Workforce shortage prevents firms from expanding in Superior

Todd Seyfert

Four of the top executives at FeraDyne Outdoors in Superior commute there each week – including one who flies in from Atlanta, Ga, at the company’s expense. The others drive from Minneapolis, St. Cloud and central Wisconsin.

“That’s four families that aren’t living in the local area, supporting stores and contributing to the tax base,” CEO Todd Seyfert explained.

 Attracting outside talent has been a significant challenge, Seyfert told BusinessNorth last month. But it’s not just executives who are difficult to recruit. The maker of sports equipment, including well known “Block” archery targets, also has difficulty hiring manufacturing workers.

“We’ve found people are tough to find, and when we do hire them, there is fast turnover. Maybe they were not prepared for manufacturing work,” said Seyfert, who commutes to company plants in Superior and lower Michigan from his Minneapolis residence.

The problem is so bad it is threatening Superior’s long-term economic base.

“We’ve moved 250 jobs to Superior in the past 12 months, but because of our inability to hire, we’re halting expansion in Wisconsin. In fact, we may move people back out because we can’t find the people we need,” Seyfert lamented. Instead, FeraDyne is looking at Michigan and Minneapolis as likely places to expand.

It’s an issue that extends beyond FeraDyne, said Jim Caesar, executive director of The Development Association, which serves Superior and Douglas County.

“It’s a pretty broad based problem,” he said. “We have some businesses that are starting at $13 to $15 an hour for really low-skill work with full family benefits after 90 days, and they can’t find enough people. There’s tremendous turnover with the people they get.”

Just how bad is the labor shortage among Superior manufacturers? One local company is operating at 40 percent capacity because it can’t fill open positions, Caesar noted.

“The younger the candidate, the less inclined they are to do manufacturing work,” Seyfert has observed. “They haven’t been exposed to it, and it’s hard work. The labor pool in our area is used to seasonal work such as at the shipyards. I think there’s a mentality that ‘I only have to work seasonally, and that will get me through,’ ” he said.

Some companies are so desperate they’ve turned to vastly alternative hiring methods. FeraDyne tried recruiting at a nearby subsidized housing structure, Seyfert explained, but didn’t attract many workers. Those who were hired tended to lack soft skills such as showing up for work when scheduled.

According to the Wisconsin Department of Workforce Development, 3.1 percent of the state’s population remained jobless during June. Those persons are the most difficult to employ, said Dr. Charlie Glazman, associate dean of continuing education at Wisconsin Indianhead Technical College. Many lack the soft skills needed to regularly work, he explained, and others might not be able to pass a screening for illegal drugs. Unfortunately, he said, colleges such as WITC don’t have the resources to rehabilitate persons in that situation. In a somewhat different setting – where work attendance and attendance is closely controlled and drug use is unlikely – good workers are being found.

“One business is actually using people through the prison system. It’s a work-release thing,” Caesar explained.  “They bus in people every morning and the workers return on the bus after work. A lot of people, when they complete their term, get hired permanently.” 

Other obstacles

Similar to Duluth, Superior has a housing shortage. There’s a lack of new homes and existing stock is old. Recruiting outsiders to Superior is difficult, Caesar noted, because homes and other amenities don’t appeal to trailing spouses.

“That goes back to the quality of life issue,” Seyfert said. “That’s been an issue in attracting executive talent. Schools, housing, shopping and entertainment are the biggest factors.”

Mayor Jim Paine has formed a task force to address the housing shortage.

“People would like to live in better housing but they can’t, because nothing’s available. It’s preventing our workforce from growing,” he said.

Making matters worse, the high demand for housing, coupled with low supply, has driven up prices. Paine said apartment rents often exceed monthly home mortgages. But obtaining home loans can be a challenge for young workers, even though they have adequate income.

“They lack the credit,” Paine said, particularly young professionals who recently graduated from college.. “Student loan debt is quite the problem for people under 30 right now.”

Rehabilitating older homes is an option the mayor promotes.

“I’m very passionate about housing restoration. Many older homes are worth saving, but sometimes it’s very expensive to do so,” he said, again noting the difficulty young people have with establishing credit while burdened with student debt. “Typically, a student’s college debt is about the same as the cost of a starter house,” Paine lamented. As an early step to address the problem, the Development Association has created a housing loan fund to help stimulate housing development. 

The good news is that a multi-family unit was recently completed on Wisconsin Highway 35 just south of the city limits, and a 54-unit structure is in the midst of construction on the former Central Middle School site.

Potential blue collar workers face other obstacles. The Development Association has formed a task force to address some of them.

“We’re looking at transportation issues and Duluth Transit Authority routes,” Caesar  said. Paine has discussed the matter with DTA representatives, asking them to study Superior routes. Both men believe there might need to be alternatives to public transportation.

“I think there’s an opportunity for a number of businesses to work together to create a shuttle service to get people to work,” Caesar said. In a flat city like Superior, Paine suggested bicycles might also be an option.

Manufacturing workers also struggle to find affordable daycare, especially when their children are ill, according to Caesar.

Seyfert said he and other employers appreciate the reaction they’ve received from public and development officials, but they know the problems won’t be eliminated overnight.

“In the short term, I think it will continue to be a tight job market. Development takes time, investment and tax dollars. There are no quick answers,” Seyfert said. “The city and county recognize this and are seeking solutions. They are trying to keep existing manufacturers and recruit additional ones.”

Paine recognizes the need to strike while the iron is hot. 

“Business owners, if they have the chance to grow, will take that opportunity. A smart businessman knows they are losing money every day they are too small,” he said.