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Despite the huge challenges of the past few years, manufacturing continues to be an important economic engine for the state, but this legislative session, manufacturers are letting lawmakers know they need help to ensure the sector remains strong.
After surviving shutdowns, pivoting to new products and scrambling to bring employees safely back to work during the pandemic, manufacturers continue to face supply chain nightmares and workforce shortages that threaten to restrict growth.
Employing 67,848 Granite Staters, manufacturing accounted for 12% of total private (non-government) employment in NH in 2021, which is above the national average, according to the NH Dept. of Employment Security. It is the third largest employment sector in the state behind only health care/social assistance and retail trade.
However, manufacturing jobs are far below where they were at their peak of 19.6 million jobs nationally in 1979 when they represented 22% of total non-farm employment, according to the Bureau of Labor Statistics. Forty years later, by 2019, that number declined to 9% while employment in service-providing industries grew.
Industry leaders are hopeful manufacturing will grow again, with many pointing to the infusion of $44 million in a federal grant that will be used to expand a biofabrication cluster in Manchester’s Millyard, which is expected to create thousands more manufacturing jobs and make NH the global epicenter of biofabrication.
However, manufacturing wages are not as competitive as they once were since other sectors have significantly raised pay. The lack of affordable housing makes attracting new talent challenging, and industry leaders say the state needs to invest more in education to create a stronger workforce pipeline.
Plea for Increasing Funding
At a recent roundtable with industry leaders co-hosted by the University System of NH and the Business and Industry Association (BIA), NH’s statewide chamber of commerce, BIA president and CEO Mike Skelton said the workforce shortage is one of the most important challenges facing NH, explaining it was the top concern raised by business leaders across the state during a listening tour the BIA held last year. “In some cases, it is threatening their future,” Skelton says. “Funding for postsecondary institutions is paramount to this issue. They are the tip of the spear in addressing our workforce issues.”
The roundtable was held a few weeks before Gov. Chris Sununu released his proposed state budget to show business support for increasing funding for the University System of NH (USNH). USNH received $88.5 million in the last state budget, well below the $100 million it was funded in 2011. In this next budget, USNH is seeking to restore funding to 2011 levels.
Of the five business leaders at the roundtable who spoke about the role NH’s universities and colleges play in addressing the workforce shortage, three were manufacturers.
Ben Learned, human resources manager for Freudenberg Sealing Technologies, which has facilities in Manchester, Northfield and Bristol, pointed out that two-thirds of students who participate in internships with NH employers stay in the state after graduation. Butch Locke, strategic operations director of BAE Systems in Nashua, the largest manufacturing employer in the state, agrees internships are essential to connecting with students and making them aware of the opportunities that exist in NH.
According to USNH, on average, 2,000 USNH graduates join the NH workforce annually. Out-of-state USNH graduates are twice as likely to stay in NH when they participate in internships and other hands-on learning opportunities while in school, according to USNH. And there are nearly 3,000 first-year students currently attending USNH institutions.
Dean Kamen, founder of DEKA and the leading force behind the Advanced Regenerative Manufacturing Institute (ARMI), which is trying to establish NH as a hub for manufacturing human tissue and organs, underscored how critical partnerships between businesses and colleges and universities are to strengthening the workforce pipeline and ensuring business success moving forward.
Kamen says there were two major challenges ARMI faced. The first was whether it was too early in the development of this technology, which would hinder the ability of ARMI to attract biofab companies to NH and funding. However, he says biofab firms are growing in Manchester’s Millyard, and a collaboration between ARMI and five other partners, including Southern NH University and the University of NH, was recently awarded that $44 million federal grant.
That leaves the second major challenge: attracting the skilled workers needed to grow this biofabrication hub. “When kids leave with a tech degree, it’s like a free pass to go wherever they want,” Kamen says, explaining NH needs to make a compelling case for those graduates to stay or come to NH and create a critical mass of young people. Kamen says ARMI is partnering with educational institutions in the state to make that case.
Manufacturers and colleges are finding ways to strengthen their connections and offer pathways to employment, but it is still difficult to funnel students into manufacturing programs. Nashua Community College’s manufacturing program includes day and night courses leading to an associate degree and certificate programs. The curriculum includes machining courses, mechanical design, mechanical engineering, programming courses, manufacturing courses and a CAD course. Students learn how to operate computerized vertical milling machines, 3-D printers and other high-tech equipment.
Mark Dodge, a manufacturing professor at Nashua Community College, says the program has attracted as many as 28 students in a semester, but currently 20 are enrolled for the spring 2023 semester. “Part of the low numbers can be attributed to COVID,” he says, adding that the other factor is a lack of participation in programs at the high school level.
“Students are actively discouraged from a two-year school without taking into account that our graduates go on to good paying jobs.”
Many manufacturing jobs pay well and do not require years of training. In fact, for most manufacturing jobs in NH, a high school diploma will get people in the door. The median hourly wage for a starting machinist with no experience and no college degree is $24.46, and some machine operators earn up to six figures in wages after completing manufacturing programs.
One of those jobs could be operating and programming a Cincom L 12, a machine that makes screws and other parts.
“That’s a six-figure job if you can make this machine work,” Dodge says, adding some students have gone on to work for DEKA and other large companies. Nashua Community College also partners with GE, Ruger and Sig Sauer on various internship programs, he says.
Haas, the largest machine tool business in the U.S., recently provided Nashua Community College with $30,000 in scholarship assistance. “We have a good association with the Haas company. They are a big supporter of education,” Dodge says.
The best part, Dodge says, is watching students succeed. “Some students who come in have never been in a machine shop.
One of my very early grads is now chief programmer at Protolabs in Nashua. That’s the reward. It’s not the money.”
There is much work still to be done to shore up the manufacturing workforce pipeline as the shortage is only expected to become worse as boomers retire. “Our guys are retiring, and people aren’t getting into [manufacturing],” says Doug Howe, chair of the Manufacturing program at Nashua Community College.
Yet the questions of why the next generation is not stepping up and whether manufacturers are effectively responding is up for debate. Howe cites a long-held belief by many in the industry as part of the cause. “Parents and guidance counselors sometimes think this is an old dirty job, as if it’s about putting lug nuts on a ’62 Chevy,” he says, adding that culture does play a role in the amount of interest there is for manufacturing jobs. “We read to kids about the policeman and the firefighter, and they hear about celebrities, what about the machinist and the engineer?”
However, Ben Armstrong, executive director and a research scientist at MIT’s Industrial Performance Center, pushes back on that. Armstrong studies how workers, firms and regions adapt to technological change. He is particularly interested in the decline of the middle class since the heyday of the 1960s when someone with a high school degree could make more in manufacturing and have union benefits.
The difficulties some companies express about paying higher wages or creating partnerships with educational institutions, Armstrong says, reveals one of the myths associated with manufacturing jobs. “The myth is that if students only knew manufacturing jobs weren’t dark, dirty and dangerous they’d come. And it’s true that most of these jobs aren’t dark and dirty. They involve professional, skilled labor.” And yet, he continues, “people are still making more in other sectors.”
Overall, Armstrong says, machinists and operators make between $15 to $22 on average, and productivity is flat.
In his research, Armstrong has found that many manufacturing firms rely heavily on internal training. A 2021 MIT Initiative for Knowledge and Innovation in Manufacturing paper states that training workers to perform in an advanced manufacturing environment “will only be relevant when U.S. manufacturers expand their investments in advanced technologies.”
Expenditure on equipment and machinery for small and mid-sized (SME) enterprises was flat from 2010 to 2019. “Less than 10% of all U.S. manufacturing plants have made any investment in robotic automation as of 2018, and small plants are far less likely than large ones to have invested in robots,” the study states.
And low levels of technology adoption at SME manufacturing companies affects how these firms recruit a skilled workforce.
Between 2010 and 2019, the share of small and medium manufacturers identifying workforce issues as a leading challenge facing their firm tripled—from around 20% to nearly 60% according to national survey data from the National Institute of Standards and Technology (NIST) Manufacturing Extension Partnership between 2008 and 2020. “It’s not just the cost of technology that’s causing the problem,” Armstrong says, explaining that cost-sharing grants are available for companies purchasing capital equipment to expand their technological capabilities, but he adds that risk tolerance may help explain why capital expenditures are flat. “A lot of companies have been risk averse and just trying to survive. But, firms that invest more in automation need more skilled people.”
The MIT study corroborates this, stating, “Our research indicates that training workers to perform in an ‘advanced manufacturing’ environment will only be relevant when U.S. manufacturers expand their investments in advanced technologies. We propose advanced technology adoption as an essential companion to advanced training.”
Manchester’s Manufacturing Renaissance
The $44 million awarded to Manchester from President Biden’s Build Back Better Regional Challenge fund to be used in the biofabrication industry is one such investment. It has been matched by industry investors, bringing the total to $56.5 million, says Manchester Mayor Joyce Craig. “This is an exciting opportunity, not just for Manchester but for the entire state of health care throughout the country,” she says.
“It was over a year in the works,” Craig continues, adding that several organizations were instrumental in the grant process, including Manchester Advanced Regenerative Manufacturing Institute (ARMI), Southern NH University (SNHU), the University of NH Manchester, Manchester Boston Regional Airport, the Manchester Transit Authority and the Southern NH Planning Commission. “The goal is to enhance our fabrication industry and to make Manchester the epicenter of biofabrication.”
The goal of ARMI, which started in 2016 with investment from the Dept. of Defense, is to manufacture cells, tissues and organs to cure chronic disease and treat traumatic injuries. Craig says a startup lab is already operating in the city as well as a transportation network to get the manufactured tissues and organs from the manufacturing facility directly to hospitals.
Over the next several years, up to 7,000 jobs and 37,000 indirect jobs are expected to be created as part of ARMI’s growth, says Manchester’s Economic Development Director Jodie Nazaka. “This was a very intense partnership grant,” she says.
“[The city] is leading a coalition and building a nonprofit organization with an executive director that will help make sure this investment is following the goals and visions stated in our grant application that provides close coordination with all of the coalition partners.”
The life of the grant is five years and Craig says things are moving quickly. “ARMI’s lab space is under construction, and they just secured a location on Dow Street for additional lab space,” she says, adding that a vision for a manufacturing renaissance in Manchester was started over 30 years ago. “It’s the same location where the largest textile manufacturing facility in the world was. And we’re bringing that back.”
Aside from construction costs, the largest portion of the funding is allocated for providing pathways to good paying jobs for local workers, Nazaka says, “especially focusing on low-income households, veterans and other under-represented groups.”
To do this, tapping into local high schools and higher education institutions will be key, she says. “As the mayor has said, ‘tapping into our existing people that live here is our first step.’”
More than $8.2 million of the federal grant is earmarked for workforce development, Nazaka says, and ARMI will be working with the Manchester school district as well as SNHU and UNH Manchester to help develop the workforce needed to support its endeavors. “This technology is so new that these jobs don’t exist. So as the technology advances, there is a huge investment going in from the city to build the workforce out, to create these jobs as the technology is advancing,” she says.
SNHU is the lead organization for the workforce development portion of the grant, dubbed “Work & Learn,” and will allocate sub-award agreements with UNH, Manchester Community College and ARMI to carry out the work. “The purpose of the Work & Learn program is to create equitable pathways for the most marginalized communities in Manchester to have more access to higher education and workforce pathways,” says Stephen Thiel, assistant vice president of community impact at SNHU. “Part of the grant is going to build a manufacturing facility and a training facility. The work-and-learn component is to make sure Manchester residents have a way to obtain the jobs that emerge.”
A significant amount of the jobs created won’t require a college degree, Thiel says. “This could be a great economic opportunity for marginalized people such as new Americans, formerly incarcerated people or folks coming out of domestic violence situations.”
UNH is leading education trainings as well as the mobile delivery of STEM programs for K-12 programs, Thiel says. “UNH also has a New Hampshire Creates teacher-training program, which is a STEM-based teacher program that will come to Manchester.”
Thiel adds that as the biofab industry gains momentum, it will create more jobs not only within that sector but in the overall economy of the state.
Finding the workers for this fledgling industry will be a major challenge, especially as NH’s overall labor force is constrained by a lack of available housing. Finding workers for nearly any industry can be difficult given these issues, says Phil Sletten, research director for the NH Fiscal Policy Institute.
One of the ways to add employees is to attract workers from outside NH, but with many people moving to the state to retire and an already low level of available affordable housing, importing people to add to the labor force is difficult, he says.
Sletten says the limited housing supply, both on the purchasing side and the rental side, “is definitely a headwind when it comes to economic growth generally.”
“People who might otherwise have moved here for a job cannot find housing here,” he says. It is also an obstacle looking for residents to relocate within the state for a job, Sletten adds.
Nick Taylor, executive director of the Workforce Housing Coalition of the Greater Seacoast, points out that to afford the statewide median cost of a typical two-bedroom apartment with utilities, a NH renter would have to earn 131% of the estimated statewide median renter income, or more than $63,000 annually. Taylor says the bottom line is developments need to be built. “Developers can make the math work with increased density, but without this, projects often fall through.”
While none of the money from the Build Back Better grant is eligible for workforce housing, Mayor Craig says the city has a plan to build thousands of workforce housing units in the coming years. “We have about 2,000 units in planning in Manchester, and we’re seeing a lot of interest in development in the city,” she says, adding that most, if not all units, will be in walking distance to the Millyard.
Nazaka is optimistic, saying that while NH’s median age has been rising, Manchester’s has decreased over the past three years. “The state average age is 43 while in Manchester it’s 36,” she says. “We’re attracting a young population, we’re attracting professionals and young families, and I think a lot of this has to do with investments in STEM businesses and advanced biofabrication.”
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