Davidson’s largest employer has a surprising problem
Davidson’s largest employer has a problem.
You probably know the products Ingersoll Rand manufactures, such as Trane air conditioners and Club Car golf carts, even if you didn’t know the parent company’s name. The Irish conglomerate with its North American headquarters in Davidson has grown to about 2,000 local employees since planting its roots in the quaint Lake Norman town in the mid 1970s.
The problem? The company has about 1,000 open jobs that it’s having trouble filling.
The main cause of that is the so-called skills gap, CEO Michael Lamach said in a recent interview at the company’s headquarters. The term refers to a shortage of workers with the necessary technical skills to handle machinery, perform service on the equipment and use advanced technology, among other functions.
It’s a perplexing thing, too, since the jobs are often high-paying, and usually don’t require a college degree, Lamach said. Commercial technicians at Ingersoll Rand, for instance, can make up to $105,000 without having attended a four-year university.
“Most parents, I think, will coach their kids to go to college, and in doing so, are not thinking about some of the vocational areas,” he said.
Filling the pipeline with fresh young talent is a task he and hundreds of other manufacturing leaders around the U.S. are prioritizing through community outreach, recruitment in science, technology, engineering and math (STEM) programs and efforts to create enjoyable workplaces for employees.
Lamach, CEO since 2010, sat down with the Observer this month to talk about a host of issues, from jobs to tax reform to North Carolina’s now-repealed House Bill 2.
Labor shortages are a problem anywhere the economy is growing, said Mark Vitner, Charlotte-based economist for Wells Fargo. It’s a particularly acute problem in construction and in manufacturing.
Ingersoll Rand considers itself something of a manufacturing mainstay: It makes large equipment that’s expensive to transport, and it employs thousands of technicians whose job includes servicing and diagnosing that equipment.
The company – which has posted $10.6 billion in revenue through the first nine months of 2017, up 4 percent from a year ago – therefore sells most of what it makes where it makes it, a philosophy known as lean manufacturing. “It’s all about getting supply chains to be shorter, and to get response times to be faster,” Lamach said.
All of that means that automation hasn’t exactly taken the place of many Ingersoll Rand jobs like it has for some of the company’s competitors.
Manufacturing was once considered the economic lifeblood of North Carolina. But employment has dwindled over the years as work moved overseas and technology made operations more efficient.
The industry’s image has also hurt recruitment efforts, Vitner said. “You think of all the dirty blue-collar jobs that used to exist,” he said. “Changing that reputation is hard.”
Lamach dismisses the idea that a piece of legislation or a change in policy could bring back the thousands of jobs that the manufacturing industry has lost over the years. Rather, he said, manufacturers must figure out how to embrace automation.
Automation will claim some U.S. jobs, he said, but some of those are roles people just don’t want to do,” Lamach said.
Advanced manufacturing “requires integration of software and hardware to make them work,” he said. “When you do that, you’re creating jobs that are going to last for a long time.”
Lamach described one such experiment with integration: An Ingersoll Rand technician with 40 years of experience uses a Google Glass to manage multiple virtual service calls with less experienced technicians out in the field.
As the field technician is looking at the equipment, the more experienced worker is taking in the scene virtually to help diagnose the problem, Lamach said. It’s a mental challenge for the seasoned worker without the physical work that could be hard on his or her body.
“Using technology ... is a great way of transferring knowledge to help bootstrap people who don’t have the experience,” Lamach said.
Retaining good talent is as equally important for Ingersoll Rand as recruiting in local high schools and community colleges.
Keeping workers happy not only means providing competitive pay, but also creating a workplace in which employees feel engaged, Lamach said, citing Ingersoll Rand’s sustainability efforts and ethics in particular.
For instance, Ingersoll Rand has started manufacturing its air conditioners to produce fewer greenhouse gas emissions.
Lamach said it is the responsibility of corporations to commit to ameliorating climate change and other problems especially in today’s uncertain political climate.
“If you had that in five to six key industries (doing the same), you could reduce greenhouse gas emissions in the world dramatically by 2030,” Lamach said.
Lamach is among the two dozen leaders that make up the Charlotte Executive Leadership Council, the group led by Duke Energy CEO Lynn Good that supported compromise legislation to repeal HB2, North Carolina’s controversial law that limited legal protections for LGBT people.
The repeal was a step in the right direction, Lamach said, but there still needs to be a more “affirmative policy that’s more progressive” on LGBT rights.
“It has nothing to do with politics. It has to do with values and people. Why are we creating more pain?” he said.
When it moved its corporate address to Bermuda in 2001, Ingersoll Rand was one of the first major U.S. corporations to move offshore in what’s known as an inversion, a deal intended to cut its tax rate sharply and reduce its annual bill by hundreds of millions of dollars. The company moved again in 2009 to Ireland, which also boasts a low corporate tax rate.
Inversions like Ingersoll Rand’s have been criticized as unpatriotic and a way to unfairly cut tax bills. But the company and many others points out the problem is the U.S. tax rate, which at 35 percent is the highest among industrialized countries. Lamach said his company, like others with headquarters outside the U.S., pay U.S. taxes on U.S. earnings, so they are not getting any special break.
Congress is currently debating legislation that would slash the corporate tax rate to as low as 20 percent. Lamach did not comment specifically on the proposals, but said Ingersoll Rand would benefit with lower taxes.
“It’s just such an uncompetitive U.S. tax system that it really disadvantages anyone competing globally, and it has to get fixed,” Lamach said.
Meet Michael Lamach
▪ Age: 54
▪ Career: Joined Ingersoll Rand in 2004, has been CEO since 2010
▪ Education: Bachelor’s degree in engineering from Michigan State University, master’s degree in business administration from Duke University
▪ 2016 compensation: $16.4 million