Consumer goods (CG) companies are caught between increased stay-at-home demand, limited ability to pass on price increases, and a labor force that requires increased expense to keep safe. CG companies quickly defended against germ warfare—readying their front line with masks and gloves, confining them to make-shift plastic bunkers, and teaching them to follow painted arrows on the floor. You’d expect productivity to fall until you put into context that these anxious employees are grateful not to join their 39 million out-of-work neighbors.
The rapid response of CG employers is admirable and completely necessary. But relying on these short-term actions and expecting to sustain profitability is like catching a falling knife. The solution is becoming obvious, the need to automate via robotics is paramount to reduce overall workforce reliance and overcrowding of facilities. While this thought process flies in the face of our current astronomical unemployment phase, it begins to make a lot of sense in the future for both the American worker and the CG companies that want to be around for the long term.
Front line employees make up generally 60-70% of CG companies’ headcount. Entry-level jobs often consist of repetitive motion activities, long periods of standing, and not a lot of space. Supply chain worker availability has been in short supply over the past 5 years, as these jobs are not considered desirable or highly sought after. The choice of driving an Uber or Lyft and choosing when one works is more appealing—and can be as profitable—versus the basic entry worker in manufacturing or distribution. These unfavorable working dynamics have led to turnover broaching 30% annualized. Companies respond by paying more than the company down the street (bidding wars for talent) to quick-fix a systemic problem. The added wage expense puts more pressure on productivity targets, and the downward spiral continues.
Despite the current surge in the available workforce, manufacturing jobs are still not desirable. Jobs are viewed as higher risk given today’s pandemic. Newly offered hazard pay doesn’t make up for the monotonous routine. For the few companies that have managed to create a robust hourly employee training and development program, they probably never considered the impact of an “onboarding buddy” who must wear a mask and stay 6-ft. away from new hires.
The only reasonable answer to the situation is to automate. No longer just a cost-cutting idea, automation now reduces employee exposure to hygienic hazards without a decrease in productivity. While there will be short term reductions to the overall number of jobs available, automation should be incentivized, as it provides improved technical skills and pay opportunity for today’s workers while reducing risk for companies and employees. Furthermore, automation can be the key to bringing quality, skilled manufacturing jobs back to our country.
With capital interest rates at all-time lows and the availability of money at an all-time high, automation investments are even more attractive. Projects that have been put off for years due to high-interest rates or low ROIs may now be viable, supported by higher demand and increased labor cost.
Given what we know and see, we must make judgments about the future. We know the virus impacts will be long-lasting. Companies must shift from short-term response plans to long-term strategies. If I had to place my bet, it would be on an offensive strategy to implement systematic automation focused on eliminating high concentration, low-skilled, and repetitive motion labor. Long-term, the strategy results in a more protected workforce with higher wage opportunities and a more reliable supply chain.
I welcome your thoughts on the subject.
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As of September 8, 2020, Crimson & Co (formerly The Progress Group/TPG) has rebranded as Argon & Co following the successful merger with Argon Consulting in April 2018.
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Randy Burns
