Kennametal CEO Calls on Executives to Talk Up Manufacturing's Strengths

Kennametal CEO Calls on Executives to Talk Up Manufacturing's Strengths

"It is time for our industry to reintroduce itself to the American people in a manner that encourages them to understand the vitality and importance of U.S. manufacturing to the global economy."

Factories are safer and more efficient than ever. Companies are reporting record profits. And data suggests that U.S. manufacturing is rebounding stronger and faster than most other sectors.

Despite all that, an estimated 600,000 manufacturing jobs remain unfilled, and in a new poll commissioned by industrial-tooling maker Kennametal Inc., 71% of respondents said they would not recommend a manufacturing career to young Americans -- primarily because they believe no manufacturing jobs are available.

Maybe it's time for manufacturers to chip in a few bucks and hire a public-relations agent to pump up manufacturing's deflated image.

"Contrary to public perception, the manufacturing industry is leading the economic recovery," says Carlos Cardoso, CEO and chairman of Latrobe, Pa.-based Kennametal.

Cardoso: "It is time for our industry to reintroduce itself to the American people."

"It is time for our industry to reintroduce itself to the American people in a manner that encourages them to understand the vitality and importance of U.S. manufacturing to the global economy."

On Monday at the National Press Club in Washington, D.C., Cardoso implored executives to speak up about the good things happening in U.S. manufacturing. Afterward, he spoke with IndustryWeek about the disconnect between perception and reality in American manufacturing -- and how it's hurting the industry.

IW: What prompted Kennametal to commission this survey exploring the perception gap in American manufacturing?

CC: The No. 1 reason is that we believe it is our obligation to manufacturing and to the communities in which we do business.

We keep reading about the high unemployment rate. We keep reading about all the financial challenges that we have as a country. And we feel very strongly that we need a strong manufacturing footprint in this country -- and that's what has made this country great.

One of the main drivers for a solution for a lot of the economic problems we have is to make manufacturing stronger in this country.

To do that, we have a skills gap that we need to address. We have a perception gap. We have a lack of focus from our representatives in Washington to making manufacturing a priority.

So I think we needed to start somewhere, and we felt this would be a great place to start. And this study really validates a number of studies that have been done in the last 12 months.

Founded on Manufacturing

IW: There was a time in this country when manufacturing was a fundamental part of the fabric of society, and young people were encouraged to follow in their parents' footsteps and work in factories. Today we have survey after survey concluding that parents, high schools and guidance counselors are dissuading kids from pursuing careers in manufacturing. Where did we go wrong?

CC: First of all this country was founded on manufacturing. What made this country great is that especially after World War 2, we manufactured things here for the whole world and people were very proud of that.

In the decades that went by, manufacturing went from being dirty, unsafe, low-tech and unskilled to what is today a highly skilled, high-tech, very clean, very safe environment.

And I think because manufacturing is one of the oldest industries in our country, that perception of [dirty, unsafe and low-tech] is very difficult to overcome.

Throughout the years, I also think the regulatory environment created a big challenge for manufacturers. Believe me, I think there is need for regulation -- a market cannot be totally free -- but I think we have to a certain extent overregulated cost versus benefit, or at least made it very challenging for manufacturers to be competitive.

... Just to give you a point of reference, the value added by manufacturing to our economy is about $1.6 trillion. However, the cost of regulation is about $1.7 trillion. So in order for us to continue to be competitive and have manufacturing jobs, we over the years have become more productive. And if we keep the output the same, and become more productive, that means [fewer] jobs.

So manufacturers over the last decade exported low-tech, low-paying jobs in order to keep and generate high-paying jobs in this country, and I think that created a perception that jobs in manufacturing are not stable.

IW: Was there anything in the survey that surprised you?

CC: In general I wasn't surprised by the overall theme of the survey.

At times, though, I was very surprised by the numbers, and by how pervasive the lack of understanding of manufacturing is. I knew that there was a lack of understanding; I just didn't understand the extent of it. It was a lot more pervasive than what I thought it was.

The fact that parents don't encourage their kids to get into manufacturing, the fact that at the K-12 educational level, manufacturing is not seen as a career option, for instance, is surprising to me.

Because at the end of the day, I truly believe that manufacturing jobs equal middle class.

You read all the time about how the middle class is shrinking, and you read a list of excuses of why that's happening. The reality is the middle class is shrinking at the pace that the manufacturing jobs have shrunk.

So if you want the middle class to expand, it's pretty simple: Let's create more manufacturing jobs, and the middle class will increase.

Skills Gap at Kennametal

IW: Interconnected with the perception gap is the skills gap, and you reference the recent Deloitte/Manufacturing Institute estimate that some 600,000 skilled factory jobs are unfilled. How is the skills gap affecting Kennametal?

CC: We do have job openings right now.

In North America alone, we have about 300 job openings. And we have hired about 200-plus people in the last 12 to 18 months.

We have some of the same challenges that everybody else has. That's one of the reasons we have been, for the last 10 years, investing in education and engineering, and we have partnerships with technical schools and universities. It's also why we launched the Young Engineers program.

We felt that we needed to get ahead and start talking to students at the K-12 level. Because at the end of the day, if they're not presented with manufacturing or engineering as a career choice in high school, if they don't get the math skills and the science skill necessary to go into a technical career and/or an engineering career earlier, their fate is sealed as far as what they're going to be doing.

Another stunning statistic is that 2.7 million manufacturing jobs are going to be open in the next decade because those folks are going to be retiring. So if we don't do something now, this is only going to get worse as the economy comes back.

IW: Could you tell us more about Kennametal's Young Engineers program?

CC: We just finished the first class this year, the pilot class. We're going to start another class in the Latrobe area in January.

It's a 15-week program, and it's geared toward juniors and seniors in high school who have a math and science aptitude. We get mentors from engineering, marketing, production and other departments, and the kids come to one of our facilities after school and they spend the afternoon doing projects and learning about engineering and manufacturing -- and most importantly, learning about what it's like in the working environment, learning about how to be a good corporate citizen, and learning the Kennametal values.

We brought four of our graduates with us [to the National Press Club], and they did a variety of interviews with a variety of groups, and one of the interesting things to me is the fact that they really have a very mature view of manufacturing, the corporate world and engineering.

So there is no doubt in my mind that whether they go into manufacturing or engineering or not, they will have the right perception about manufacturing, just by coming through the program.

Obviously we're going to continue this program. We're going to do two programs per year -- one in the first half of the year and the other one in the second half of the year. And we're going to expand this program to all the locations in the U.S. where we have a major concentration of Kennametal facilities and/or employees.

In the next school year, we plan to start up this program in Cleveland. We have three facilities in Cleveland, so we have a good concentration of employees in the area, and we're eager to kick that off.


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