ASK A BOARD MEMBER

A Good Employee Is Hard to Find

THE QUESTION: Like many industries, the dairy industry continues to struggle with labor shortages that have significantly impacted business. How has your sector of the dairy industry struggled with the labor shortage and what has the industry done (or can continue to do) to both recruit and retain employees at every level?

Like most industries, the dairy industry continues to struggle with labor shortages – a problem that has significantly impacted businesses of every kind. According to the Bureau of Labor Statistics, at the end of 2021, there were 10.6 million jobs open and more than 6.3 million unemployed people in the U.S. (This number is thought to be conservative, as to be classified as “unemployed,” a person has to be actively looking for work.) Unemployment rates are expected to average just under 4% in 2022 with nearly 300,000 jobs added monthly.

While there are a variety of reasons why a good employee is hard to find, the obvious common denominator is the pandemic. Some lost their jobs as businesses shut their doors; others refuse to come back fearing COVID or due to other issues like lack of childcare or elder care. Many like working from home and are only considering opportunities that will continue to let them do so – not something always possible in the dairy industry. Some people, particularly Baby Boomers, took the pandemic as a sign that it was time to retire, and others, particularly Generation Z, decided that work-life balance was of the utmost importance, often jumping quickly from one job to a better one with fewer hours and better perks. Other issues, like age restrictions for truck drivers, a lack of interest in dairy-related jobs, particularly in the trades, and what some in the industry say is simply a lack of interest in good, old-fashioned hard work, has also tipped the scales in the wrong direction for employers. Employers in every industry are doing everything they can to draw in employees – from generous hourly wages to signing bonuses and other perks. Federal Reserve economists expect unemployment to improve by the end of 2022 but are only estimating a fall back to 3.5%, so the problem is not going away anytime soon.

To that end, Northeast Dairy asked board members from the Northeast Dairy Foods Association and the Northeast Dairy Suppliers Association to weigh

in on the following question: Like many industries, the dairy industry continues to struggle with labor shortages that have significantly impacted business. How has your sector of the dairy industry struggled with the labor shortage and what has the industry done (or can continue to do) to both recruit and retain employees at every level? Here are some of the responses we received.

“Identifying, hiring and successfully onboarding new people is becoming the single greatest determinant of our ability to meet growth opportunities in the markets we serve. We have expanded our network of professional recruiters, engaged additional local temp service agencies, created an employee rereferral program (one of my personal favorites for the successful rate of new members); and we have broadened efforts on our own internal recruiting efforts through website services. For the local temp agencies, we have held virtual open houses to show the agencies what type of environment their people will be coming to with the goal of better prioritizing our opportunities versus other forms they may be servicing and know our challenge is really against more of the work-from-home or non-manufacturing type rolls. Fortunately, it does seem to be working for us, and we were able to meet our needs through 2021. As we roll into 2022, we are, once again, experiencing growth that is putting us back into the fully active role of filling a number of positions.” –Glenn Emory, general manager, North America, Weidenhammer New Packaging, LLC

“At our facility, the present employees have benefitted greatly, as we put emphasis on retaining the work force we have with better benefits, bonuses, shift differential, pay increases, etc., which puts us on a level playing field with other local manufacturers. To attract new hires, we have implemented sign-on bonuses. We still cannot force people to return to the work force. There needs to be change in government regulations. Open the schools, so parents aren’t forced to stay home to home-school their children and restart the Job Service program to find persons on unemployment a fulfilling job and (a reason to) get off of government assistance.” –Ray Gerwitz, dairy manager, Steuben Foods, Inc.

“Our company has been very aggressive in searching for new employees, particularly in the engineering and service positions. Alternate and multiple search companies have been utilized, and we have had some good success in hiring veterans of the Armed Forces who have recently been discharged. The company recently improved our PTO policy and provided increased paid time off to employees based upon years of service in order to retain our valuable long-term employees. Even with our success, we still face a serious shortage of personnel at our plants. In many cases, we have had to extend delivery times and quantities shipped to keep all customers satisfied and properly stocked. We are also facing a shortage of electrical components and other hardware required to build our machines. Our sourcing personnel are working overtime to get us prioritized for shipments and to also locate alternate suppliers globally. –Paul Knoerl, packing equipment specialist, Pactiv Evergreen

“There is no easy answer to solving the labor shortage in the dairy processing industry. Some of the challenges that we face involve having to run our plants 24/7. More and more people are realizing that having some time away or weekends off is worth something. How much money? That will vary in each person’s circumstances. However, that

is one of the bigger challenges that we face. To give our employees more time off, including weekends, we have to be creative in scheduling shifts. We have seen other industries (like healthcare) that operate 24/7 make changes that benefit the employees’ lifestyles. Another thing is to try and improve the working conditions. Depending on where you are working in the plant, you can have some extreme environment conditions – hot or cold. What can we do as management to moderate those conditions, which usually involves some type of investment dollars? This typically can be a one-time investment. One last, and probably the most important, aspect to consider is appreciation of your employees. In my first job in private industry, the company had three plants in one town, and every day the owner was in town. He would go through one of the plants and visit the employees. The employees valued that visit because it gave them a chance to talk with the owner and express ideas to management that typically would never be heard. The employees felt that they were worth more, especially when the owner would come through and say “hi” to them by name. Sometimes the little things matter more than any of us realize.” –Thomas Pittman, senior vice president, Agri-Mark Cooperative, Inc.

“Drivers. We struggle in all three of our divisions: the milk hauling, the petroleum hauling, as well as the general freight. We have put in place every kind of advertising we can think of – radio, TV, social media, geofencing, etc., to attract new people. We have three different areas where we do our own driver training – Central New York, Eastern New York and Central Pennsylvania. Lately, this has brought some success, attracting some middle age career change candidates and also young people starting from scratch. This is great, but it is time consuming to get them up to speed and then finding DMV testing available in a timely fashion. It often takes six to eight weeks to get a person trained for the road test, then further training is needed to fill the specific driving position that person has chosen in one of the divisions. We can train three to four people at a time in each location, but the COVID restrictions have made that difficult. We have given large pay increases in the last couple of years in the hopes to attract and retain drivers. It has helped to retain but not so much attract. The driver shortage has really limited what we can do for our customers. Not being able to deliver longer distances or do extra work for them has limited our growth. We are always looking to grow and have been offered tons of opportunities, but we just can’t do it.

Hiring and keeping mechanics and technicians are basically the same situation. We are short in all of our five shops. There seems to be very limited interest to come into this field, even though techs are very well paid today. We have to send much of our work out to vendors for repairs, which is more costly than doing it in-house – but we have no choice.

Even with the outsourcing of repairs and doing all that we can in-house, we often face repair time that is much, much longer than it should be because we are lacking parts. I know everyone has heard of the lack of electronic parts in the manufacturing of all kinds of equipment, and the same is true when it comes to repair of trucks. We’ve had to wait weeks for a sensor, which identifies the quality and level of the diesel exhaust fluid in a trucking holding tank, for example. This is a common problem, and, every time one of these sensors is needed, it is a battle to find one. It isn’t just electronics. It’s everything. We have a truck sitting now that needs a simple water pump. It’s been six weeks. These are $130,000 to $150,000 trucks sitting because we are waiting for $100 parts.” –Rick Wadhams, owner, Wadhams Enterprises, Inc.

“Shortage of milk and cream haulers has been a problem for years, but it has become a much larger problem since we are operating during a multiple year pandemic. There is a shortage of drivers and a lot of turnover of available drivers. Some have just decided to retire. Just about every industry is trying to attract CDL drivers, so we’re seeing drivers switch not only to a company within the dairy industry but also to similar

industries – delivering milk to delivering soda or beer. And, many over the road drivers want to drive only within 105 miles of their home terminal.

We’ve looked at possible options, like shortening the runs so one driver can haul more loads per legal work week, maximizing the legal payload, a willingness to hauling business units by helping new people to enter the business, being willing to spend more money per unit of measure because labor infiltration is real, and being willing to forfeit customers that are just too costly to continue providing delivery services and products.” –Daniel Lausch, director, milk procurement, Lactalis American Group, Inc.

“I run a recruiting and staffing firm that works exclusively in the food/ beverage industry with a big focus on dairy. In the 13 years that we have been doing this, we have never been busier. My company recruits management level positions from supervisor to the CEO level, and there is a lot of movement there for sure. From the people I talk to at the higher levels, the biggest problems is finding operators and processors and then retaining them. When you’re paying $15 to $18 an hour for an operator and all of the local gas stations/ convenience stores and fast food restaurants are paying the same, it can be tough. People don’t seem to care if they show up for work because they know they can find something else pretty much immediately. I am seeing more and more companies trying to battle this by adding in incentives like paid vacations, quarterly bonuses, long-term bonus incentives, sign-on bonuses (that need to be repaid if the employee leaves within a year), educational reimbursement, employee development and career mapping in order to differentiate themselves and to make it worthwhile for people to stick around and look at it as a career rather than just a job.

Unfortunately, there will always be some people who just don’t care, but a lot of people out there are quitting their jobs in the service, retail, restaurant industries and looking for a career where they can advance and still have work life balance. Companies that paint that picture around the growth in the industry and the long-term career potential within the organization for their employees are having more success.

On the recruitment side, with the competitive job market, we are seeing a lot more demand for our recruiting services. Companies are reaching out to us because of our extensive network of candidates and the ability to weed people out and find passive candidates that may not be currently looking for a job but may be interested in the right opportunity. We are seeing lot of hiring in the upper level management ranks because of the growth out there. It seems like just about every company is looking for “servant leaders” who can keep employees engaged and get their buy in. They are looking for leaders who believe in and have experience developing employees and putting into place employee training and development programs and making employees feel empowered in their jobs and within their career paths.

It’s definitely a dynamic market right now, and it’s important for companies to really pay attention to both their recruiting and retention strategies in order to differentiate themselves from other competitors in the marketplace.” –Ryan Osterhout, COO and managing partner, KCO Resource Management

“More companies are adding in incentives like paid vacations, quarterly bonuses, long-term bonus incentives, signon bonuses educational reimbursement, employee development and career mapping in order to differentiate themselves....”