Packagers undervalue intellectual capital

Packaged goods companies are shedding irreplaceable talent due to cost-cutting and consolidation strategies. One blogger asks, ‘Where will it stop?’

The way that some packaging companies treat their aging workforce, you could easily conclude that management places little or no value on the knowledge that their employees possess. These companies are undervaluing and casting off their greatest asset: an experienced and skilled workforce.

While employees with technical training from the Vietnam era are reaching retirement age at an alarming rate, some packagers are deliberately accelerating the rate through downsizing initiatives fed by early-retirement packages and plant closings. Although some of these initiatives may be true downsizing, others are merely aimed at transferring operations to less expensive co-packers here in the USA or to operations in developing parts of the world such as Mexico, China, or India.

When downsizings occur, skills go out the door at rates exceeding the overall attrition rate because people with skills know that they are marketable. Skilled workers can collect on retirement packages while embarking upon second careers. These folks can sell their services as high-priced contractors, sometimes being hired back into the same jobs that they left at comparable rates of pay. I don’t get the new math that CFOs are using. More than likely the CFOs and CEOs of today’s corporations have never suffered through a grueling packaging line startup. They don’t have a firsthand understanding of how much skill and knowledge it takes to get a line up and running at peak efficiency and then to keep it there. The young workers that are being hired to replace the seasoned veteran operators do not come with the basic math and technical skills of their predecessors. The new technical and professional employees don’t stay in place at one job long enough to see a project through from concept to startup and on to optimized routine operation. Executives today must think that packaging lines have an Easy Button or else it all just happens by magic! I know that neither is true.

At a packaging meeting that I attended recently, I did come across one of the world’s largest food and beverage packagers that does understand the value of the knowledge that their long-time employees possess. This company has established a program that aims to capture and manage their at-risk knowledge before it goes out the door forever through retirements. By identifying people with core knowledge, capturing it, and sharing it with younger employees over time, this company will be much better positioned to compete in the global economy.

I would encourage other packagers to recognize the intellectual capital that exists amongst their workforce and to carefully deposit that capital in the type of investments that will be protected and that will produce a favorable rate of return over time. Cavalierly jettisoning these assets will provide neither capital preservation nor growth.

Comments

• AMEN. I have said this for 10 years to my employers. The amount of incoming personnel has fallen short of the demand for 10-12 years, and they are not qualified.
• I strongly agree and think CEOs, CFOs, and staff should follow thru with watching a project on a line from start to finish.
• Keith, I could not agree more. Managers where I work value an untested newbie with a diploma from any old place more than they do a guy with 15+ years of experience. Even though I got an MBA, I still labor under a disadvantage because managers value “new blood” more than us oldtimers with knowledge. And if we are not being downsized or laid off, we are voting with our feet. I’m tired of getting cost-of-living raises every year while the newbies get bonuses. Remember, people don’t quit companies—they quit bad supervisors.
• Some companies just toss their older experienced employees aside. I sincerely hope that as you said with all the technological experience gained over the years by working on the line, the best and most logical solutions and ideas come from the shop floor. If they are not being listened to, what a waste.
• I would like to see companies establish programs to provide after-retirement opportunities to packaging veterans. I am about a year and a half away from retiring and would like a situation where I could keep active in the industry in which I have spent my whole career. My vast experience should be attractive to some company.
• Had I been in the military, technically, I would have been a Viet Nam era veteran. I agree with points above 100%. I was “downsized” over a decade ago while in the midst of building my original design of a proprietary system that revolutionized packaging operations for one of the company’s flagship brands. This is the risk of being an “employee at will” in a large corporation. There are probably dozens of engineers out there with similar experiences. In retrospect, it was probably the best thing that could have happened with respect to my career and professional development.
• I agree with your comments. I would suggest also that what you say here goes well beyond the packaging industry and applies almost universally across the board in the U.S. and, I bet, across the world. When you can exchange one 50 or 60 something for two twenty somethings and have change left over, it seems that this new math almost always comes up with companies opting to divest themselves of the experience and make up for it with extra inexperienced bodies.
• I agree with your comments concerning a skilled workforce. They came at an excellent time, as I am requesting a state training grant. We wish to transfer skills to the next generation, just as they transfered their skills to us. With that said, we also need to upgrade the skills of our current workforce to stay “current” with the technology that is evolving on the manufacturing floor.
• You got that right. More and more companies will use contractors/consultants to do a project. Millions of dollars are wasted since nobody can manage them. This is called savings. In the long run it’s a waste of company funds. But hey, marketing guys are running companies, and what do they know about engineering?
• I was downsized by a company that used to be part of the DJIA before they started letting talent slip through their fingers. Toyota, who this year passed GM, has revitalized the use of “master craftsmen” to innovate and ensure quality. I think that what we are discussing is another example of arrogant U.S. corporations destroying themselves while paying their CEOs outlandish salaries for doing so. c
Keith Campbell speaks out on vision and leadership for packaging automation.
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