Wages in the Metalworking Industry: Where Are We Headed? | Machine Shop Talk Ep. 35

it's october 2021 and we find ourselves in a situation where many places people are being offered more money to pour coffee than to be a machinist what does this mean for the trade we're going to get into that before we do make sure you like and subscribe if you want to see more videos let's get into it [Music] okay guys this one was a very interesting very relevant very timely conversation i found it very interesting um i hope you guys do too and i'd love to hear your thoughts about this one a guy came on and he wanted to know what do we do in 2021 right now regarding wages um he was pointing out that in north america he didn't say he was in the u.s he didn't point out exactly where he was but he was having issues with staff retention um he pays guys a wage and all around him wages are starting to go up and surpass that wage he pays his machinists um it did sound like this was an issue more affecting some of his lower end guys so his operators or his setup guys not lower end but at the lower end of the pay scale compared to you know the journeyman machinist or the programmers you know who make more per hour or more per year um and he was having issues with staff retention um i wasn't i can't remember off top my head if it was him or another guy who pointed it out but they actually had a scenario where they had one of their machinists and machinists not an operator leave because a warehouse had opened up near him that was paying 28 an hour to drive a forklift um you know another guy pointed out that in his area it's difficult because there are now restaurants offering thirty dollars an hour to serve um and the question and discussion around this whole conversation was what do we do about this um you know we all can agree that wages in the trades especially manufacturing have not really kept pace with inflation and especially now that we're dealing with a situation in north america where everybody wants more money um everybody's asking for more money and people are getting what they're asking for um it's a very very difficult situation and guys were kind of asking each other questions about what they plan to do with it how are they planning to handle this scenario and i'm gonna say off the back guys this is an extremely complicated issue um i'm not an economist i'm not really into politics i don't know all those aspects of it but i do know there is something going on right now where wages have to go up they're going up across the board what do we do in order to stay competitive so this was a very very good conversation guys i hope i'm gonna do it justice but i do recommend you go click the link in our notes here to go check out this conversation because it was interesting it's a lot more nuanced than i'm gonna have time to get into here in a quick video but essentially the big question that people were asking was what is the incentive for people to get into the trade when they could go make equivalent or more money doing a job that has less skill for instance you know warehouse work or service industry type stuff where you can go train and you're on the floor making the full wage within a month or two as opposed to something like a machinist trade where typically you get in as an operator you make you know 16 to 18 an hour for a few years and then you slowly build your skills until you're making the 28 to 45 dollars an hour that some places can command and it is very regional obviously guys i know some guys in that conversation were saying that no matter what they're in a low cost of living area of the of the us their wages are just not going to hit 45 an hour their top guys are getting paid 25 because you can buy a house there for 100 grand so you know don't focus so much on the specifics of the numbers of this conversation focus more on the what do we do to stay competitive and that's really what it was coming down to um you know guys were lamenting the fact that if they're paying guys on the floor to run a machine they were paying them fifteen dollars an hour or sixteen dollars an hour how do they now stay competitive when they're running production style work if they now have to pay that guy thirty dollars an hour um you know one of the big things about north american manufacturing that we've had to contend with over the years is offshoring and what has been the big benefit to offshoring people can save money because wages are lower so now we're in a scenario where guys have to pay their employees more in order to retain them that edge that offshoring had previously just got higher so the question that everybody's asking themselves is how do we pass on this cost to our customers without losing them entirely guys had different strategies for this um you know there was no one good answer in here because we're all just trying to figure it out the one thing that i saw people talking about a lot in there was automation they are planning to replace their low entry level guys with automation for instance you know putting a cobot in front of a mill to reload it lights out for you know 24 hours a day instead of paying a guy 18 to 20 an hour to run it because that guy now is going to be commanding 30. um i did see guys in there speculating that this is a bubble um i thought that was an interesting perspective but i don't know if that's true guys wages typically do not go down um you know contractions have definitely happened in the world you know we all know about the great depression we all know about the recession but typically you know since the 70s 60s even wages don't go down they go up and everything raises to meet them now we're in a scenario where it's kind of flipped where costs and inflation have gone up and now wages have to rise to meet them um for those of you who are thinking in that thread who were commenting that you know this is temporary we're gonna contract you know if you hire on a bunch of warm bodies right now at thirty dollars an hour you're gonna be in trouble because that guy's not gonna accept a pay cut you know in a year or two when wages go back down to 20. i think this is misguided i think that if wages go up they are probably here to stay and it's about trying to build your business in a new direction or you know revamp what you're doing in order to make that work counting on them coming down and just trying to weather the storm and get by with as little as you can it's not really going to be effective guys and i don't recommend it um if you fail to pivot and embrace what's going on you're going to get left behind um personally my thoughts on this i am actually hiring right now i am giving guys raises my biggest thing right now is staff retention that's what i'm focusing on um the biggest problem that we're going to run into when wages go up is it's going to further the problem with people not getting into the trade if our wages don't don't rise to meet them um already there's a skills gap already there's a shortage if we do not give people incentive to come into the trade there is going to be no one left in the trade um if you're planning to run your business for five years from now only and then you're closing this might not affect you but if you're like me you know i'm 33 years old this year and i'm planning to be here for at least another 20 maybe 30 i need to be able to have guys coming into the trade and have guys in my shop that know what they're doing um you know i can't train absolutely everybody up from zero in this area there needs to be a pool of candidates because you know people leave the trade for reasons outside of money and if you don't have people coming in to replace them you're going to be in trouble if my customers want to offshore um this is a problem but i do not think people offshoring right now in 2021 is going to be as big of a problem as it was in the late 90s guys if people were gonna offshore they've typically already done it my work at least does not deal with 10 000 parts in a run my work does not deal with 100 000 part runs so i can't really speak to that but when it comes to customers of mine i'm dealing with small run stuff i'm dealing with short production stuff stuff that doesn't make sense to put on a boat to and from asia or to indonesia or wherever it may be our stuff is short order need it now need it yesterday type work that is the kind of stuff in my opinion that is the most offshoring proof so i've been trying to develop and keep holding on to those kind of customers in order to basically base my business model more around that as opposed to trying to compete with lower wages because that model is not going to work anymore um you can put as much automation on the floor as you can as it stands right now i don't know on a straight price to price basis if you were going to be able to compete with places where they pay four dollars an hour maybe you are i don't know i definitely know you can be more competitive with automation but trying to compete on a dollar to dollar basis i think is going to be very difficult the other thing that i'm trying to do and this is one of my strategies in order to retain customers through retaining staff is try to focus on the benefits of what we do well so to my employees you know i i may not be able to we're not in aerospace we're not doing you know stuff that goes to the moon i can't pay you guys 45 an hour because the work we do does not command that what i can do is pay a fair living wage and guys deserve that the other thing i can do is try to highlight the benefits of working here we have a very relaxed work environment very independent work environment uh we do not work evenings we do not work weekends we work four days during the week we have a half day on friday we have full benefits and we're in canada so that does not you know include health insurance as you guys have in the states which is a whole different conversation but it's these things and the structure that we try to build into our business here that give guys benefits aside from straight money um does it affect my bottom line yes could i make more money by having you know a night shift running for sure could i help my bottom line by you know working weekends for sure but the problem is that it's gonna burn out my staff even more and if i'm doing that i need to pay them even more you know it's it's not a matter of not wanting to pay people but it's building a business model that keeps people happy keeps their families fed gets them a fair wage and gives them the benefit of working somewhere that they enjoy because guys if you enjoy working somewhere it's a lot more manageable than working somewhere you don't like plain and simple to my customers using that same theory i try to highlight the things we're good at and chase the work that we are really good at at the moment for instance the benefits of working with a local company like myself to local businesses is that you can drop in we can have a conversation you can look at your parts you can come check in on how things are going um we can be very responsive you know i have customers that call me on monday and say they need a part on tuesday i have customers that come in and say hey we have all these parts that are wrecked right now from another supplier i need you to fix them by the weekend you can't do that with offshore work um that kind of work is always going to exist and trying to focus on it for me has been important because that's work that i'm not going to lose to a place with lower wages it allows me to pay my guys well because as you guys know service orders and rough orders can command a higher rate per hour from the shop so essentially guys my whole thought on this is wages are going to go up we have to build ways into our businesses that are going to be able to help that because it's not going to go the other way and essentially guys just be aware be aware of what's going on um try to keep up to date with what other shops around you are doing don't be the last shop to give raises or else your guys will leave make sure you're paying your guys a fair rate because if you're not treating your employees well you're not going to have employees especially in this market lastly guys for you guys who are employees this is a very critical time um make sure you recognize and call out if you feel you were being taken advantage of on your wage or you know in your work environment but make sure guys you are having conversations with your employers some people right now may not know the guy made who runs your shop may not know that the guy down the street is paying ten dollars an hour more because he's been running the shop since the 60s and he just doesn't know what a fair wage is give them the opportunity to do the right thing talk to them and say listen do you know what i enjoy working here down the road i can get this much more our wages need to come up to meet it they may say do you know what you're right let's give you that money um make sure you're having open dialogue and if you're in a place where you can't have open dialogue with your employer in my opinion you shouldn't be there anyway i'm just saying give people the benefit of a doubt have a conversation before you quit but if you were in a situation where you know you're being taken advantage of and not getting your fair wage this is the time to go um this is the time to go find a new job because there's a lot of places hiring and paying a lot of money uh to get you there i saw places when i was down in the states offering five to eight thousand dollars signing bonus just to start as a machinist so this is a seller's market when it comes to your skills so keep in mind guys anyway i'd love to hear your thoughts below on you know how the wage rising wages are affecting you as an employer um as an employee what are your plans you know are you planning to stay where you are are you planning to leave the trade are you planning to bounce around and try to get a bit more money per hour you know all these are very fair things to talk about um you know this is an industry-wide and really business-wide you know the whole business environment in the us and canada event happening so you know having an open dialogue about it and figuring out how we're going to be able to compete with places that aren't here is important so i'd love to hear your thoughts below on this thank you very much for watching guys as always make sure you like and subscribe below if you want to see more videos you take care [Music]

Channel: Practical Machinist

Views: 82,655

Keywords: machine shop, machine shop talk, wages in the metalworking industry, salaries in the metalworking industry, machinist wages, machining wages, machinist salary, how much does a machinist make?, machinist salary gap, Ian Sandusky, Practical Machinist, metalworking industry

Id: KPM0BudDqAA

Length: 13min 43sec (823 seconds)

Published: Wed Oct 27 2021