On May 23, 2023, the Chicago Chapter of The Society of Industrial and Office Realtors (SIOR) hosted its Speaker Series luncheon “State of Chicago’s Manufacturing and Labor Market” at Allegra Banquets in Schiller Park, Illinois.
I was pleased to moderate a candid discussion with commercial real estate leading experts in the manufacturing and supply chain industries including Stephen Olds, founder and president of Exegistics; Patrick Osborne, president of technology and manufacturing association; and Ryan Wiegel, vice president of operations at Wiegel. They discussed the Chicago area’s labor challenges, the outlook for manufacturing business here and technology and automation trends that are making waves.
During the discussion on labor and staffing changes, I inquired about the impact of the great resignation and the decreasing number of people in the workforce. Olds emphasized that wages and employee experience were key factors underlying these trends. He pointed out that approximately 25% of the current labor market consists of baby boomers, which led his company to engage in conversations with other companies regarding succession planning and mentorship programs.
“By implementing such initiatives, we aim to involve older, experienced workers in mentorship programs and facilitate collaboration with younger employees,” Olds said. “These strategies have proven effective in making a noticeable difference, as we observe the training of younger workers to acquire the necessary job skills.”
Osborne underscored the potential for a significant number of manufacturing openings, estimating around two million in the coming years. “Every member of my association in the Chicago area has the same need—for skilled workers to fill these positions. It has forced us as an association to diversify our offerings a little bit more.” He mentioned benefits such as an insured brokerage and a 401K plan and was particularly passionate about their training program, which has been in existence since the 1950s.
The local manufacturers now face the pressure of locating, hiring and training the appropriate candidates. “This collaborative effort between the association working with the manufacturers is essential, given the scarcity of skilled individuals in the job market. It wasn’t like that 10 years ago,” Osborne added.
Osborne also noted that the association has expanded and observed an increase in female representation in the industry, although progress is still needed. They are also actively striving to attract young talent into the manufacturing sector.
A Focus on Culture, Education, and Branding to Attract and Retain Talent
When it comes to talent tracking, Wiegel emphasized that there is no “one-size-fits-all” approach that suits everyone. He shared their efforts in cultivating a strong company culture, emphasizing the importance of a professional work setting in manufacturing buildings. While acknowledging that there may be manufacturing facilities that appear dark and dingy, Wiegel specifically referred to their company’s commitment to maintaining higher standards. “We prioritize well-lit and clean environments, recognizing their significance and have embraced the integration of new technological processes—such as robotics—and remain proactive in updating our practices.” He added that “Robots are not replacing jobs. They are supplementing them.”
Wiegel further discussed the challenge of engaging parents of high school students and encouraging their child’s interest in the manufacturing industry. Despite the fact that many individuals in this field enjoy the benefit of being debt-free, there is still a prevailing misconception among families. “We are trying to educate the families and enlighten them and dispel this notion that success is solely tied to attending college, or that pursuing a career in manufacturing equates to a lack of success…that is a big struggle.”
During the discussion, I inquired about the additional investments companies are making to attract talent. Olds responded by emphasizing the significance of a company’s brand. He noted that prospective employees seek to be part of something greater than themselves. To effectively appeal to talent, companies are investing in rebranding initiatives that highlight their competitive edge and reinforce a positive image. Olds provided an example, citing Apple as the easiest company to recruit for due to its strong brand image.
Retention strategies are also essential, which include offering competitive wages and ensuring absolute clarity regarding the company’s vision, mission and values. Olds said. “It is crucial to devote ample time and effort to communicate and emphasize the brand’s significance to employees,” he explained. “This is especially important for younger workers who desire a sense of purpose and are willing to seek alternative opportunities if their current employer fails to provide it.”
AI Preparation and Challenges: Prioritizing Employee Experience
Shifting the focus of the discussion, I inquired about the panelists’ perspectives on artificial intelligence (AI), how they are preparing for it, and their approach to embracing this technology. Osborne highlighted the challenges posed by the extensive nature of AI integration.
“Integrating AI becomes a challenge at times but we prioritize having a deep understanding of the technology surrounding automation and robots.” He added that they aim to drive success in this area through member seminars, webinars, and partnerships, which will play a vital role in their preparation and adoption of AI.
Olds further emphasized the significance of employee experience, noting the need to leverage AI in enhancing it and changing employees’ perception. He questioned how organizations are utilizing AI to improve employee experience and make them feel that their job is no longer as challenging as before. The key lies in utilizing automation and technology to simplify their tasks and make their job easier.
Industry Faces Space Constraints as Warehouse Capacity Tightens
Continuing the discussion, I inquired about the current trends in terms of companies seeking more or less space. In response, Olds highlighted the tight warehouse capacity in Chicago at present. “Many warehousing clients are facing an excess of inventory due to supply chain issues and overbuying,” he explained. As a result, warehouses are currently operating at a mere 3 or 4% of their total capacity, indicating a significant space constraint. “This tightness in warehouse capacity is unlikely to change in the near future.”
When discussing the challenges of finding suitable space, Wiegel shared his specific requirements for manufacturing facilities, emphasizing the need for a strong foundation with thick concrete and the inclusion of necessary manufacturing amenities. Initially, his company’s plan was to acquire land in the western suburbs, but the onset of the Covid-19 pandemic caused them to change their course. Currently, they are exploring the option of expanding their existing building and combining it with another structure, in addition to seeking a warehouse space. “Despite the shuffling and adjustments, we are determined to make it work,” Wiegel stated. “The days of finding buildings at a low cost are long gone, and it has become challenging to locate suitable properties. Lease prices for available buildings are currently astronomical, posing an additional hurdle in our search for adequate space.”
Overall, the SIOR Speaker Series luncheon provided valuable insights into the current landscape of the manufacturing and supply chain industries highlighting the importance of employee experience, talent attraction and retention strategies, the integration of AI and the challenges posed by limited warehouse capacity. As the industry continues to navigate these challenges, it is evident that a strong focus on culture, education, branding, and adaptability will be crucial for success in the evolving manufacturing landscape.
