Experienced Help Wanted

Record low unemployment is making it increasingly difficult to find qualified employees. What can scrap companies do to hire the people they need?

By Kristina Rundquist

Kristina Rundquist is an associate editor of Scrap. 

With unemployment at an all-time low—hovering around 5 percent nationwide and dipping to as low as 3 percent in some areas of the country—the news is great for people looking for work. But it’s not so great for those looking to hire.

Long accustomed to having the upper hand in the employment game, many employers now find the deck somewhat stacked against them. No longer can they simply post a help wanted sign on their gates and wait for the lines to form. These days, employers must be part showman, part salesman, and part clairvoyant—and even then there’s no guarantee they’ll find the type of worker they want. With so many options, job candidates are holding out for better salaries and benefits, not to mention other perks such as flex time and help with child care. 

This is true even for Americans working in nonunionized service sectors and manual labor—segments of the work force that traditionally have had little choice over their working conditions. But with a slew of startup companies and expanding sectors of industry, skilled blue-collar workers are more in demand than ever. 

Of course, employers also expect more from these employees than ever before. No longer are employers satisfied with hiring someone who can simply follow directions. Today’s employees must have a firm grasp of the basics, of course, and be able to operate highly technical equipment.

Unfortunately, this leaves employers with a distinct problem: Finding employees in general is hard; finding skilled ones can be nearly impossible.

Help! Jobs Unwanted

“When it comes to finding qualified scrap labor employees, we consider them nonexistent,” says Frank Giglia Jr., general manager of Allied Scrap Processors Inc. (Lakeland, Fla.). Giglia isn’t alone in that assessment.

“Everywhere you go, you see help wanted signs, so we’re not the only industry faced with this,” says Bob Toth, human resources manager of Annaco Inc. (Akron). “The overall consensus is that there are just fewer people to go around.”

One reason might be demographics: The children of many baby boomers aren’t old enough to work. But even when people are available, they’re often not interested in the jobs offered. Toth has noticed a “nationwide shortage of interesting entry-level positions and individuals who are willing to take them.” As he explains, today’s employees are “more self-confident and motivated by their own needs. They’re more intelligent, more savvy in getting what they want from a job, and they have choices now—so many, in fact, that it makes it difficult.”

Even the overall work ethic seems to have changed, Toth says. “People in the prime hiring range are saying, ‘We’ll work there and give what’s mutually beneficial for a while, but we don’t owe allegiance and we won’t break our backs.’ People simply aren’t as interested in manual labor as they once were, let alone coming in at entry level.”

Technical Tribulations

The irony is that today’s entry-level, manual labor positions require greater technical knowledge than ever before. Gone are the days when you could cast the net and drag anyone in. Today’s employers are looking for a little something more. “We want someone who’s computer-literate, who’s had some education, and who has access to transportation,” Toth says. “More and more companies are requiring a little more education and know-how.”

But increasingly employers find that applicants for even the most basic positions lack the proper education. “Even if we find someone with a decent attitude and a good work ethic, it’s amazing the number of people who are borderline illiterate,” says ReMA President Jim Fisher, president and COO of Fisher Steel and Supply Co. (Muskegon, Mich.). “They lack basic writing and math skills and usually have no problem-solving or team-building skills.”

Unfortunately, few jobs today are unskilled. Most require significant training. But a lot of people graduating from high school today are “inadequately prepared” for the work force, Fisher says.

Neil Cohen, president of Hamilton Scrap Processors Inc. (Hamilton, Ohio), agrees. “We’ve bounced around as an education system as far as our goals and expectations are concerned, and in the process, we’ve failed to do a lot of anything.” Cohen blames society more than the educational system, noting, “we’ve ceased to be involved in education and so educators have ceased to have an understanding of what we need and want.”

Economic factors and tightening government regulations also play a part in shrinking the pool of attractive job candidates. For example, new regulations concerning commercial driver’s licenses make it harder to find qualified truck drivers. The rules “took a lot of drivers out of the marketplace” because of a provision on substance abuse testing, Cohen says. “It’s hard to find people who traditionally have been drivers that don’t have some of these flaws in their background.”

Add in the deregulation of the trucking industry and you have a classic case of demand exceeding supply. “With the huge shift to freight moved by truck from rail, there’s a tremendous demand for drivers,” Fisher explains. “It has expanded so much that there’s simply a gap in terms of the resources available to service drivers. We fight this constantly, and it’s a case of continual inflation in pay. The rate is continuing to skyrocket.” Moreover, the lack of drivers has also forced Fisher Steel to rely on outside freight companies, which pushes up transportation costs.

Truck drivers aren’t the only positions going vacant. An edition of the Kiplinger Washington Letter also listed machinists, tool and die makers, electricians, and welders as difficult positions to fill in regions where labor markets are at their tightest, especially the Midwest, West, and Southeast. Crane operators and any other position requiring technical skill are also in hot demand—and it’s getting worse.

A paradigm shift is under way as the work force moves from a manufacturing/ service economy to one based in the information age, Fisher notes. “The shortage of qualified employees is multifaceted and is in direct relationship to the forces of the economy,” he explains. “It’s intensifying everyday, but it has really exploded in the last three to four years, and the ’90s economy has reflected this.”

As the economy approaches full employment, most people who want a job can get one. “So the people we’re dealing with are the ones who are, in effect, unemployable as far as their skills, attitude, etcetera are concerned,” Fisher says.

The key to weathering the storm is for scrap processors to attract better employees. “We’re no different from any other industry in that we want better workers and we’re competing for them,” Fisher notes. “We must continually do a good job of assuring that we have a good image, that we have clean vehicles and good safety practices, a good culture and benefits, and all the other things that go along with it. Otherwise we’re going to have a perception problem with people saying they don’t want to work in the scrap industry.”

Sweetening the Pot

So how do you attract a better crop of employees? 

Higher salaries is a start, but it’s not the whole answer. “The lure of money brings them in and it serves a purpose for a while, if no more than to keep your firm on par with the competition. But it’s not the cure-all,” asserts Toth. Annaco, for instance, also offers overtime benefits, profit-sharing, a prescription drug card, and a paid day off for the employee’s birthday.

Hamilton Scrap likewise offers generous salaries and benefits, Cohen says. But to attract the right type of employee you must go even further. “You need to have a caring nature for their family and be a little more giving than you traditionally would in our industry,” he notes.

On the flip side, competition also limits some companies from upping wages. Higher wages translate into higher prices, and many companies find that customers don’t want to foot the bill. While job candidates certainly want a good benefits package, the benefits alone don’t guarantee you a viable pool of candidates. People also have to know about your company and what it offers, or else you won’t find many takers no matter how good its benefits.

So what do you do? The obvious answer is: Let them know you exist. 

Marketing your company is one of the most effective—and in some cases least expensive—ways to find high-caliber employees. “The first line of defense is an ad in the newspaper. Then there’s word-of-mouth with customers. And don’t forget to post a sign in front of your operation,” says Toth. Any advertisement must be truthful and yet promote your company in the best possible light, he adds. Key points to include are overtime, full benefits, and opportunity for advancement. “We’re looking for a higher caliber of entry-level employee,” Toth stresses, “and our ads are designed toward that end.”

Networking is another tried-and-true recruiting tool. When looking to hire, Toth networks even during his off-work hours. Annaco also offers its employees an incentive to help fill positions, giving $100 to those who find a new employee who remains on the payroll for six months.

OmniSource Corp. (Fort Wayne, Ind.) also uses employee referrals, and sponsors job fairs. “We’re forever involved in various area seminars to get our name out,” says Ben Eisbart, corporate director of administration and human resources.

College placement departments can help fill managerial and supervisory positions, while high school guidance counselors can also steer students to your door. At OmniSource, internships give students in various high school and college programs a taste of the workplace. And the company is in the process of sponsoring prizes for the best welding student or mechanically oriented person at vocational schools. “We’re trying to pick schools that will let us highlight the fact that quality students can get quality jobs,” Eisbart says.

Beyond such proven methods, Eisbart also touts some unconventional means of hiring. “We have a relationship with the social service agencies in the area that have helped immigrants and those who are developmentally disabled. Now, for example, we have a host of Bosnian and Croatian employees. The Catholic charities have been resettling a number of immigrants and the local Jewish organization is working to resettle immigrants from the former Soviet Union.”

Such alternative hiring sources have worked so well for OmniSource that Eisbart advises other firms to “break the rules and think creatively.”

Temporary Solutions

While unusual outlets may prove fruitful, many employers find that the constant need to hire new employees combined with the shrinking pool of suitable applicants simply takes too much time. “I’m constantly searching for individuals we can bring in here,” says Toth. “Just the prep work takes a lot of time and money.”

To ease that time crunch, scrap operations of all sizes are turning to temporary and leasing agencies to fill their staffing needs. “Companies need to understand what their core competency is and if it’s not in hiring and interviewing, then outsource it and let someone who is good at it do it,” Fisher advises. His company, for example, has used a temp agency for five years, while Allied Scrap has a 15-year track record with temps.

Temporary and leasing agencies, which place a block of people for a particular job, are popular precisely because they take care of all the details. At Hamilton Scrap, “the agency we use takes care of all the benefits,” Cohen notes. “They do payroll and taxes and send us a bill at the end of the week for doing so.” Nearly half of the processor’s employees were hired through temp agencies.

“Whether they find a particularly good match is a 50/50 chance,” Cohen continues, “but the nice thing is that they have a pool of people, so they can send you the next one if the first one doesn’t work out.”

As such, most of Hamilton Scrap’s entry-level positions are filled through a temp agency. “From there we promote from within to the more skilled positions and fill those positions with people that show a desire to make that move,” Cohen says.

 For Fisher Steel, temp agencies “get employees in the door,” Fisher says. Likewise, OmniSource’s Eisbart believes using temporary agencies “gives us a good chance to evaluate people.”

Allied Scrap uses a three-pronged hiring plan, starting with a temp agency that handles the initial screening. From there, it gives the potential hire a first-day orientation including a plant tour and the company’s policy packet. “Then we start the two-month trial period,” says Giglia. “We put the person with a training buddy, and unless they have a rare talent we employ them in several departments. After that 60-day evaluation, we get feedback from everyone they’ve worked with—because once he’s hired, he belongs to them for better or worse.”

Of course, temp agencies are no panacea. With temporary employees come problems—some of which can be anything but temporary. 

First off, there’s training. If your company hires temp workers on a short-term basis—to fill in for sick employees or help with a quick project, for instance—you don’t want to spend a lot of time training employees who won’t be with you long. 

At the same time, you can’t turn loose a group of untrained workers into your plant, especially not with today’s increasingly strict safety regulations. For Hamilton Scrap, that means making sure all workers are trained “even if they’re only working for the day,” Cohen notes.

To minimize training downtime, make sure temps are given “tasks that might take 10 minutes to learn and that don’t require a lot of product knowledge,” Toth suggests. “You want your best players and most seasoned veterans in the critical and sensitive positions.” He adds that Annaco is fortunate to have “a good crew of veteran employees that pitch in heavily and assist with training. No matter how many new guys they get, they take the time to train them—there’s enough pride in their workmanship coming from the veteran employees that it overcomes the frustration, but it does put a greater burden on them.” 

Unfortunately, it’s a burden that few see abating in the near future. “I think the shortage of good labor is becoming more acute,” Toth says. “It hasn’t bottomed out yet, and I don’t expect to see any improvement in the next 10 years.”

Although the labor shortage might ease somewhat as more of the baby boomers’ children enter the work force, Toth adds one last concern: Will they be interested in the scrap industry? Of course, the question can just as easily be turned around: What will scrap recyclers do to make their companies interesting to those future workers? •