufacturing plant are busy. There aren't a lot of extras of them. We have a very low unemployment rate in the United States, around 4%, 4.1%. And while there are a lot of technical skills, there aren't a lot of trade skills available for the development and staffing of manufacturing. And if you look at new manufacturing facilities and you look at semiconductor or even furniture, I talked to a furniture manufacturer the other day. Those are semi technical jobs. They're not just moving forklifts from place to place. They're operating equipment and sometimes making decisions that require a fair amount of training. So if you as a company decide that for business or tariff reasons, you want to move more manufacturing into a particular location in the United States, you're going to have a sourcing problem to decide who's going to staff these plants, where are we going to locate it for the best sources of labor and the best labor cost? Where are we going to have access to information and educational support people or professional services people that can help us run this plant, where our manager is going to want to live? And we're going to have to find out what the pay levels are for these jobs, too. So this is a big talent intelligence problem. And our GWI studies, which we've done in many, many industries, we haven't done one in manufacturing, actually, we did them in a bunch of others. Show you the process of identifying these challenges and deciding how to do this. To give you just one example or two, one of the companies we did a lot of work with, I won't mention the name, is the large chip manufacturing company located out here in California. And, and through the research we did, and the research they did using data sources like Drop, which is the company I podcasted on this week, or others, they concluded that in order for them to open the plant or multiple plants that they're planning on building, they were going to have to train almost double the supply chain of semiconductor process engineers that exist in the United States today. So, you know, that begs the question of where are we going to find those people? How are we going to train them? And if we put the plant in some location in the United States where they don't live, how are we going to get them to go there?
[00:04:18] Or do we locate the plant where they're already busy working for a competitor? So I think a lot of these new manufacturing dynamics that are being created through the tariff policies here are going to result in a lot of talent challenges that companies are going to really have to grapple with. Let me give you a second example that is actually sort of a different type of a problem. So there's an automobile. Automobile, global automobile manufacturer. I won't mention the name, but it's a big one, one of the big three or four. And they have a plant in France that makes internal combustion engines. And it's staffed and trained and it's been running for a number of years, and they have good skills there. It's a small town, though. It's not a town where there's a lot of other employers. And they've made a business decision to downsize that plant and eventually shutter it and replace it with a plant to build batteries, because a lot of their future hybrid cars need more battery capacity and less internal combustion engine capacity. So they were going through a process of deciding where to put the battery plant and of course, doing talent intelligence and looking at where the skills are in different parts of the world and, you know, coming up with spots like in the United States and Silicon Valley or other places in the UK where there's lots of, you know, technical skills and background in science in these areas, including supply chain, by the way. And the French government said, well, look, if you're going to shut down this plant, we have labor unions here. You're going to have to employ these people for a number of years after you shut down the plant. So this isn't going to be a small decision for you if you decide to do this. And after analyzing the problem and looking at the skills data of the skills needed in the battery manufacturing versus the ice manufacturing, they realized that this is sort of a retraining problem. And rather than start from scratch in a new location, it might be economically better to locate the battery plant in the same small town in northern France that the engine plan is located, because we have loyal employees there who are committed to the company. Obviously, they don't want to lose their jobs and they can be retrained in a period of 6 to 9 to 12 months to take on these new roles. We don't have the problem with the government or the overhead cost of maintaining people on the payroll for years. After we shift shut the plant down, the government will give us subsidies to move this plant and keep it in France and keep this town healthy. And that's what they decided to do. So when I look at the decisions that are going on in the US about tariffs, I think a lot of you are going to be in conversations exactly this type of conversation. Should we locate the plant or the manufacturing in the United States? If so, what do we believe will happen with tariffs? If so, where do we have a facility already in place where we can add more staff or capability or capacity to what we already have now? Or are we going to start from scratch someplace new? Now, a lot of you've probably been involved in these decisions. The problem that most companies have is they don't have good data. It's hard to get good data. Well, I mean, I think we're in a world of data like I've never seen before, as you can hear about in the podcast I did this week from Drop, or you call up Lightcast or other vendors like them, but those are two to me, of the leaders. They will show you how to analyze the specific skills you need for the manufacturing capability that you're trying to build. And they will show you the adjacency of those skills to other skills you may have in your company. And that would lead you to talent, mobility, reskilling, redeployment, and location strategies that might help you deal with this new economic climate that we're going into now with the American sort of protectionist policies. So I wanted to just sort of highlight this as something to think about as a topic for the current day, April 2nd, when this is all going to hit. Now, the second thing, of course, you have to think about is pay levels and wages.
[00:08:45] And the new version of Galileo. The Galileo Mercury release has pay data by job, by role, by skill, by tenure, by city, in it. And so as you go through these planning processes to think about a manufacturing location or a manufacturing plant, if you're doing this, we will be able to help you come up with the salary and budget levels of what is going to have to happen to staff these things up. So, you know, the world of work never gets boring, I'll tell you that.
[00:09:14] And you know, I know some of you are working on these projects. Maybe more of you will after this all comes to pass. And I wanted to let you know that we're here to help you think this through. Of course, there's also cultural issues of different locations and management and how do you staff a new facility in a new location that you can count on delivering the same level of quality and focus that you had in the location you had before. It takes years for manufacturing organizations to build their strength in quality and culture. I talked with, you know, a large manufacturer. I actually was with some automobile industry folks last week. And, you know, these are not small decisions, but I hope those of you that are involved in these kind of manufacturing situations will reach out to us for help. Call Lightcast, call Drop, call us, and we'll help you think this through. Exciting times. And Galileo is also a massive tool here to help you with all of these kinds of complex decisions. Hope this was a nice little update. Talk to you guys again soon.
