So That Happened: Labor Churn Losing Steam? Navistar's Training Mission, Venture Capital Eyes Ag Tech
Editor’s note: Welcome to So That Happened, our editors’ takes on things going on in the manufacturing world that deserve some extra attention. This will appear regularly in the Member’s Only section of the site.
Ag Tech Proving Fruitful
Agriculture may not be the first—or fifth—sector most of us think of when we consider venture capitalism and technological innovation in the face of labor shortages and the general push for more productivity. But ag industry players have long been focused on some of the same issues as manufacturers who do their work inside factories: automation, precision, artificial intelligence and making workers (who are becoming harder to secure and keep) generally more efficient. Research firm PitchBook reported early this year that ag tech ventures raised roughly $23 billion in 2021 and 2022, nearly six times the dollar volume of 2015 and 2016.
Two recent news items illustrate the trend: First, prominent equipment maker AGCO last week agreed to pay $2.0 billion for most of Trimble’s ag products portfolio of autonomy, connected farming and other tech tools. Soon after, executives at AGCO’s peer CNH Industrial (the product of Case and New Holland joining forces in the late ’90s) said they have invested an undisclosed amount in California start-up Advanced Farm Technologies, which specializes in robotic harvesting.
The business case for that latter deal is clear: Nearly half of the cost of apples comes from them being picked by hand and the number is substantially higher for strawberries. Talk about your low-hanging fruit.
Navistar’s Technician Training Mission
To celebrate National Technician Appreciation Week (Sept. 24-30), Navistar honors the recent graduates of its second Uptime Academy class. The 2022-2023 class consisted of 18 apprentices who are now equipped to service several International Truck and IC Bus vehicle types.
Uptime Academy is a 12-month training program designed to prepare apprentices for a career as a service technician. It combines 3,200 hours of real-world experience in a dealership service bay with 800 hours of classroom time and lab work. The customized training units offer participants paid, hands-on experiences.
Employing more than 6,000 technicians, Navistar’s dealer network relies heavily on the continued education, recruitment and retention of technicians. In addition to Uptime Academy, dealers across the U.S. have donated training equipment to community technical schools through Navistar’s TECH EmPOWERment initiative, creating established relationships between dealers and local colleges and technical programs.
“From our Uptime Academy program to simply connecting with our technicians through continuing education, there is no shortage of passion and heart in our dealer service network,” said Ana Salcido, technician recruitment manager.
Learn more about the Uptime Academy apprenticeship program and requirements here.
Manufacturing Expectations for Additive
You may have noticed that the Technology & IIoT section as of late has turned into the Stratasys and Desktop Metal Show. Generally speaking, you won’t find much M&A news in the Tech section because that’s not how I see my role here. My job is to tell you which manufacturers are enjoying what successes with technology and help you cut through the inevitable Hype Cycle-related static.
M&A’s are largely about hype and salesmanship, of course, hence why you won’t see very much about them in my section. In this case, however, not only was the now-scuttled deal obviously relevant for its own sake, but it also marks a different kind of inflection point than what Stratasys’ CEO, Yoav Zeif, talked to Robert Schoenberger and I about a few weeks ago.
Few (if any) additive manufacturing companies are profitable by GAAP accounting standards and the long-held promise that AM would replace traditional manufacturing at scale seems definitively debunked. AM is too expensive, too slow and quality isn’t replicable at speed.
If we’re talking about parts where size, weight and power are of paramount importance (aerospace and Formula 1 racing) or when existing manufacturing processes are cumbersome to get right (dental appliances), or when traditional manufacturing simply is not capable of producing the desired geometries, AM is the clear and best choice.
These are all very specific and limited use cases, however, which is ostensibly why you see Zeif moving the goalposts on what “scale” means. And now that it seems to be clear that additive has found its niche and does not represent a true alternative at scale to injection molding or die and casting, the specter of slowing investment flows looms and hence we now enter the big M&A season and figure out who the last companies standing will be.
What’s most interesting to me right now is that 3D Systems hasn’t offered IndustryWeek any CEO interviews. We’ve been getting the requisite comments from Jeffrey Graves, president and CEO of 3D Systems, in the financial missives but otherwise Graves hasn’t added anything to the din. 3D Systems continues to march on. The silence speaks volumes about quiet confidence that 3D Systems is here to stay and has nothing to prove.
That’s probably fair considering, you know, that the founder of 3D Systems is generally regarded as the father of modern-day additive manufacturing. The further we get from those first innovations and patents the less relevant 3D Systems’ lineage will arguably become. But now the conversation is not whether or not Stratasys and Desktop Metal will merge, but whether or not 3D Systems will swallow its No. 1 competitor in the market.
So, we’re probably in for more M&A news in the Tech section than we’re used to, outside of my comfort zone and priorities as your technology editor, but I think we really are seeing some momentous business dealings taking place. History is probably being written here, the days when additive manufacturing slid off the crest of the hype cycle and settled into reality.
Quitting Jobs to Advance Careers May Be Losing Steam
Job openings unexpectedly increased in August, showing that despite problems with inflation and corporate spending, there are plenty of opportunities for those who want to work. A year ago, those dynamics fed into the so-called Great Resignation, a massive shift of people voluntarily quitting their jobs to seek higher pay elsewhere.
That trend continues, but it’s a heck of a lot less popular now than it has been. In manufacturing, about 229,000 people voluntarily left their jobs in August, a 12% decline from July – economywide, the quits rate fell 6%. Of the people who left manufacturing jobs during the month, 59% did so voluntarily with the remaining 43% suffering from firings, plant closures or temporary layoffs.
While that’s a lot of people quitting work, it’s only slightly higher than the 10-year average for manufacturing of 58%. Throughout the past three years as the economy recovered from pandemic-era shutdowns, that percentage of people quitting vs. being fired hovered around 74% for several months. August’s rate was the lowest level of quitting since July of 2020 (the post-shutdown hiring boom started in August of 2020).
So, what does all of that mean? During the height of the labor churn, several experts predicted that workers would eventually stop hopping from plant to plant in search of another 25 cents per hour in wages. We’re possibly seeing evidence of that. Companies have also gotten more aggressive about improving benefits, wages and even offering retention bonuses to keep the people they have. Average wages in manufacturing are up 13% from July 2020 through August 2023, an all-time high of $32.61 per hour.
Still, employers shouldn't expect relief any time soon. There are still far more unfilled jobs than available workers, so keeping wages and benefits competitive will likely be a critical competitive factor for the foreseeable future. But, at least in August, employers seem to have convinced more people to stay on the line instead of fleeing to greener pastures.
