Tom Simpkins, who joined Nevada Industry Excellence as project manager in 2019, was appointed to the director role in June of this year; he served as interim director since January.
Prior to 2020, Nevada Industry Excellence Director Tom Simpkins would hear a lot of manufacturers echo each other when the topic of automation came up.
“They’d say, we want to automate, we understand it, but it’s something that’s just a little too far off, and the capital investment required is something that we’re just not prepared to do right now,” Simpkins said in a recent interview with the NNBW.
Since the pandemic threw a wrench in the manufacturing industry, many manufacturers in Northern Nevada are changing their tune as they work to make themselves disruption-proof.
After all, the first wave of pandemic-driven shutdowns — when workers were spaced six feet apart and COVID cases popped up like clockwork — caused drops in staff and production levels across the globe.
“Now, automation’s shifted to the forefront,” said Simpkins, who was promoted to director of NVIE in June. “Capital expenditures are still there — you still have to invest in it — but the priorities may be a little bit higher. The awareness level of what automation can do for a workforce in a pandemic on your factory floor has been highlighted.”
That’s one of the many shifts in mindsets and operations that manufacturers in greater Reno-Sparks have made throughout the pandemic. To dig deeper into the state of manufacturing in 2021 and beyond, the NNBW spoke at length with Simpkins about the challenges and trends shaping the industry and what factories of the future might look like.
Q: What lessons do you think manufacturers have learned over the past year? Was 2020 a warning sign to develop better systems for navigating disruptions?
Simpkins: One of the key terms that has come out of this is resiliency. When you have major disruptions to your factory floor, your supply chain, how quickly can you bounce back to get back to full production? Every manufacturer has this massive web of supply chains, which makes manufacturing such a great industry for Nevada because when a manufacturer moves in, they need this massive support in the supply chain to keep them going.
But manufacturers had never envisioned a scenario where they had to completely shut down their operation and put everything on pause. What does that do with existing purchase orders and future purchase orders? And then demand is way up for certain raw material when things start back up again. So a major lesson learned is to just think about that. It was something that was kind of unfathomable before, and now we definitely need to be prepared for it. Any manufacturer needs to be able to have a plan on how to pause your business if you need to, pause your supply chain, increase your safety stock on your critical materials, so that when things start back up again you’re going to be OK.
Q: Do you think the pandemic is driving more digital investments in technologies to support new levels of resilience?
Simpkins: Part of your resiliency strategy could be “what happens when our workforce is reduced?” Either they have to stay home or we have certain protocols put in place where we have to send people home for extended periods of time. So, your resiliency plan is also a workforce component — what do you do to manage that? And I think the pandemic has really been a catalyst for greater automation in many manufacturing facilities. I’ve heard some numbers thrown out that the pandemic has sped up the adoption of automation by like three to five years.
From a pandemic perspective, if you’ve got a workforce and they’re coming to work and we’re getting production up, what happens when they can’t come to work? What happens when they’re sick and they have to stay home? How do we continue production so that when they come back, they have a job, we can pay everybody, we can keep everybody employed and our business can thrive? That’s one way to look at it, and then there’s the other way on the workforce shortage side of it as well.
Q: On that note, how significant is the workforce shortage for manufacturers right now? How can the industry overcome it?
Simpkins: One of the numbers I heard lately from the National Association of Manufacturers is that there are 4.5 million manufacturing jobs that are needed, yet 2.4 million of them are not going to be filled. So there is this lack of workers. But probably equally as important is there’s a need for qualified talent. There’s a workforce shortage because there’s just not as many people out there working, and also because you have this qualified talent gap that’s happening. We’ve got these jobs that are going to be unfilled. So, how do we retain our current workforce and keep them trained and help them grow within the organization and understand new technologies? How do we offset that massive workforce shortage and then how do we offset the talent gap?
The future of the factory floor is where robots are going to handle menial, tedious tasks, and then the human workforce is made up of people with technical and managerial people skills, who can do the creative thinking and the interesting work around manufacturing. If you can help fill some of that labor shortage now with robotics and automation, you can help alleviate some of that. Because those are the positions that are going unfilled — those entry-level, factory-line assembly workers.
We thought that perhaps during the pandemic when he had this massive layoff in the hospitality sector in Nevada, that you would have a huge pool of potential employees that could be reskilled or upskilled from hospitality into manufacturing. But the reality of it is, it wasn’t quite that simple. All of these laid-off hospitality workers, their jobs weren’t completely gone. They were receiving some (unemployment) benefits and waiting to see if their job comes back. Some of them are permanently gone, but a lot of those hospitality jobs have come back. So there wasn’t this massive upskilling talent pool. There are some candidates out there, but what it requires is just some well-funded, well-focused programs to identify those workers interested in being on a factory floor and making a career change. And then helping get them trained up and getting them ready for a factory.
Q: Do you think the lack of available skilled workers here and the lack of workforce housing is giving some manufacturers pause about relocating or expanding here?
Simpkins: It definitely is. When we are brought in with economic development agencies early to talk about a manufacturer potentially moving here, that is always important — wage inflation and cost of living increases. It’s just unpredictable where the ceiling is in Nevada. Wage inflation is not a bad thing, by the way. I think we all agree that having natural wage increases as the economy grows and opportunity grows isn’t a bad thing. All the studies have shown that a natural increase to the labor market is better for the economy, it’s better for the worker in the long run, and it keeps more people employed naturally.
Does it get to a point where the wages in Reno are the same as they are in the Bay Area? The incentive then to move to Nevada isn’t as great. You still have all sorts of tax incentives, and purchasing land is going to be less, but if your labor wage rates and the cost of living for your employees is just as high, it just lessens our competitiveness as a state. Wages are certainly going up everywhere across the country, it’s not just Nevada. And there are still many incentives to be here. If you’re making your whole decision based on wages, it’s probably not the right approach to take.
Q: What are other trends in the manufacturing industry to watch out for moving forward?
Simpkins: Domestic supply chains are a major thing that manufacturers are looking at now, and will continue to look at, which could create amazing opportunities for those upstream suppliers. For example, if you’ve been importing your steel, and then all of a sudden you can’t get that stuff internationally, and you want a local source, there’s an opportunity there. It’s not as cut-and-dry anymore when it comes to importing material.
No. 1, the cost of importing materials has gone up, and, No. 2, the uncertainty of not having it … that’s an opportunity cost that is being weighed. And so for local suppliers to be setting up sheet metal supply, hardware supply, and if you’ve got local semiconductor manufacturing, you’re going to have a lot of business here. Because manufacturing is this massive web of small manufacturers making stuff for medium manufacturers who then assemble it and then give it to big manufacturers, that whole thing could really be benefited.
I’ve also noticed a sense of community. So many manufacturers like to just keep their heads down and make their product, and do what they do. But we’ve noticed a major increase in manufacturers raising their hand and coming to us and saying, hey, we want to be part of a manufacturing community that works together on, for example, addressing our workforce challenges. They’re realizing that coming together as a community and one voice and benefiting manufacturers as a whole in the state will make the state a more sustainable place for manufacturing.
Note: This interview has been edited slightly for length and clarity.