Tài liệu LOS ANGELES COUNTY WORKFORCE PREPARATION AND ECONOMIC DEVELOPMENT COLLABORATIVEMetal ManufacturingIn Los Angeles CountyPart I: An Industry Overview July 1999COMMUNITY DEVELOPMENT TECHNOLOGIES CENTER doc

About This Report This report is produced by the Community Development Technologies Center, a regional nonprofit organization that provides training, applied research and technical assis

LOS ANGELES COUNTY WORKFORCE PREPARATION

In Los Angeles County

C OMMUNITY D EVELOPMENT T ECHNOLOGIES C ENTERPart I: An Industry Overview

July 1999

About This Report

This report is produced by the Community Development Technologies Center, a regional nonprofit organization that provides training, applied research and technical assistance services in community economic development CDTech is project director for the Los Angeles Regional Workforce Preparation and Economic Development Collaborative, a three-year pilot project to help establish an integrated workforce development system for the county

The work of the Collaborative is led by a Joint Management Committee made up of representatives from: the California Workers Assistance Program, AFL-CIO, the Department of Public Social Services for Los Angeles County, the Employment Development Department, Los Angeles Area Chamber of Commerce, Los Angeles County Office of Education, Los Angeles Economic Development Corporation, Los Angeles/Orange Counties Community Colleges Consortium, and the South Bay Private Industry Council

The contents of this report are solely the responsibility of CDTech For additional information about this report and the project itself, please call Linda J Wong at (213) 763-2520, x 235

THE METAL MANUFACTURING INDUSTRY

IN LOS ANGELES COUNTY

AN OVERVIEW

Introduction

This overview of the Los Angeles metalworking industry was commissioned by the Los Angeles County Workforce Preparation and Economic Development Collaborative (here after known as the “Collaborative”) The Collaborative is one of six regional projects established under California’s Regional Workforce Preparation and Economic Development Act of 1997 The purpose of the legislation is to facilitate the implementation of a seamless, integrated workforce development system by strengthening existing partnerships in economic development, employment and training, welfare reform and school reform The goal is to improve the content and delivery of education and workforce development services by aligning these programs with the training needs of existing and emerging industries

The Los Angeles Collaborative is addressing this particular goal by developing two products:

• An Internet search engine (http://www.laworkforce.org) that will connect different information systems, so that job seekers, employers, education/training providers and others can easily access information about jobs, career ladders, and education/training resources; and

• A “skills gap” profile of key occupations in five industries— apparel, food

processing, health services, high tech/electronics and metalwork— so that identified gaps in skill sets and education curricula can be closed through industry-led efforts

This report provides an overview of the metal manufacturing industry in Los Angeles, the

“demand” side of the equation It examines the characteristics of the industry— its size, the firms’ ownership structure and product niches and any geographic clustering of firms

in the region A subsequent report will address their recruitment, hiring, training and promotion practices, especially among smaller companies

Additional reports will focus on the “supply” side of the equation— the education and training infrastructure for this industry A comprehensive inventory will be developed of metal manufacturing technology programs offered by high schools, regional occupational programs, adult education schools, community colleges and others A narrative report will accompany this inventory, explaining the major findings from the research and field interviews Lastly, a report on best training practices will be prepared This report will highlight the characteristics of effective programs that are successful in educating, training and placing students in jobs in the industry

Definition of Metalworking

Manufacturing in general is defined by the Standard Industrial Classification (SIC)

new products Metal work is categorized under durable manufacturing and encompasses the following SIC’s:

pig or scrap Examples include firms which manufacture castings, sheets, barbed and twisted wires; firms that hot roll iron and steel into basic shapes, such as sheets, strips, rods, bars and tubing

hand tools, cutlery, general hardware; firms that do electroplating, anodizing and finishing of metal products; manufacturers that produce stovepipes, awnings, eaves, etc

and garden machinery, cranes, industrial trucks and tractors, industrial machinery, computer and office equipment, etc

engines and parts; firms that produce or engage

in research and development of guided missiles, space vehicles, propulsion units and related parts

The core of the industry is made up of firms in primary metals, fabricated metal products and industrial/commercial machinery However, some economists also include Transportation Equipment, SIC 37, in the metal work category, because this segment has manufacturing related to aircraft and aerospace equipment

While the SIC codes are useful in describing various metalworking processes, they actually understate the complexity of the industry Metalworking is very diverse in terms

of products, processes and markets Firms offer a wide range of goods and services, from

1

The Standard Industrial Classification is the statistical classification standard for all establishment-based Federal economic statistics categorized by industry It covers all economic activities and defines industries

in accordance with the composition and structure of the economy The Office of Management and Budget

is responsible for the publication of the Standard Industrial Classification Reference Guide

raw metal processing to intermediate metal work (for example, sheet metal and metal for building structures) to finished goods

The smallest segment of the industry is primary metals refining This subsector consists

of firms engaged in raw metal processing such as foundries The larger segments are fabricated metals and industrial/commercial machinery Companies in these categories manufacture components or finished products Also included are firms which provide services to the industry, such as heat treating, plating or finishing They are not true manufacturers of a product, but rather, members of the supplier network If the aircraft and aerospace segments are included in metal work, they would represent the largest subsectors in terms of total employment

Characteristics of the Industry in Los Angeles County

Employment gains since the recession When the recession bottomed out around 1995,

manufacturing in Los Angeles began a slow, steady recovery For metalworking, the rebound occurred with:

Fabricated metal products From an average of 66,700 jobs in 1988, this

subsector lost nearly 21,000 jobs by 1995, a decline of 31 percent However, there was a

Industrial machinery This segment of metalworking declined from a high of

61,100 jobs in 1988 to a low of 46,300 jobs in 1995 However, it, too, experienced a

Aircraft and related parts This segment was the hardest hit during the

recession From a peak of 123,300 jobs in 1990, employment plunged to a low of 62,400

in 1995, representing a loss of over half of the workforce However, this subsector

Using 1995 as the base-line year for the start of the economic recovery, metal

Firm size and ownership A 1995 RLA analysis of 50 metalwork firms in the “neglected

fragmented The typical firm is a family-owned “job shop” that has been in business for

30 years It is small, with fewer than 50 employees, and performs custom work for larger companies Subsequent research showed that small companies dominate fabricated

The analysis was conducted by Rebuild LA as part of its economic development strategy to form

manufacturing networks “Neglected” areas are neighborhoods in which the poverty rates exceed 20 percent

metals and industrial machinery manufacturing Nearly 90 percent of the firms in these subsectors employ fewer than 50 people An overview of the industry, based on the number of firms and employees, is provided in the chart, “Metalwork Industry, Los Angeles County,” which is found in the Appendix

At present, the industry is experiencing the competing pressures of consolidation and fragmentation At the top tier of prime contractors, a series of mega-mergers has shrunk the number of major industry players to a handful Driving these consolidations is the need to be commercially and globally competitive To achieve operational efficiencies, these firms are finding that size and scale are the most expedient ways to reposition

simultaneous fragmentation, or “externalization” of functions, at the bottom To reduce costs and streamline operations, more companies are transferring specific operations to outside suppliers What the larger firms keep in-house are the technical and product development capabilities, while the smaller companies do the actual metalworking Unfortunately, this means that subcontractors are vulnerable to industry downturns and increasing demands from their customers, who can outsource to other suppliers,

The great majority of small metalworking companies are locally owned This is not surprising in view of the family-owned nature of the businesses Many firm owners grew

up in Los Angeles and prefer to stay in the region Moreover, their dependence on a local customer base and their heavy investment in equipment and technology make relocation out of the region cost-prohibitive However, even though job shop owners and suppliers live in the region, most influential corporate decision-makers are no longer based in

With the globalization of this industry, manufacturing subcontracts will go to those regions that have the most productive workforces; that is, the ones that have the best combination of skilled workers, technology and effective management Historically, the companies most capable of training and upgrading the skills of their workforce were the large prime contractors like Hughes, Lockheed, Northrop and McDonnell Douglas They had the internal capacity to develop and sustain workforce development programs for existing employees, new hires or potential job applicants However, with small firms dominating the landscape of this industry, new and existing training resources must be directed to these smaller companies Without a stronger training infrastructure, small firms will face tremendous challenges as platform segments decline and the profile of the industry becomes increasingly high tech

Geographic Concentrations

The largest geographic concentrations of the industry are found in the southeastern portion of the county, the South Bay, and the city of Los Angeles (mainly in South Central Los Angeles) (See Appendix for maps of the different segments of metal working in Los Angeles County.) A detailed analysis of the character of the industry, broken down by region, is provided in this following section

Antelope Valley This region10 was hard-hit by the downsizing of the defense industry

In a 1997 telephone survey of local residents, over 12 percent of the respondents were former aerospace workers who had separated involuntarily from their companies Out of this group, nearly half had left aerospace employment before 1990 Another 26 percent left between 1990 and 1994; and 19 percent left in 1997 Nearly 45 percent of the aerospace respondents said they left as a result of industry lay-offs However, recent aerospace industry data shows a leveling off since 1994 and modest employment gains

now aerospace or aircraft companies:

The Antelope Valley is currently competing for two major projects, which could generate several thousand new jobs and millions of dollars into the Southern California economy The first is the Joint Strike Fighter, which is the next-generation multi-role aircraft being developed by the U.S Department of Defense for the armed forces This is a high performance stealth weapon system with multiple variants for different users It is expected to be the last new U.S military aircraft to enter major serial production for the

which will conclude in 2001 Boeing and Lockheed Martin are the two competing

The second possible project is VentureStar, a space vehicle representing the generation X-33 Lockheed Martin is developing a prototype at its Palmdale Skunk Works facility If the project stays in Palmdale, it could generate about 2,500 direct jobs for the launch and manufacturing facilities Additional jobs would be created for the payload processing facility, engine manufacturing, communications facilities, service companies providing fuel and other support, military support personnel and the tourism and hospitality industries However, Lockheed Martin has not yet decided where the

10

Antelope Valley encompasses the Mojave Desert region, which includes Kern and Los Angeles counties This region extends from Acton to Ridgecrest, and from the San Bernardino county line on the east to Interstate 5 on the west

VentureStar will be built Moreover, Palmdale is only one of three possible California

City of Los Angeles Within the boundaries of the federal Empowerment Zone (here

22,000 people Metal work is the second largest manufacturing sector in the EZ, next to apparel production Metal work represents about 20 percent of all manufacturing and 15 percent of the manufacturing employment base in the EZ By far the largest segment of metal work is fabricated metal products, which employs half of the workforce in the industry Next is industrial machinery manufacturing, which employs another 33

San Fernando Valley/Santa Clarita Valley Recent studies17 about the region18 do not break out manufacturing into subsectors At best, a distinction is drawn between technology-based manufacturing and general manufacturing “Technology-based” manufacturing includes aerospace and defense-related manufacturing This segment represents the second largest employer in the region, despite the job losses from the recession “General manufacturing” refers to all other kinds of manufacturing This sector also declined during the recession However, it remains the Valley’s largest provider of lower-skilled jobs

finished products, SIC 34, have the largest number of employees in sheet metal work, followed by plumbing fixtures and fittings; hardware such as bolts, nuts, screws, rivets and washers; and services such as stamping, electroplating and coating For SIC 35, industrial machinery, companies are concentrated in industrial and commercial machinery manufacturing of all types, including computer peripheral equipment, machine tools, industrial molds and ball bearings

establishments in the metal work industry Over half are engaged in the manufacturing of industrial machinery or component parts, and another 38 percent are in fabricated metal products All together, these 606 firms employ nearly 10,000 residents The largest concentration of metal work firms is found in Pacoima, Sun Valley and North Hollywood

San Gabriel Valley A 1998 study of the San Gabriel Valley industrial clusters22

revealed that metalwork companies employed about 22,600 people in the region The largest component of the cluster was found in industrial machinery, with over 8,600 jobs, followed by: fabricated metal products, with over 6,500 employees; primary metals, with nearly 4,000 employees; metal services with just over 2,000 employees; metal work machinery and tools with 1,100 employees; and wholesale with several hundred employees

There is a definite geographic clustering of firms in the San Gabriel Valley Industrial machinery manufacturers are mainly located in the northern part of the San Gabriel Valley along the 210 freeway; this area includes the cities of Pasadena, Monrovia, Azusa and Glendora Companies making components are found in the southern part of the Valley, with the largest concentration in the City of Industry-La Puente, El Monte, South

El Monte and Montebello Metalworking is experiencing the greatest growth in the

While metalworking is a significant segment of the region’s economy, residents seem to

be ambivalent about the merits of attracting more manufacturing firms into the Valley In

a recent public opinion poll, 43 percent of the polled respondents agreed that there should

be efforts made to attract new manufacturing businesses, with another 6 percent strongly agreeing with this statement On the other side, 38 percent disagreed and another 5

San Gabriel Valley First Annual Survey & Report, San Gabriel Valley Economic Partnership and the

Rose Institute of State and Local Government, Claremont McKenna College, January 1999

South Bay This region25 has historically had a large concentration of aerospace and defense-oriented companies As a result, it was especially hard hit by the defense budget cutbacks in the past decade Between 1987 and 1996, the total payroll for the South Bay aerospace industry declined from $4.65 billion to $2.09 billion At the same time, business taxes generated directly by aerospace declined from $109 million in 1987 to

With a bottoming out of the recession in the second half of the 90’s, South Bay business leaders undertook an in-depth analysis of the region’s industrial base In assessing the future of the region, this analysis concluded that three anchor industries should be targeted for business attraction and retention programs: high technology, transportation

computers and satellite communications In addition to these anchor industries, “linked” industries were also recommended for retention and attraction; these include metals and industrial machinery Firms in these related industries are geographically clustered Two out of three South Bay manufacturing workers are employed in just four cities: El Segundo, Torrance, Hawthorne and Carson

Southeast Los Angeles County This region28 contains the historic industrial core of the county It was the home for traditional “smokestack” manufacturing, such as steel and tire production, until these firms disappeared in the late 70’s Then the region was pummeled again by the decline in aerospace and defense spending From 1988 to 1995,

manufacturing was concentrated in this part of the county, it has had an especially difficult time climbing out of the recession

To facilitate a coordinated response to the downturn, the Gateway Cities Council of Governments was formed in 1996 This body connected together 27 cities and the County A nonprofit economic development organization, the Gateway Cities Partnership, was formed to mobilize and manage short- and long-term economic development initiatives Its responsibilities include industrial cluster support, workforce transition, market development, site reuse and technology innovation

25

The South Bay is bounded by the I-105 freeway on the north and the I-110 freeway to the east The Pacific Ocean is the western and southern boundary This region covers 16 incorporated cities, including Inglewood, and stretches of unincorporated county territory between Inglewood and Hawthorne and around Carson

26

South Bay Economic Adjustment Strategy, Executive Summary, Economic Roundtable, Beltramo and

Associates, Kosmont & Associates, UCLA and USC Departments of Geography, April 1998 See also

1997/98 South Bay Economic Profile & Forecast, Los Angeles Economic Development Corporation,

29

Southeast Los Angeles County Defense Adjustment Strategy, DRI/McGraw Hill, 1997

The Southeast Los Angeles County Defense Adjustment Strategy report identified metals and aerospace/defense as industry clusters which represent the region’s historic strengths However, these industries also require intensive support because recovery has been slower for firms in these sectors In a survey of durable manufacturing firms, which included aerospace and defense subcontractors, workforce development was ranked as one of the top three priorities Over half of the responding firms reported problems in recruiting qualified job applicants with needed skills Among high tech companies, a similar survey identified a need for the upgrading of skills for current employees

As the industry continues to undergo restructuring, however, opportunities exist to build a support system that will help it weather the turmoil in the global marketplace One of these is the development of a coordinated, flexible workforce training system that can meet the industry’s short-term training priorities, while addressing the longer term need

to grow new talent

To recruit new blood into this sector, industry leadership will have to overcome the negative image of manufacturing as dirty, monotonous assembly line work This should not be a difficult undertaking, however, since metalworking has evolved into sophisticated, state-of-the-art operations with the advent of new technologies

Moreover, it offers a flexible career path that provides many options for job seekers One can start in traditional blue collar jobs and work up to the skilled trades, such as tool, die and mold-making Or one can start in machining and learn computer numerical control processes With continuing education, a person can become a manufacturing technician, which, in turn, can lead to an engineering career If an individual has entrepreneurial ambitions, he or she can move into a business pathway This diversity of career options and the high salaries associated with blue and white collar jobs help to make metalworking a very attractive industry Subsequent reports commissioned by the Collaborative will examine these issues more closely

REFERENCES General

A.T Kearney, Los Angeles Regional Technology Alliance and Los Angeles Economic

Development Corporation, Beyond Consolidation: A Study of the Continuing

Transformation of Aerospace and Defense in Southern California (1998)

Los Angeles Economic Development Corporation, 1998-99 Economic Forecast and

Industry Outlook (July 1998)

Los Angeles Economic Development Corporation, Manufacturing in Los Angeles (June

1999)

Southern California Association of Governments, 1999-2000 Regional Economic

Forecast for Southern California

Antelope Valley

Alfred Gobar Associates, 1997 Antelope Valley Labor Base Analysis (October 1997) Antelope Valley Board of Trade, 1999 Antelope Valley Business Outlook

Los Angeles City

Community Development Technologies Center, Total Manufacturing in the

Supplemental Empowerment Zone (May 1997)

UCLA School of Public Policy and Social Research/Advanced Policy Institute, The City

of Los Angeles/UCLA Industry Cluster Initiative Project (1998)

San Fernando Valley

Community Development Technologies Center, Northeast San Fernando Valley Sector

Employment Report (November 1998)

San Fernando Valley Economic Research Center, Report of Findings on the San

Fernando Valley Economy (1998)

SRI International, Valley Economic Development Center and Economics Research

Associates, Partnerships for Progress, An Economic Strategy for the San Fernando

Valley (1998)

San Gabriel Valley

Applied Development Economics, San Gabriel Valley Industrial Cluster Study (Revised)

(June 1998)

Los Angeles Economic Development Corporation, San Gabriel Valley 1998-99

Economic Overview and Forecast (1998)

1998 San Gabriel Valley Resource Guide (BenchMark Publishing Company)

San Gabriel Valley Economic Partnership, Rose Institute of State and Local Government,

First Annual Survey of the San Gabriel Valley (January 1999)

South Bay

Los Angeles Economic Development Corporation, 1997/98 South Bay Economic Profile

& Forecast (October 1997)

Economic Roundtable, Beltramo and Associates, Kosmont & Associates, UCLA and

USC Departments of Geography, South Bay Economic Adjustment Strategy, Executive

Summary (April 1998)

South Bay Economic Development Partnership, 1998 South Bay Patterns for Change

South Bay Economic Development Partnership, 1998 Survey of South Bay Businesses

(September 1998)

Southeast Los Angeles County

DRI/ McGraw Hill, et Al., Southeast Los Angeles County Defense Adjustment Strategy

(1997)

APPENDIX

1 Table: Metalwork Industry, Los Angeles County

2 Map: Los Angeles County Metalwork Industry

3 Map: Los Angeles County Primary Metals Subsector

4 Map: Los Angeles County Fabricated Metal Products Subsector

5 Map: Los Angeles County Industrial Machinery Subsector

6 Map: Los Angeles County Aircraft and Aerospace Subsector

Metalwork Industry Los Angeles County

SIC Description

Size of Company (Number of Employees)

Number of Companies

Total Number of Employees Annual Sales

Response Rate for Annual Sales

SIC 34 subtotal 2411 55875 $9,571,620,629

SIC 37 subtotal 348 107738 $13,746,816,016

Source: Dun and Bradstreet (June-July 1999)

Data believed reliable but accuracy is not gauranteed.

Data is self-reported by companies and may not be complete.

All information based on companies' primary and/or secondary SICs.

*Includes SICs 3721, 3724, 3728, 3761, 3764, and 3769

LOS ANGELES COUNTY WORKFORCE PREPARATION

In Los Angeles County

C OMMUNITY D EVELOPMENT T ECHNOLOGIES C ENTERPart II: Employer Personnel Practices

February 2000

About This Report

This report is produced by the Community Development Technologies Center, a regional nonprofit organization that provides training, applied research and technical assistance services in community economic development CDTech is project director for the Los Angeles Regional Workforce Preparation and Economic Development Collaborative, a three-year pilot project to help establish an integrated workforce development system for the county

The work of the Collaborative is led by a Joint Management Committee made up of representatives from: the California Workers Assistance Program, AFL-CIO, the Department of Public Social Services for Los Angeles County, the Employment Development Department, Los Angeles Area Chamber of Commerce, Los Angeles County Office of Education, Los Angeles Economic Development Corporation, Los Angeles/Orange Counties Community Colleges Consortium, and the South Bay Private Industry Council

The contents of this report are solely the responsibility of CDTech For additional information about this report and the project itself, please call Linda J Wong at (213) 763-2520, x 235

THE METAL MANUFACTURING INDUSTRY

IN LOS ANGELES COUNTY EMPLOYER PERSONNEL PRACTICES

Introduction

This report was commissioned by the Los Angeles Regional Workforce Preparation and Economic Development Collaborative (here after known as the “Collaborative”) The Collaborative is one of six regional projects established under California’s Regional Workforce Preparation and Economic Development Act of 1997 The purpose of the legislation is to facilitate the implementation of a seamless, integrated workforce development system by strengthening existing partnerships in economic development, education and training, welfare reform and school improvement The goal is to provide workforce development programs and services that are responsive to the training needs of existing and emerging industries

The Los Angeles Collaborative is addressing this particular goal by developing two products:

• An Internet search engine (http://www.laworkforce.org) that will connect

different information systems, so that job seekers, employers, education and training providers and others can easily access information about jobs, career ladders, and education/training resources; and

• A “skills gap” profile of key occupations in five industries— apparel, health

services, food preparation, high tech/electronics and metalworking— so that identified gaps in skill sets and education curricula can be closed through industry-led efforts

This report focuses on the recruitment, hiring, training and promotion practices of metalwork firms in Los Angeles It is the second of two reports which examines the

“demand” side of the equation— the metalwork industry and the small companies which dominate this sector The first report provided an overview of the industry This second report looks at specific employment and training practices of small metalwork firms It provides information about what they do to identify and recruit job applicants and who makes the hiring decisions The report also describes the kind of training that employers provide their workforce and the various career paths available to production workers and other employees What makes this approach different from traditional labor market analysis is that it attempts to go beyond the hard data, which emphasizes job numbers and growth statistics, to find out what companies actually do to address labor shortages and other human resource issues As such, it provides important insights into employer behaviors that will be useful to the education and training community

Methodology

The information for this report is based on employer responses to a survey questionnaire and face-to-face interviews with a select group of metalwork companies A database of firms was developed from two sources— the California membership list for the National Institute for Metalworking Skills (“NIMS”), an industry-supported nonprofit, and a list created by Rebuild LA in 1994, when it first researched the industry A total of 27 companies responded to the survey questionnaire (a copy of the survey instrument is found in the Appendix to this report) Fourteen firms were affiliated with NIMS, while thirteen came from an RLA database of sixty-one companies Interviews were conducted with seven Los Angeles area metalwork employers Emphasis was placed on small firms, since they dominate the local industry The smallest company interviewed had 18 employees, while the largest had a workforce of 120 Most of the metalwork employers were commercial firms or had a diversified customer base; so they were not aerospace-dependent for their business

Characteristics of the Respondent Firms

Two-thirds of the respondents were Los Angeles County-based businesses The rest were located in other parts of Southern California and the Bay Area (mainly the East Bay and Santa Clara County) Seventeen companies, or 63 percent of the respondents, had fewer than 100 employees Another seven firms had an employment base ranging from 101 to

250 employees Only three manufacturers had more than 251 employees

In terms of product niches, the firms represent the fabricated metals and industrial and computer equipment subsectors They manufacture a wide range of products, from commercial food processing machines, spray booths, and computer components to springs, wires and light sockets Also included were a mix of firms that provide stamping, plating and other specialized services for metalwork companies For the most part, the respondents represented the commercial side of the industry Few companies indicated that aerospace or defense made up the bulk of their business In fact, most manufacturers and service vendors had a diversified customer base

Recruitment Strategies

Small firms, unlike their larger counterparts, have limited human resource capacities Owners and mid-level managers often wear multiple hats and handle a variety of functions As a result of these staffing limitations, small firms tend to use recruitment strategies that require a minimum of effort but yield maximum results Not surprisingly, the most efficient screening mechanism turned out to be the company’s existing workforce Employees are familiar with the work requirements, and they know what needs to be done within their respective departments Word-of-mouth referrals from other employees were therefore cited as the most common form of recruitment

A very close second was the newspaper However, some of the employers admitted that they did not have a lot of success with advertisements These kinds of job postings generate a large number of responses, requiring the company to do a considerable amount

of screening Even when unqualified applicants are eliminated from the pool, the remaining candidates are not necessarily the most ideal ones As a result of these limitations, some firms resorted to staffing services and temporary employment agencies

to recruit job applicants

One metal fabricator used two different kinds of staffing services, one for hourly employees and another for technical staff Another company used a temporary employment agency to fill vacancies in its accounting department Even though staffing services are expensive for small firms, they provide an efficient means of screening potential employees and eliminate a major burden for small businesses with limited time and manpower One human resources director underscored the importance of having a good screening mechanism to match job requirements with job applicants’ skills, experience and temperament She used the Employment Development Department as an example, citing how, in the past, the agency had not done a good job of screening applicants for job openings More recently, however, it had made substantial improvements by partnering with other organizations that took on the responsibility of screening applicants before they were referred to employers for job interviews

Even when a company uses a variety of recruitment strategies, it is not always successful

in filling job vacancies Several employers noted that they had a difficult time finding qualified applicants for certain positions The most frequently mentioned were tool and die making, welding, machining, computer numeric control (cnc) programming, and tool designing with CAD technology Several companies also said that mid- and senior-level managers were hard to find

Making the Hiring Decision

Two-thirds of the respondents said that hiring decisions are made by the department managers where the job vacancies exist This person plays an important decision making role whether or not a company has a human resources (HR) director In cases where a firm has an HR unit, the hiring decisions are made jointly by the department manager, in conjunction with the human resources director, or sometimes with the owner of the business

All of the respondents said that they hired both entry-level and experienced employees However, one production supervisor indicated that he preferred to hire people with at least two years of experience with the equipment they would operate This kind of operating experience with different machines turned out to be a major issue for small machine shop employers who had a lot of specialized equipment on the production floor While companies have different personnel policies, a common theme did emerge from the survey responses and employer interviews: they cannot afford a lot of employee

turnover because of the expense of hiring and training entry-level workers Some companies go out of their way to rotate entry-level employees into different jobs to find out which one provides the best fit In fact, one of the machine shops interviewed for this report indicated that the owners did not like firing employees This company, as a matter

of practice, gave its new hires several chances to succeed However, if they were rotated into several different jobs and still could not perform the work, they were eventually terminated Despite this possibility, however, the company was generous in other ways For example, it conducts employee wage and performance evaluations every six months

As a result, a person who starts at $7.00 an hour can, with good evaluations, increase his

or her hourly rate to $10.00 within a year after starting

Promotion Opportunities

All of the respondents, with the exception of one firm, said they offered advancement opportunities to their employees Although small companies hire fewer people than larger firms, small employers generally have a greater commitment to promoting from within than their larger counterparts The emphasis on internal promotion is not surprising, since small employers cannot afford the financial and operational disruptions that come with the hiring of new employees who have to overcome a learning curve

Every company interviewed for this report had a different organizational structure and different ways of organizing work However, everyone cited specific examples of employees who made their way up the job and salary ladder To gain an understanding

of what the career path looks like in a small firm, the following functional chart was developed, based on a synthesis of information collected from seven employer interviews:

FUNCTIONAL ORGANIZATIONAL CHART

SENIOR MANAGEMENT

President/CEO, General Manager, VP, CFO

PRODUCTION

General Help, Sheet Metal,

Assembly, Welding,

Set-Up, Machine Shop, Tool &

Finance

Advancement opportunities are available within specific job categories For instance, one company provided several examples of how entry-level employees could be promoted:

Example of Job Progression and Pay Ranges*

Entry-level Operator or Perform miscellaneous shop tasks Assist more $6 $6.50 $7 Helper senior operators in performing machine

operations

Journeyman Operator Able to lead machine operations with aid of a $8 $8.75 $9.50

helper Sufficient knowledge to work with little or no supervision

Senior Operator All of the above and able to lead operations $9.50 $10.50 $11.50

Good general knowledge of all equipment available in shop

Lead Operator All of the above and able to train and lead other $11.50 $13.75 $16.00

operators in performance of their duties

Entry-level Welder Basic training in the use of welding and $8 $8.50 $9

cutting equipment Basic skills to weld and assemble common parts

Journeyman Welder Skill set is complete and product knowledge $9 $10.50 $12

is sufficient to weld and assemble parts with little or no supervision Able to weld and assemble special parts with some supervision and engineering support

Senior Welder All of the above and ability to weld and $12 $13 $14

assemble special parts, structural shapes, etc with no supervision

Lead Welder All of the above and ability to train and lead $14 $15 $16

other welders in performance of their duties

*Other examples of pay ranges for various metalwork job categories are found in the Appendix of this report

Several companies also gave specific examples of how some of their employees were promoted through different career pathways:

then to customer service as a purchasing clerk In production, a general helper could advance to general assembly, then to specialty assembly, and later to the repair and maintenance of equipment That same employee could also move into a middle management position as a lead man, foreman, team leader or production supervisor

advanced into technical positions, such as draftsmen, CAD/CAM operators and engineers For example, this manufacturer described how a welder was recently promoted into an engineering supervisory position

managers had opened up promotion opportunities for the firm’s employees He gave

an example of how, in one instance, the company had accidentally stumbled upon a promising employee This employee, a young Latino, had been taking computer classes on his own time He asked for help from one of the supervisors, who only then had learned about the employee’s efforts to improve himself Impressed by his initiative, the supervisor ended up mentoring the employee This employee is now working in the lab as a technician, but the company is also grooming him for the assumption of management responsibility

In every case cited above, promotability depended not only upon personal initiative, skills and knowledge, but also upon access to continuous training and learning opportunities

Training

All but one of the survey respondents said that they provide some kind of training for their employees Typically, the training is done by a supervisor or another experienced employee Eleven companies indicated that they had a formal training program Ten firms said they also provide an educational allowance that would reimburse employees for outside education and training expenses For specialized training, such as equipment operations, the manufacturer of the equipment is often asked to provide training for a customer’s employees In other instances, suppliers of chemicals used in plating, finishing and other special treatments were brought in to train employees on the appropriate use and disposal of the chemicals

The most frequently cited training topics were safety (24 responses), sexual harassment (13 responses) and hazardous waste disposal (7 responses)

In terms of skills development, twenty-four out of twenty-seven respondents— nearly 90

percent— said that development of supervisory skills was a priority Next in importance

was the development of basic skills, such as reading, writing, and oral communications; then came basic math skills, customer service, and other skills such as blueprint reading, measuring of parts, purchasing and costing

Two of the interviewed companies were in the process of securing their ISO 9000 certification For these two firms, training involved their entire workforce, from line workers to senior management Both firms had retained outside training consultants One company, a metal plating firm, said that skills upgrading was critical Improvements were needed in vocational English-as-a-Second Language, shop math, total quality management (TQM) and safety For employees with limited English-speaking skills, the company’s goal was to improve their English Ideally, it wanted the employees to improve their English language skills to the point where they could communicate with the company’s customers

For the TQM training, the essential training components were not limited to team building, communications or problem-solving The president of this metal plating company said that document and data control were becoming increasingly important to firms like his He indicated that this development was a significant departure from past practice Previously, prime aerospace contractors provided their suppliers and vendors with the written specifications for producing a finished product or providing a specific service Today, however, the prime contractors have delegated this responsibility to their vendor/supplier network As a result, subcontractors must take on and absorb this function within their technical operations

To stress how important this development is, another metal fabricator reiterated the need for good communications skills among its technical staff Even though its customers were mainly commercial firms, the operations manager noted that the company was expected to document its engineering procedures and manufacturing processes; and this information had to be communicated in a clear, concise and understandable manner The operations manager also revealed that the company had to terminate a CAD/CAM systems administrator because the employee had poor reading, writing and oral communications skills

Another metal fabrication firm in the middle of an ISO 9000 certification process kept a detailed training audit for all of its employees, from the president of the company down

to the shipping clerk While the content of the training varied with the particular job categories, there were, nonetheless, common training elements that everyone was exposed to For example, everyone was trained on their respective management responsibilities, as well as the development and maintenance of quality systems, document and data control, and control of quality records

Nearly everyone, except for front office and accounting staff, was trained on process control, control of nonconforming product and corrective and preventive action After employees were trained, they were then tested for their knowledge and understanding of

what they had learned Some production-level employees even had to pass a series of tests in order to work on specific kinds of equipment The production supervisor for this company had oversight responsibility for all employee training in the production side of the firm’s operations

Conclusion

Based on the survey responses and firm interviews, it is evident that the majority of companies rely upon an informal employee network to identify potential job applicants Dependence upon employee referrals is not surprising, since they provide an inexpensive means of screening applicants for characteristics and skill sets that are important to the employer The key here is the screening function that employees provide for their employer They know the company; they are familiar with the job requirements; and they can relay this information quickly to their relatives, friends and acquaintances when job openings are available Staffing services and temporary employment agencies can also perform this function, especially if their niche market is industry-specific recruitment Companies that use these recruitment strategies like the convenience they offer Employers may not try other alternatives unless they are as quick, cheap and reliable as the methods they already have

When it comes to making hiring decisions, the department manager where the job vacancy exists has the most influence in deciding who gets hired However, small firms

do not always limit the decision-making authority to a single individual If anything, hiring decisions are often made jointly by department managers and the firm’s owner or human resources director This process is intended to help the company make the best hiring decision possible

While making a good match between the company and the potential employee is important, another consideration is ensuring a good fit between the individual and the culture of the organization One employer commented that it had received a large number of inquiries from laid-off aerospace employees, but the firm was reluctant to hire them, because they did not know how to function in a small business environment This same company had also taken a risk by hiring two people referred from local training programs funded by the Job Training Partnership Act The jobs were entry-level set-up operator positions Unfortunately, the matches turned out to be ill-fitted for both employer and employee One person left shortly after being hired, and the other stayed for only two years

Awareness of these issues, along with knowledge of what employers actually do in recruiting, hiring and training new employees, is crucial to closing the gap between the business and training communities Small business owners do not have the time or the staff to research and identify credible training programs, and training providers do not always market their services effectively Educators and training professionals need to find out what kinds of recruitment and hiring strategies are used by employers, and they need to evaluate where they can add sufficient value to the process, so that employers are motivated to change their current practices

For the companies that responded to the survey questionnaire, training was a top priority Metalwork is an example of an industry in which a skilled workforce is critical to the financial health of the business and the marketability of the employee In fact, one company lamented the decline of the apprenticeship approach to training, because the development of in-depth technical skills requires at least ten years of on-the-job experience and continuous learning opportunities

The importance of training to the industry, and the absence of sufficient high quality training resources for metalwork firms, has spurred many industry associations to launch their own training initiatives.* One of the best known is the National Tooling and Machining Association (NTMA) The Los Angeles chapter of NTMA operates Training Centers in Norwalk, Costa Mesa and Ontario Another industry association, the Precision Metalforming Association, recently established a pilot apprenticeship program for press and set-up operators with three local community colleges To further improve the quality

of training, a consortium of industry associations established the National Institute for Metalworking Skills in 1995 to develop skill standards for all of the major occupations within the industry

*A directory of metalwork trade and professional associations is found in the Appendix

of this report

APPENDICES

Appendix A: Business Recruiting and Training Survey Instrument

Appendix B: Wage Ranges for Selected Occupations

Local area wages:

Appendix C: Directory of Metalwork Trade and Professional Associations

Occupational Details

Job Family: Machinists

Area: Los Angeles Area Responses: 121

OES and Title 891080 Machinists

Responses

Education

Skills considered

Employer Difficulty Finding Qualified Applicants

Difficulty Finding Non-Experienced

1%

Occupational (1) Assoc (0) Bachelors (0) Graduate (0) 8%

Internet (3) Trade Pubs (0) Corp Pers (0) 1%

Other (1) 2%

Frequently (1) 1%

Frequently (8) Don't Know (0)

Don't Know (3)

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Other (5) 4%

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Employment Development Department

Labor Market Information

1999 Directory of California Local Area Wages

CALIFORNIA T H E G O L D E N S T A T E California

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Experienced

3 Years with Firm

All Wages $5.75 $16.20 $9.00 $7.19 $25.57 $14.00 $9.59 $29.83 $18.00

All Wages $6.00 $15.38 $6.00 $6.00 $22.95 $10.00 $8.50 $24.52 $13.00 Monterey 1996

All Wages $6.50 $10.00 $7.50 $7.00 $12.47 $9.00 $10.00 $18.00 $12.00 Mother Lode 1996

All Wages $5.00 $8.00 $7.00 $8.00 $16.56 $11.00 $11.00 $16.56 $14.50

All Wages $5.25 $8.00 $6.28 $7.25 $19.00 $11.50 $10.00 $24.00 $13.57 Riverside 1998

All Wages $5.50 $15.00 $7.50 $10.00 $20.00 $15.00 $11.00 $25.00 $18.00 Sacramento/Yolo 1998

All Wages $6.75 $8.25 $7.50 $7.00 $18.00 $13.00 $8.75 $25.00 $17.50 San Benito 1998

All Wages $5.75 $15.00 $10.00 $8.00 $17.50 $12.00 $10.00 $22.00 $15.00 San Bernardino 1996

All Wages $5.00 $15.77 $5.00 $7.00 $17.95 $11.12 $9.00 $19.23 $15.00 San Diego 1998

Union $10.00 $10.25 $10.13 $11.00 $16.00 $13.50 $15.00 $22.00 $18.50 Non-Union $5.75 $12.00 $7.00 $6.75 $15.00 $12.00 $8.00 $19.00 $16.00 San Luis Obispo 1998

All Wages $6.00 $8.15 $6.50 $7.00 $12.00 $10.00 $8.50 $19.00 $14.17

"N/A" - Wages not available

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finding an occupation

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San Mateo 1997

All Wages $6.00 $10.00 $8.00 $10.00 $18.00 $13.00 $12.00 $28.00 $20.00 Santa Barbara 1998

All Wages $5.75 $10.00 $7.00 $6.00 $20.00 $11.00 $10.00 $25.00 $18.00 Santa Clara 1997

All Wages $6.00 $15.00 $7.00 $8.00 $20.00 $12.00 $10.00 $30.00 $18.00 Santa Cruz 1996

Union N/A N/A N/A $16.00 $16.00 $16.00 $18.50 $18.50 $18.50 Non-Union $5.15 $15.24 $7.00 $7.00 $22.00 $10.00 $8.00 $22.00 $16.00

All Wages $5.00 $10.58 $6.00 $7.00 $16.35 $10.00 $10.00 $24.04 $15.00

Employment Development Department

Labor Market Information

1999 Directory of California Local Area Wages

CALIFORNIA T H E G O L D E N S T A T E California

Home Page

Governor's Home Page

Experienced

3 Years with Firm

METAL FABRICATORS, STRUCTURAL

All Wages $8.50 $15.00 $11.25 $10.00 $21.00 $14.69 $13.64 $33.56 $19.18 Santa Clara 1998

"N/A" - Wages not available

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finding an occupation

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All Wages $11.99 $18.00 $15.00 $11.99 $25.00 $15.82 $16.78 $35.00 $20.00

Union $11.92 $11.92 $11.92 $13.12 $16.88 $15.67 $14.46 $20.56 $18.41 Non-Union $12.00 $12.00 $12.00 $9.00 $31.65 $25.17 $12.00 $38.42 $32.13

All Wages $8.00 $17.68 $10.00 $8.87 $20.81 $12.00 $10.55 $31.16 $15.89

All Wages $10.55 $15.58 $11.85 $11.99 $19.18 $15.82 $14.38 $28.77 $19.59 San Mateo 1996

All Wages $5.75 $7.00 $6.25 $6.25 $20.00 $9.50 $9.00 $25.00 $15.00