Low Cost Labor vs Low Labor Cost

My Sticky Note today comes from recent conversations and a popular narrative of the trade press and a national message repeated often by politicians and others.  The complaint has been, “we can’t find employees” or “we can’t find the right kind of employee” etc.  Although retired, I’m still very active in our industry and have had these conversations first hand. When asked to consult or just offer an option I often ask my host to back up and allow us a moment to discuss their real issue, that is, “why are we not avoiding this labor intensive operation altogether?”

A recent conversation had to do with fork lift drivers and all the issues associated with their use; safety, insurance, maintenance, and qualified/certified drivers. My host was lamenting on their recent safety problems and why he couldn’t get a fork lift driver who could navigate their aisles and racks with any skill at all.  The area he was concerned with was back in the panel saw department and the handling of the raw materials in/out of the saw.   “Why just last week there was a close call involving a stack of flake-board and the operator!” he lamented. “It’s impossible!” I let him vent for awhile and I was certainly concerned, however the conversation took a different turn.

Most meetings I have now as a consultant involve a discussion of cost.  To be specific — labor cost.  It’s one thing to find good employees, it’s another thing to afford the rising costs of wages and benefits. Additionally there seems to be an issue of finding suitable candidates that can even pass the employment screening. Things are going to have to change, this “replacement” mentality of plugging in employees where the job has been vacated with just another body is hopelessly out of sync with the direction of our nation’s competitiveness. Low Cost Labor isn’t the answer. We can never compete on a national scale or, heaven forbid, an international scale by trying to “out cheap” those areas and nations where labor is just an extension of “the way we do things here.” It’s time to consider how “Low Labor Cost” will work for you.

These two terms appear to be similar other than they focus on two interiorly different strategies.  Let’s get back to the fork lift driver problem;  my friend was perplexed as to how he was going to be able to afford another fork lift driver after a disappointing experience for the third time in a year.  And so I asked, “why not do away with the fork lift in this area all together?” “It not only would solve the problem of finding a replacement but would be safer and less expensive in the long run considering your other costs and at worst, an accident” “Not possible” said my friend.  “I need that forklift to unload the truck, position the load in the racks, pull out a load when needed, replace the extras, and take away the scrap” I agreed that a forklift was useful in the shipping and receiving area but beyond that I could not support his opinion that he needed that device once his panels entered the production environment.

The Low Labor Cost in this example was the implementation of a simple storage and retrieval system the  that would receive the stacks of flake-board (and other materials) from the receiving department and stack his panels automatically into a caged area for future use, as needed, by the saw operators. Partial sheets are also reintroduced as needed. Problem solved; no forklift and exceptional control of his inventory. In addition; no additional forklift (and driver) needed to support the panel saw department. Scrap is introduced into a grinder and sent away via the existing dust extraction system.

My Sticky Note today is to avoid the trap of a replacement strategy and embrace the example of our industry as they strive to find their Low Labor Cost solution.

If I can be of any help or you would like to debate my Sticky Note, please contact me at swaltman0026@gmail.com