Editor’s note: Welcome to So That Happened, our editors’ takes on things going on in the manufacturing world that deserve some extra attention. This will appear regularly in the Member’s Only section of the site.
Not So Sweet
Oddly coincidental or perfect timing? You be the judge. The U.S. Government Accountability Office chose Halloween, one of the most candy-coated ‘holidays’ of the year, to share some not so sweet news for confectionary food manufacturers and others who rely on sugar as a main ingredient in their products.
The news: In 2022 U.S. consumers, including food manufacturers, paid twice the world price for sugar. That’s better than in 2003 and 2004, when the disparity reached greater than three times the world price, but it’s also well above 2013, when the disparity was at its lowest in the past 20 years. Then U.S. sugar prices were less than 1.5 time more expensive than world prices.
Why is the GAO sharing this data now? It’s got to do with the Agriculture and Food Act of 1981, which contains provisions to support the price of U.S. sugar. The most recent authorization of the sugar program ends in September 2024, less than a year from now. In advance of that, Congress asked the GAO to review the effects of the program.
Yesterday that full report (PDF) came out. Research reviewed by the GAO “suggests the U.S. sugar program results in an increase in domestic sugar production and higher profits for farmers,” while some studies “estimate that the program leads to declines in U.S. employment in industries that rely heavily on sugar, such as confectionery manufacturing.” (IndustryWeek tackled this topic in the 2004 article, The Bitter Goodbye.)
Ultimately, the GAO is recommending that both the USDA and the Office of the U.S. Trade Representative evaluate the effectiveness of current methods and alternative means for allocating tariffs and quotas related to the sugar program. It’s too soon to know what the outcome will be, but the Alliance for Fair Sugar Policy issued a statement following release of the agency’s report.
“For too long, the discussion over the U.S. sugar program in Washington has pit America’s food manufacturers and sugar producers against one another,” said Executive Director Grant Colvin. “The GAO cuts through this false choice and shows that commonsense updates to the U.S. sugar program not only will increase supply chain reliability for manufacturers and lower costs for consumers, but also can be done while protecting the farm safety net for sugar producers.”
Assessing Industry Interest
Only 14% of Gen Z say they would consider a career in industrial work, according to the Soter Analytics Gen Z Industrial Work Report. The study surveyed over 2,000 Gen Z respondents to gauge the generation’s attitudes toward industrial professions.
Gen Z’s perceptions of industrial jobs show their concerns: 20% think the pay is low, 25% believe working conditions are unsafe and 38% say they have “little to no understanding of what industrial workers do,” according to the report.
33% of respondents want to work at a job that is embracing new technology to help employees, but they have mixed feelings on automation. 23% are excited and want to learn more about automation, while 22% worry that it could replace human labor.
The report also highlights the importance of visibility, with 17% of Gen Zers reporting they would be “incentivized to consider an industrial job if they knew someone who was working in the space and liked it.”
In addition to gathering opinions on industrial careers, the research also included other factors and concerns Gen Z considers when job seeking. The report identified pay, flexibility, growth opportunities, benefits and safety as the main areas that matter to the generation.
“While the research does uncover some unfavorable attitudes towards industrial work, it also shines a light on where employers can better attract the younger generation to the industrial workforce, starting with prioritizing competitive pay and flexible work,” says Soter Analytics CEO and Co-Founder Matthew Hart.
How Manufacturing Careers Are Made
For Manufacturing Month, IndustryWeek asked readers what got them interested in a career in manufacturing. Here are the reasons that respondents gave, in descending order.
- Family. Visiting work with a relative, doing odd jobs at the family machine shop, watching a family member use their skills to make something, listening to an uncle talk about building fighter planes.
- Career Pathways (tie). This answer indicated the respondent had a clear path to career development, be it through apprenticeships, opportunities for advancement, co-ops, internships, etc. One respondent mentioned a college senior project that involved working directly with a manufacturing company: “It opened my eyes to all the possibilities of machine design.” Another respondent’s path began with a mechanical drawing class in high school and the realization that “I could quickly see how things went together. Then a couple of years after I got a job at a sales/distribution office of a mold base manufacturer. Shortly after, I became office manager which included reviewing mold drawings for quotes. My boss told the company president that I had the best technical mind he had worked with. That led me to sales.”
- Creativity. Responses here included: “I always knew I wanted to make things.” “Curiosity and the urge to know how things are made or done pushed me into manufacturing.” “When I was 17, I found machining and sheet metal fabrication to be the most rewarding outlet for my creativity.”
- Fell into It, or It Found Me: Needing a job and finding one on a production line, then getting one promotion after another. “It was close to home and the money was fair.” “Needed a job, but it has turned into a career.”
- High School: “The PSAT test my junior year in high school said I should be a mechanical engineer.” “I took all available shop and drafting classes in school, enjoying working with my hands on tangible projects.”
So, what do those responses say about Manufacturing Day/Month activities? Keep up those plant tours and visits to high schools. They’re making a difference. While you’re at it, put more emphasis on the types of job pathways and career opportunities that are available in manufacturing, and play up the underappreciated creative/problem-solving aspects of manufacturing jobs (like Honda Marysville did recently on their Manufacturing Day tours.)
One more thing: Include parents on plant tours (or set up additional tours just for parents). They’ve got a lot of sway.
Uncle Sam Continues His Cybersecurity Watch
Cybersecurity content often winds up in So That Happened because it forces a bi-weekly cadence, otherwise we might constantly bash our readers over the head with the subject matter.
Focusing on big hacks like the recent Clorox breach a) Prevents burnout on either side of this conversation and b) Makes it very clear why manufacturers need to pay attention to cybersecurity without harping on specific threat profiles and mitigation strategies ad nauseum.
So, your bi-weekly dose of cybersecurity updates: cybersecurity company Tenable and consulting firm Forrester released a new report that suggests security teams can’t get ahead of cyber threats because they are too busy dealing with critical events. With all we’ve talked about regarding the rising number of cyberattacks across the board the report’s conclusion makes perfect sense.
For manufacturing, this is troubling as generally speaking IT runs on efficiency models and cybersecurity requires either bulking up IT departments or shouldering the financial burden of hiring outsiders to do the job.
It comes down to the cost of doing something versus the cost of paying out ransomware demands to make sure the lines don’t go down for too long. Which is more expensive? The shame is that manufacturers need to suffer a successful attack before they can do those calculations with real numbers.
Or, manufacturers could look at the new SEC regulations regarding mandatory disclosure of cyberattacks with material effects, which is what Clorox dealt with, or related events like the SEC this week charging renewable energy company SolarWinds and specifically its Chief Information Security Office (CISO) Timothy Brown for fraud and internal control failures.
The infamous SolarWinds hack of December 2020, now regularly (and rightfully) trotted out by cybersecurity experts as the boogeyman to scare companies into addressing their security flaws, was perpetrated by Russian cybercriminals and resulted in the exposure of data from Microsoft and multiple government agencies.
The short version of the SEC charges is that SolarWinds defrauded investors by overstating how good its cybersecurity was and not disclosing cybersecurity risks, when the company and Brown knew what the problems were beforehand.
Yes, it took a while for the SEC to file these related charges but take this news in conjunction with the SEC’s new reporting regulations and draw the ominous conclusion. You will be held to account for cybersecurity lapses if they were preventable and it’s difficult to prevent them because your cybersecurity teams may be too tied up repairing the damage from the attacks you didn’t prevent.
Uncle Sam is not only watching more closely than ever, he’s also more ready and willing to throw the gavel at you.
A Long-Term Source of Energy
Let’s label this a case of short-term pain versus long-term gain.
Parts of the renewable energy sector are struggling to adjust to higher input costs and interest rates—the word from leaders of Denmark’s Orsted on Halloween that they’re pulling out of a large New Jersey offshore wind project being the highest-profile move—but the work to build the North American manufacturing infrastructure that will support the future energy grid continues apace.
In recent days, executives with Canadian Solar Inc. have announced they will spend $800 million to build a factory for photovoltaic cells in southern Indiana—here’s a story on that from our sister brand EnergyTech—and Eaton Corp. leaders said they will invest $85 million in their Queretaro, Mexico, plant to make more of the equipment that helps electric utilities bury their power lines. The projects will create 1,200 and 300 jobs, respectively.
Government backing of infrastructure projects is playing a huge role in these decisions: Just as we’re seeing headlines about delays for or demises of specific projects like Orsted’s, the Biden Administration is putting out a steady stream of news about initiatives funded by legislation adopted since 2021. Last week, it was about $3.5 billion to support investments in grid reliability and resilience; this week, $1.3 billion for new transmission lines that will go up in six states. The spigot remains open and, given strict local sourcing requirements, U.S. manufacturers won’t go thirsty.
—Geert De Lombaerde
Toyota Workers Getting Raises: Thanks UAW
If you’ve been paying attention to labor negotiations this year between the United Auto Workers, General Motors, Ford and Stellantis, you’ll know that autoworkers stand to gain 25% wages, cost-of-living adjustments and other financial rewards, thanks to their six-week strike against the automakers.
UAW President Shawn Fain made it clear that his targets weren’t just in Detroit. Winning big wage increases will be part of the union’s big pitch to recruiting workers from Tesla, Toyota, Honda, Nissan, Hyundai, Kia, Volkswagen, BMW and Mercedes at plants across the U.S. And, one of those automakers is already taking steps to let workers know they don’t need a union contract to earn higher wages.
The labor-leaning Labor Notes publication first reported that Toyota sent a memo to workers in Alabama and Kentucky, announcing 9% wage increases to about $35 per hour. That’s still below the new UAW wages, which will top out at $42 per hour within four years, but it’s close to the 11% bump workers stand to get upon ratifying the new contract. Axios reporter Nathan Bomey, a longtime automotive journalist for the Detroit Free Press, USA Today and Axios, quickly confirmed the story with Toyota officials.
This is nothing really new. Non-union plants have typically paid at or close to the UAW wage to discourage members from joining the union. That practice weakened a bit in recent years as Toyota and Nissan set lower wages in Mississippi than they’ve paid in Kentucky. So, something to watch in the coming months – will Detroit’s rivals match the UAW’s labor terms? The UAW has never successfully organized a foreign-owned automaker’s plant in the U.S., something Fain says he badly wants to change.