A matchmaker for skilled manufacturing workers and biz
|Author: Crain’s Chicago Business -- Claire Bushey: 5-3-17|
Date: Monday, May 22nd, 2017
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(Crain’s Chicago Business -- Claire Bushey: 5-3-17) A new company wants to play matchmaker between skilled manufacturing workers and the businesses seeking to hire them—just not full time.
At FactoryFix, employers can browse profiles for engineers, machinists, maintenance technicians, welders and others, then contact likely candidates. Founder and CEO Patrick O'Rahilly, noting that workers are vetted before joining the company's network, jokes it's "like a dating website if you only let beautiful people in." What it resembles more, though, are websites like 99designs, Upwork or TaskRabbit that serve as intermediaries for hiring help, whether a creative professional or a handyman.
The fledgling Chicago company exists at the intersection of two seemingly opposite trends in manufacturing: the casualization of the workforce and employers' struggle to find skilled help. Nearly 10 percent of the sector's workers in 2015 were employed by staffing agencies rather than manufacturers. Yet companies are clamoring to fill vacancies for millwrights, welders and tool-and-die makers. In this tight labor market, "if they're not working (full time), there's something else going on," says Anne Edmunds, regional vice president at Manpower in Chicago.
At FactoryFix, there is something else going on. Some 60 percent of workers in the network already have a full-time job, O'Rahilly says. They use FactoryFix for extra hours. The other 40 percent are a mix of semiretired tradespeople staying active or small engineering shops that use the site for sales leads.
"There's just not enough of these people, so these companies are going to have to start borrowing from each other," O'Rahilly says. "That's part of the whole gig economy movement. That's part of the future of work."
O'Rahilly, 31, started FactoryFix in 2015. As one of the founders of Elgin-based Compass Automation, which builds custom manufacturing equipment, he informally brokered deals with other companies that wanted to hire his engineers for one-time projects. That convinced him there was a market for the service.
Two former executives at Navistar, a Lisle-based truck and engine maker, have invested in the four-person company, and O'Rahilly raised $150,000 from friends and family. FactoryFix brought in about half a million in revenue last year from a base of 60 customers, including Illinois Tool Works and BWAY, which makes metal cans for paint and food at its Little Village factory.
A robotics engineer fixed a machine at BWAY when it stopped stacking cans on pallets, idling the assembly line, says maintenance manager Harold Whitecotton. The engineer arrived "three hours after we called him, he reset everything, and we were able to get back into production."
Employers pay $100 per hour to hire a robotics or automation engineer or $65 to $75 per hour for a machinist. FactoryFix takes a 30 percent cut. The company notes that by hiring contract workers, the employers save on payroll taxes, liability and unemployment insurance, and the cost of paying wages during production downturns.
The key question contingent labor raises is whether it complements or cannibalizes the existing job market … whether it creates new work opportunities … or replaces traditional jobs that offer built-in protections for minimum wage, overtime and unionizing. Researchers from the U.S. Bureau of Labor Statistics have estimated that the share of manufacturing workers employed by a staffing agency rose to 9.7 percent in 2015 from 6.9 percent a decade earlier, with more temporary workers concentrated in low-skilled jobs.
Temporary work can benefit those who have been laid off or who want to supplement their income, says Frank Manzo IV, Countryside-based policy director of the Illinois Economic Policy Institute. Problems only arise "if this temporary work becomes . . . essentially a long-term employment relationship."
The economy as a whole is shifting toward increased use of contingent labor, says Mark Muro, a senior fellow and director of policy at the Metropolitan Policy Program at the Brookings Institution in Washington, D.C. Muro’s research suggests that in some industries "freelance marketplaces may well cannibalize competing payroll businesses," like cab companies moving to adopt Uber and Lyft's independent-contractor model. But unlike those companies, he says, FactoryFix appears to solve "an authentic problem because these are increasingly quite specialized occupations. … These workers are, in fact, hard to find."
O'Rahilly has had to scour the market himself, recruiting workers to his network through referrals. Retirees, he says, generally aren't scanning "help wanted" ads on Facebook.
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