The Waconia Chamber of Commerce marked “National Manufacturing Month” recently, with its October business luncheon held at Cabinetworks Group, the second largest cabinet manufacturer in the nation.
Cabinetworks, formerly Medallion Cabinetry, has 250,000 square feet of manufacturing space in its two Waconia facilities and employs more than 560 people – 460 in plant and another 100 in the office. Nationally, Cabinetworks has 19 locations around the country with 8,000 employees, providing diverse lines of cabinetry to retail stores and home builders.
Bob Johns, Cabinetworks director of product marketing/engineering, and Jason Tollefsrud, finance director, shared those facts and other information about the growing cabinet manufacturer, and joined a panel of local business leaders to discuss the challenges facing manufacturing and the trades.
Other panel participants included Cathy Nielsen, owner of CD Products; Bill Miller, owner of J. Carver Distillery; Doug Johnson, owner of Midwest Expanded Metal; Beth Whittaker, head of human resources with Sackett-Waconia; and Chad Almjeld, owner of Trucker Logistics.
Supply chain issues, increasing costs of doing business and hiring dominated the conversation.
The lingering effects of COVID-19 mitigation strategies essentially reduced the production of goods and services, and now pent-up demand has led to shortages of materials like wood, metals, almost everything, panelists said. Another factor in the supply chain is a growing number of workers quitting jobs key to keeping things running smoothly.
There are plenty of trucks to move goods, but not enough people to drive or load and unload them, Almjeld reported. Meanwhile, shipping ports are packed and the price of shipping containers has risen from $4,000 each to $16,000 apiece.
Supply chain issues are particularly challenging for small operations like J. Carver that don’t have huge buying volumes, Miller reported.
In addition to supply chain challenges and increasing cost of materials, employers are facing unprecedented hiring challenges as they seek to attract and retain workers in short supply or reluctant to come back after COVID. Labor shortages persisted even before the pandemic, and the fact is “many workers won’t be coming back,” Miller said. He noted that many baby boomers are reaching retirement age, while others who had thought about retiring earlier, but were deterred when the financial crisis of 2008 affected their retirement savings plans have seen a rebound with market recovery and are now poised to leave the workforce. Others are cautious about returning or have discovered other opportunities.
Meanwhile, some lower-end-of-the-scale workers have moved into middle level jobs leaving more vacancies at lower-level positions. So, in many service industries like restaurants, customers may have to deal with longer wait times and generally less service at a higher price, Miller noted.
The labor challenges mean employers “are trying to do everything we can to be creative in hiring and retention,” Whittaker said. That includes wage increases and retention and signing incentives, which also drives up employer costs, increases costs to customers, and ultimately has led to inflationary pressures on the overall economy on a magnitude greater than what anyone has seen in many years.
Ironically, it might take an economic downturn to get workers back, Almjeld noted.
Conditions are likely to persist well into next year, Johns speculated, maybe longer.