Howard McIlvaine can check off all the boxes any business leader can only dream of having these days: The company he helps run was deemed essential and the demand for its product has grown exponentially overnight.
But, as McIlvaine, the vice president of operations at Unex Manufacturing in Lakewood, took his turn on the webinar of manufacturing leaders and the legislators that make up the state’s Manufacturing Caucus, you quickly heard the problems the company was facing.
It’s a scary situation — and it should serve as a warning for companies looking to return to work in greater fashion as New Jersey continues its slow walk out of this COVID-19 crisis.
This is not going to be easy. Even for the companies that seemingly have it all.
Unex makes various supply-chain products that are in high demand in warehouse and fulfillment centers, including gravity conveyor, carton flow tracks and gravity flow racks. These products have been in high demand since the pandemic began.
“We supply all the supply-chain people,” McIlvaine said. “We supply FedEx, UPS, all pharma, all the food, all the liquor — we’re in every warehouse, every truck, every depot. That side of our business went through the roof.”
As did the demand.
“We received a lot of orders with immediate delivery required for little pop-up UPS hubs and for pop-up FedEx places,” he said.
“That same week, we had 50 people (out of a staff of 75) who were afraid to come to work.”
The fear of COVID is real. Granted, this scenario happened in the early days of the pandemic. But, if you think your people are going to rush back to the office, the 10 manufacturing leaders on the Zoom call Wednesday will tell you that’s not going to be the case. And it certainly won’t be the case if the dreaded second wave of COVID-19 comes back this fall.
The reason: misinformation.
Whether it comes from friends and family, media or social media, these leaders said don’t be surprised when your employees simply tell you they’re not going to show.
And don’t be surprised when you don’t blame them.
“There are a lot of heartstrings that are pulled,” McIlvaine said. “You feel horrible, (you think) ‘What if I’m wrong, what if I make you come to work and something happens to you or your family or your loved ones because I did that.’”
The emotional reaction is not always reciprocal. At least, when dealing with customers who are not in the tri-state area — customers who don’t understand the situation here.
“I’d talk to customers and suppliers, and they acted like nothing had happened,” he said. “I’d have a customer that would understand, and I’d have a customer that said: ‘What’s the heck’s wrong with you? Why aren’t all your people at work? Supply my conveyor.’”
Any New Jersey company that interacts with companies in other regions may get a similar reaction.
Slowly but surely, McIlvaine said his workers are feeling comfortable returning to work. He’s lucky. He has work for them to return to. That’s not the case with Casey Bickhardt, the owner of GEMCO and Package Kare in Middlesex.
GEMCO produces industrial-size manufacturing equipment for pharma companies: very large blenders, mixers, dryers, she said.
And, while that sounds like an ideal company for the state that once dubbed itself the medicine chest of the U.S., it’s not. Bickhardt said 70% of her business is in China.
“These are very large capital pieces of equipment, $250,000 and up,” she said.
Bickhardt said she’s worried about the recovery. What she thought was going to be a “V”-shape curve, she now sees as a problem for the long haul.
“One of the biggest problems that we’re going to face as an equipment manufacturer, especially capital equipment, which requires a large investment, is going to be confidence,” she said. “And, when does this supply chain have confidence, when are customers are going to have confidence again to start rebuilding a factory as they’re just getting off their feet? So, how quickly can we bring that back?”
She’s talking about consumer confidence — she could just as well be talking about her workforce.
A company of 35 before the pandemic, she’s down to just half that due to the dramatic drop in orders and revenue. And, while she hopes to bring back those on furlough, she doesn’t know if they will be available when she’s able to bring them back.
This is another big problem facing companies: Will the highly trained employees you need to return be available when you need them to return? Furloughs may save your present, but kill your future.
Of course, the problems of the present are everywhere. Just ask Patrick Marotta, the third-generation CEO of Marotta Controls, a family-owned manufacturer in Montville.
His family’s 77-year-old business has been doing so well — he estimates 10% growth for the past 10 years — that it recently completed a 15,000-square-foot addition to a facility that now has 125,000 square feet of space.
With new social distancing rules, it’s suddenly not enough — not by a long shot.
“We can’t just add another building instantly,” he said.
This could limit growth.
“We put together a budget for this year knowing knew we were going to be tight on seating and we would be looking to squeeze more employees into our current space — and, now, that’s completely out the window,” he said.
The Manufacturing Caucus put the event together with help from the New Jersey Manufacturing Extension Program. Members wanted to hear the issues facing the sector. They got more than they bargained for.
The reopening of any sector is going to face numerous challenges both for companies that should be doing well — companies such as Unex and Marotta — and companies that have been crushed through no fault of their own, such as GEMCO.
The second wave of COVID’s business challenges is just beginning.