Fred Price gropes his way downstairs in the dark, grabs a Danish, and races off to work at 4 a.m. Today is a special day for the 29-year-old North Carolina factory hand. On the job, he will schedule orders as usual for the tiny tool-and-die shop where he doubles as a supervisor when he's not bending metal himself. But at midday, test results are coming in from the state Labor Dept. in Raleigh. These aptitude exams for all 43 workers at Northeast Tool & Manufacturing Co., outside Charlotte, measure everything from math and mechanical skills to leadership and adaptability. And they come with a prescription. Now it appears that Price will have to pull back from the bird hunting a little and spend less time with the kids' go-cart. Like tens of thousands of factory workers across America, Fred Price is going back to school.
Growing up, Price liked to work with his hands more than his head. He would help his father fix the family's old Ford pickup, and once they rigged up a hydraulic log-splitter. In high school, he excelled in shop class but sat toward the back in English and math. These days, in an economy where even factory work increasingly is defined by blips on a computer screen, more schooling is the only road ahead. Northeast Tool, for one, will use the employee tests over the next several months to develop customized training for each worker. Some will enroll at a nearby community college. Others will take remote courses through computers set up at the plant. A few will attend afternoon classes with professors brought right into the mill. Price wants to pursue a two-year degree in metallurgy, even if it means putting in long hours on weekends. "Someday I hope to manage the plant," he says.
Until recently, Americans often divided ranks in high school between shop kids such as Price, who went on to industrial or service work, and college-bound students headed for white-collar or professional jobs. They parted ways at graduation and would move into distinct categories of manual and knowledge workers.
IN THE LOOP. But over the past decade, thinned-out ranks of managers have been equipping factory workers with industrial robots and teaching them to use computer controls to operate massive steel casters and stamp presses. At the same time, managers are funneling reams of information through the computers, bringing employees into the data loop. Workers are trained to watch inventories, to know suppliers and customers, costs and prices. Knowledge that long separated brain workers from hand workers is now available via computer on the factory floor. At Northeast Tool, Rusty Arant, Fred Price's manager, points to a powerful computer he rigged up to a milling machine and says: "I crammed it with memory because I want these guys to be managing the business from the shop floor."
The trend toward high-skills manufacturing began in the mid-1980s with innovative companies such as Corning, Motorola, and Xerox. They replaced rote assembly-line work with an industrial vision that requires skilled and nimble workers to think while they work. In the 1990s, what was once the industrial avant-garde is now mainstream as its practices spread across the manufacturing sector. Large, old-line companies finally are learning the lesson that investments in training boost productivity, often at less cost than capital investments. And as the big guys push suppliers and subcontractors on quality, price, and just-in-time delivery, even little shops such as Northeast Tool see high skills as essential for competition.
The result is an intensifying transformation of the American factory. The ranks of manufacturers that put a majority of their workers through different types of training have doubled or tripled in the past decade, according to surveys of large companies by the University of California's Center for Effective Organizations (chart). At the same time, the share of the country's 19 million factory workers with a year or two of college has jumped to 25% vs. 17% in 1985, according to the Bureau of Labor Statistics. An additional 19% have college diplomas today, up from 16% a decade ago. "There's a real rise in companies' willingness to invest in their workforces," says Pamela J. Tate, president of the Council for Adult & Experiential Learning, a Chicago consulting group.
This investment, though, carries a none-too-subtle message for America's manufacturing workers: hone your skills or risk being left behind. U.S. workers are being pushed to raise their technical savvy to the level of the best Japanese and German workers. At the same time, many are being asked to develop leadership skills and to take a role in managing that's rare in the top-down structures found in Asia and Europe.
Indeed, the old formula of company loyalty, a strong back, and showing up on time no longer guarantees job security, or even a decent paycheck. Today, industrial workers will thrive only if they use their wits and keep adding to their skills base. It's a rich irony: Millions of Americans who headed for the factory because they didn't like school, among other reasons, are now faced with a career-long dose gf it. "It isn't whether you can hoist 100-pound sacks anymore," says Anthony Carnevale, a training expert at Educational Testing Service in Princeton, N.J. "Most of the work is mental."
Demanding as it is, the high-skills factory represents blue-collar America's best hope for retaining high wages in a world teeming with workers. Across the economy, in manufacturing and services alike, there has been a surge in demand for higher skills as employers reorganize work around new technologies and human capital-investments. Recently, the pressure for more capable workers has even begun to generate skills shortages in pockets around the country.
SKILLS GAP. But many companies still need to catch up: Only 10% to 20% of large companies have adopted high-performance techniques, surveys show, including a third of large manufacturers, according to the National Association of Manufacturers. Others are actually going in the opposite direction. In industries as diverse as apparel making, telemarketing, and chicken processing, many employers continue to slice pay, avoid unions, and outsource work to lower-wage subcontractors. These trends have led to a growing inequality along skill and education lines, similar to the one cleaving society at large. So far, the net result has weighed more heavily downward, even in manufacturing, where average pay lagged inflation by 3% from 1989 to 1995, according to the BLS.
In this cutthroat environment, an individual worker's best chance of getting ahead now lies in advancing his or her skills whenever the opportunity arises. And plenty of workers are jumping at the chance. From downsized defense-industry hands in Long Beach, Calif., to white-smocked pharmaceutical workers in the Delaware Valley, they are studying for new factory jobs.
This even includes veterans in old-line smokestack companies. Take Adlai John Warner, 44, who put in 25 years at Acme Metals Inc., a specialty steelmaker outside Chicago. Warner always enjoyed learning and was quick with facts--quick enough to be given top security clearance as a U.S. Marine intelligence specialist in Vietnam. He had planned to attend college when he returned to Chicago after the war. Instead, he started a family and wound up making good money as a laborer at Acme.
NO-BRAINER. Warner found the work tedious. Acme, like most other manufacturers, was organized for a low-skilled force and used Warner's body but not much of his brain. Even after he jumped a few rungs on the job ladder by apprenticing as a pipe fitter, the work required more endurance than thought. Warner describes long empty days of sitting around, waiting for pipe-fitting jobs, making time and a half with gobs of overtime. Despite pay that eventually reached $60,000 a year, the boredom prompted Warner to pursue a bachelor's degree in psychology at night at Chicago State University in the hopes of moving into human resources. He got his BA in 1978, but it never led anywhere.
Meanwhile, the world was closing in on Acme. Low-cost minimills and foreign mills threatened its niche in super-high-carbon steel, which is used in knife blades, tools, and critical machine parts. Its old equipment was falling apart. In 1994, management launched a $400 million redesign of the mill with a high-tech German caster--an audacious move for a $560 million company. But operation of the finicky caster, which converts molten steel into a two-inch-thick band, is fast and dangerous. If workers can't make quick decisions, they risk a "breakout," when hot liquid steel spills from the mold all over the machinery. To date, only minimill leader Nucor Corp. and its offspring, Steel Dynamics Inc., with skilled and flexible workforces, have made money with the new technology.
In effect, Acme is betting the company on its workers' brains--and Warner has leaped at the opportunity. Last year, the company brought in scads of consultants to test those who volunteered among its 1,100 unionized ranks. They used an exhaustive battery of exams to look for reading, math, technical, and communication skills. Some workers weren't interested and took early retirement. About 750 were chosen to create an entirely new, team-oriented system. Warner qualified for an advanced job as a maintenance technician and last September promptly hit the books.
Acme set up classroom trailers next to the mill and brought in teachers from Detroit, Georgia, even Germany. The company paid Warner and 130 others to spend nine months, full-time, learning everything from metallurgy, math, and computers to a piece-by-piece study of the new machinery. The total cost to upgrade the workforce, including employee salaries, came to some $8 million, or just 2% of the amount Acme spent on the new caster. "We're being exposed to things we've never been exposed to before," says Warner appreciatively.
NEW STANDARDS. Warner and his colleagues also are involved in reinventing Acme's entire work system. In the spring, he and five other workers were selected to sit down with managers and consultants for weeks on end at a nearby Ramada Inn. There, they hung poster paper all over the walls and blackboards, marking up a scheme for the new workplace, from devising a pay system pegged to profits to redefining supervisors' roles. "The people working there have to make the decisions," says Anthony C. Capito, Acme's vice-president for steel production. The new system, including the training received by Warner and his colleagues, will be put to the test when the new caster is brought on line this fall.
Workers at small manufacturers are facing similar tests. In 1985, when the then 18-year-old Fred Price landed his job at Northeast Tool, the job shop sold custom-made metal pieces primarily to local Carolina customers. Today, as regional markets meld into national and global ones, Northeast must boost quality enough to land contracts from the likes of BMW and Siemens. These companies want metal fashioned to precise tolerances that only statistical quality-control methods can achieve. Many demand that suppliers be certified to tough European standards, a goal Northeast is pursuing.
All this requires more training than Price, a high school graduate, had gained through work experience. For him, the payoff comes in getting a shot at advancement and improving his $15-an-hour pay. From manager Arant's perspective, there's no choice at all. Arant plans to use his higher-skilled workforce to bid for more lucrative business and expand. If he didn't, Northeast could fall behind, as Arant thinks some rivals may do. "They'll run the machines as long as they can and then close," he predicts.
OPPORTUNITY COSTS. Until recently, workers such as Price probably would have been out of luck. Northeast, a flyspeck of a company with annual revenues of less than $5 million, simply wouldn't have had the wherewithal to launch its ambitious training program. And many companies, large and small, were loath to invest too much in workers, only to lose them later. Now, though, more companies feel they can't afford not to train. And Northeast, like other small companies, has been able to tap into a growing network of local and state training initiatives. Often, these are cobbled together with regional or state development funds and community-college training programs.
As a result, Northeast is spending just $35,000 for its entire training plan. North Carolina has set up programs to assist small companies, helped out with staff advice, software, and access to the nearby community college. Such state programs are growing fast. "If we don't invest in higher skills, we relegate ourselves to low-wage jobs," says Eric Butler, president of Bay States Skills Corp., which coordinates training programs in Boston.
The education message rings so loudly today that some job-seekers actually target high-performance employers just to get the schooling. In fact, in the post-cold-war era, such companies are replacing the military as a blue-collar training ground as a way to get some college education, or its equivalent, inexpensively. Many companies are willing to sink money into training if they feel confident the employee has the profile of a lifelong learner. "We look for people who want change, who don't see it as troublesome, but as an opportunity," says David P. Jones, an official of Aon Consulting, a Chicago firm that assists manufacturers in testing and hiring.
Rachelle Cook, 36, fits that description. Cook worked at a Pittsburgh nursing home for six years while she pursued an associate degree at Westmoreland County Community College. But to get anywhere in nursing, she says, requires at least a four-year degree, and the mother of two was having enough trouble freeing up study time after work. So in 1992, when a friend told her that Medrad Inc., a Pittsburgh medical-equipment maker, invested in its workers, she applied for a job.
Medrad didn't seem at all promising at first. Cook found herself working as a temp, up all night assembling syringes, and making less than $10 per hour. "Everyone could see I was miserable," she recalls. "Working that shift, I had no life." But she had good communications skills and loads of ambition. She applied for every job she saw posted.
GUNG HO. Fortunately, Medrad was instituting teams in its 250-employee factory and giving workers more say in how their jobs are done. Cook was part of a pilot project that offered courses in conflict resolution, problem solving, and customer and supplier relations. A few times, the team stayed up all night debating how to reorganize manufacturing and quality-control systems.
Cook excelled, primarily because of a gung ho attitude and her sense of teamwork. The result: Last year, company managers selected her for a career development program. Now, she fills in as a substitute to learn different jobs and takes a slew of in-house computer courses. Once a week, she commutes into downtown Pittsburgh for a Dale Carnegie course on public speaking. When she's done in a year or two, Medrad will place her in a higher-paying job that best uses her abilities--possibly as a trainer or a customer service supervisor.
Unfortunately, plenty of the most flexible factory workers wind up running in place. Or worse, they take on new responsibilities and get a pay cut for their trouble. That's Phil Waccary's problem. In 1992, defense cuts prompted Allied Signal Inc. to shutter the aerospace plant in Torrance, Calif., where he had earned $19 an hour as a supervisor. Waccary found part-time jobs driving freight trucks and loading planes for a United Parcel Service Inc. subcontractor. Next came a full-time post in a shipping and receiving department. But none paid close to what he had made building medical instruments for Hewlett-Packard, F-18 fighters for Northrop Grumman, and aircraft parts for Allied.
So Waccary took a monthlong federally funded course that teaches job-seekers how to write resumes and start businesses. But a host of job interviews led to nothing with much promise. He suspected that part of the problem may have been his age, 57. Then, finally, in 1994, Waccary won a spot on the graveyard shift at Kinetic Parts Manufacturing Inc., a high-tech auto parts factory in Harbor City.
The plant was opened that year by Autospecialty, a privately owned, $75 million importer of brake parts. Autospecialty had gone into manufacturing after industry consolidation left it chronically short of critical parts. The company's founders traversed the globe to study brake manufacturing and designed a high-tech plant based on heavy training and job rotation.
"STARTING OVER." But while Kinetic is high-performance, it's not exactly high-wage. It set up shop in the Southern California town and hired lots of laid-off defense and aerospace workers such as Waccary for $9 an hour. By now, Waccary has gone through the same kind of extensive training that has helped Price, Warner, and Cook. Armed with state funds, Kinetic paid him and other new hires to put in a month of eight-hour days learning basic math, algebra, and blueprint reading with instructors from nearby El Camino College.
The company also has given Waccary and his fellow employees doses of upgrade training on the job, including more math, supervisory skills, office automation, and computer-aided design. Now, Kinetic is setting up classes for total quality management and statistical process control.
But fierce competition from the Chinese has left Kinetic barely profitable so far. And even though recent U.S. trade threats against China for dumping brake parts has the company mulling a major expansion, Waccary is not likely ever to come close to his old wage. So far, he has received only a 50 cents-an-hour raise for the training he has gone through. "No one in this building can take pride in their salaries," concedes Kinetic plant manager Stephen J. Ruiz. Says Waccary: "I feel like I'm starting over again. But I'm not sure I have any other choice."
The same could be said for many other blue-collar Americans. To earn a higher paycheck or save their jobs from rivals abroad, U.S. factory workers are under the gun to add value. This relentless atmosphere is far less forgiving than the seniority-based assembly line it replaces. But talk to these men and women about their work, their class load, the software they have to reconfigure, or the inventory that should show up in, oh, three minutes, and many seem happy for the chance to stake out a new path. Most realize that they're helping to carry U.S. industry. This time, though, it's not on their shoulders, but with their heads.