Skilled labor is key to retaining manufacturers

In upper Montgomery County, plant director Chris Milligan worries about finding hourly employees to work the production lines at Blommer Chocolate Co. in East Greenville.

At David Michael & Co, a flavor manufacturing facility in Northeast Philadelphia, a flavor chemist is hard to find, but not general manufacturing help.

"There are plenty of people looking for work," said Skip Rosskam, chief operating officer.

The availability of skilled labor is the most relevant factor influencing local manufacturers' decisions to remain in the region, the Federal Reserve Bank of Philadelphia reported Thursday in its monthly business outlook manufacturing survey.

"Availability seems to be growing in terms of importance," senior economist Michael Trebing said Thursday.

The Philadelphia regional manufacturing report is closely watched nationally because the city's manufacturing base is diverse, making it more of a proxy for the entire nation.

The report also updated the general state of manufacturing, with businesses indicating a positive outlook.

"This is the second month of a bounce back," Trebing said, following a downturn during winter's worst in February.

Trebing said an uptick is usual in the spring, but that April's results also reflect pent-up activity delayed by the winter.

Manufacturers said new orders, shipments, and employment were up in April, compared with March. They also predicted increases in those categories over the next six months. Employment was also up.

In the survey's set of special questions, which vary each month, more than nine in 10 manufacturers ranked the availability of skilled labor as very or somewhat relevant to a decision to stay in the region and said it would become more important. That was followed by labor costs.

Third was the interplay of business and government reflected in taxes, subsidies and regulation.

Fourth was energy cost.

Less significant were major factors often cited by organizations working to attract manufacturers to the Philadelphia region: its proximity to customers, distribution channels, suppliers and materials.

Groups that attempt to attract business tout the region's ports, rail network, airport and the lattice of highways that connect Philadelphia to huge nearby markets in the metropolitan areas of New York and Washington and also provide a gateway to the west.

Area chief executives involved with manufacturing say they worry about looming shortages of help.

In Bucks and Montgomery Counties, for example, manufacturers are reforming a coalition to address workforce issues.

Some executives, such as Milligan at Blommer's, are contacting local schools to interest teenagers in manufacturing careers.

Others, such as two Northeast Philadelphia companies, Cardone Industries Inc., an auto parts remanufacturer, and AgustaWestland Philadelphia Corp., a helicopter manufacturer, develop in-house training.

"Our biggest success has been bringing people in at the junior levels and being able to help them learn the process as we go along," William Hunt, chief executive of the Italian company's Philadelphia plant, said in a January interview.

For Philip Rinaldi, location was key in his company's 2012 decision to buy two South Philadelphia refineries from Sunoco Inc., halting Sunoco's plans to mothball its 1,400-acre facilities on the Schuylkill.

"They have river access to two rivers," said Rinaldi, chief executive of Philadelphia Energy Solutions L.L.C., in an interview late last year.

"They have rail, highways, infrastructure," he said. "The place is completely permitted for heavy industry. Where on earth are you going to replace that?"

His company aims to address the energy issue by offering low-cost energy to attract other manufacturers to the region.

Rinaldi said that finding the pipe fitters and welders his company needs has not been an issue.

"But 15 years from now, it will be really difficult," he said. "It's an age thing. Those jobs are not attracting a lot of young people."