Moldmaker Remains Positive Despite Obstacles

By Ed Oliver
May 2003 Print Edition

Dick Flannagan tells MassNews he used to get by with good workers but now he needs all-stars to continue to make it in Massachusetts.

He's manager of Stan-Cast moldmaking in Leominster, a company with 13 employees that he co-founded 31 years ago. At one time he had 22 employees.

"The global marketplace has become an extremely difficult place because we enjoy a certain standard of living in the United States," says Flannagan, "but we should not give up on that standard of living."

Flannagan says there was a misunderstanding that the U.S. would be able to compete globally because we said we have the latest technology and a skilled and dedicated workforce second to none. That might be an overstatement, he says. We do have a skilled and dedicated workforce but there are other workforces just as dedicated, specifically in the Asian countries. "China has made a significant commitment to manufacturing and to train its manufacturing workforce, to include its engineers and shop floor workforce," he says.
		Manager Dick Flannagan in shop with CNC Machinist Mike Christianson from Athol.

"There are manufacturing facilities in Hong Kong and Shanghai that are second to none in the world," he says.

They also have an excess of educated people, he says. He's spoken with plastics people with companies in China who have degreed engineers working on the shop floor. Typically in the United States, that would be a management position.

There is a tremendous labor pool there to draw from, with a portion that is very skilled and a portion that is totally uneducated and unskilled. The mistake we make is to think there are very few educated people there.

		Manufacturers in Massachusetts and the United States are going to be tested severely and in some instances lose out, says Flannagan, because the technology is just as good in Asia, the standard of living is lower and the non-competitive dollar is hurting us. Regarding the dollar, Flannagan said 70% of the molds that are imported come from Canada. The Canadians are not harder workers or have a better product, but the big buyer will go there to save thirty to forty percent. In China, you can get a mold for 50% less, says Flannagan, because of the non-competitive dollar and their lower standard of living.
Dick Flannagan, head of Stan-Cast machining in Leominster, during interview with MassNews.

The argument that the quality is not as good is a foolish argument.

"There are facilities now in China that can do just as good a job as a facility in the United States. That was not the case ten or fifteen years ago, but it is now."

The focus was on Japan in the 60's and 70's, says Flannagan, but we were mainly purchasing just from them then. The major difference now is we are not just purchasing from China; we are moving our major manufacturing there and all over the Pacific Rim.

Flannagan hears projections of 7- to 12-percent growth rates annually for China's economy.
In order for us to compete at any level, we need to continue to make a commitment to workforce development in education, says Flannagan.

"There needs to be an ongoing concentrated effort to continue to train today's workforce for tomorrow, and as a country we need to look and try to determine what that means as far as tomorrow."

Flannagan says we continually fall victim to being a full step behind the others, because we are training workers for the shortage of today.

"We always find that out after it happens." For example, the trade of moldmaking continues to dwindle in the United States. There are not enough capable moldmakers, he says. "There was a concentrated effort in the moldmaking industry of Massachusetts to try to correct that. Specifically in the city of Leominster, there were some very strong efforts and good progress made. The Center for Technical Education in Plastics program to train workers to come into the plastics industry so the plastics industry could be more competitive. That's the right thing, but we took those steps too late. "It's not enough to look at the needs for today. We need to look at tomorrow and the day after that, and that is a very difficult thing to do. It's quite frankly frightening."
		Stan-Cast Machining in Leominster Mass.

After you face up to that, says Flannagan, it is your best guess what the future needs are going to be five years from now.

In the end, he says, with a strong, but non-competitive dollar, you could say that no matter what is done, a developing third world country is going to be in a better place providing to the marketplace because they are on the way up.

"So what's the sense in trying to compete with that?" he asks.

Flannagan says he doesn't have the perfect answer, but he asks, "Do you really want to accept the alternative and to say out loud, 'now that I know the depth of the problem, there is no solution?'"

Flannagan does not believe we will ever legislate restrictive tariffs to make someone else's product more costly when purchased in the United States, in order to protect jobs.

Despite the alarming numbers of manufacturing jobs lost and the spectacle of American companies setting up shop in foreign lands, Flannagan believes protective tariffs are not the American way and says people feel good about purchasing a cheaper foreign made product when given the choice.

"We've seen the textile industry go, the shoe industry go, toy manufacturing, electronics.
Twenty-five years ago it would have been unheard of to think that the moldmaking industry would become a trade that is dying out. There are fewer moldmaking facilities in the state of Massachusetts this year than there were last year, and the numbers will continue to decrease," he says.

It is the same story nationwide, Flannagan says. Does that mean the U.S. will not have a moldmaking shop somewhere in the United States, he asks? He thinks there will be one somewhere.

"Does manufacturing in Massachusetts begin and end with moldmaking?" asks Flannagan. "No. It's just one example of a highly skilled trade that is on the decline in the state of Massachusetts and is in fact in decline in the United States."

Asked what a manufacturer looks at when choosing to set up in this state, Flannagan says there is a good work ethic and high caliber of worker here, and by and large, it is an educated workforce.

The cost of doing business here is high. Power costs are expensive. But living in the Northeast also brings certain cultural advantages and higher living standards, he says.
There are a number of manufacturing facilities that have moved from the Northeast to the South driven by operating costs. Some were also driven away by the need to service the customer, he says.

For example, certain companies like Hewlett Packard that are assembling in China may want parts that go into that assembly to be manufactured in China, rather than shipped from the U.S., says Flannagan.

Training makes things extremely difficult. A highly skilled workforce doesn't come out of the schools in this country, he says. A big part of training falls on individual businesses. Other countries in contrast may target certain industries and set up training to capture certain businesses. The plastics industry is one of them, says Flannagan.

Flannagan was instrumental in getting the legislature to set up a worker-retraining fund using surplus unemployment insurance funds.

He says there is no silver bullet for manufacturers when looking for solutions.

"We need to look at a number of things. We need to look at where we are today and where we think manufacturing is going to be in the future, at what we need to do to position the state to do well in the future. I think I can safely say we are always one-step behind. We find ourselves in a shortage and we scurry to react to that. By the time we are done reacting to that, the landscape has changed."

Flannagan would advise the legislature to stay on board with MCAS, which he believes is a good thing. They also should realize that not everybody is going to be a doctor or a lawyer and should try to figure out what sorts of skills are going to have to be taught for future manufacturing needs.

With the incredibly sophisticated colleges and universities available to us, says Flannagan, there is enough brainpower to look at the future and say where they think industry is going.
We also need to look at how we manage the health care system, product liability law and should continue to monitor worker compensation costs and unemployment insurance systems, he says.

To remain competitive today, you also need skilled workers to get 100% use of the available technology, but even with that, we are losing the battle, he says.

"To survive in manufacturing, you need to surround yourselves with a team of superstars," says Flannagan. "Think about that. It's not funny. You come to work and work hard and you are an average employee. You know what? It's not good enough. Everybody has got to be a Tiger Woods. Everybody has got to be a long ball hitter. Everybody has to be a Michael Jordan. You can't be average, because the competition doesn't allow it.

"You can be average in China, Portugal and Canada. But when you have in front of you the non-competitive dollar and add to that the standard of living-The only way you are going to compete is by output. An individual can only work so hard, so what you need to do is maximize the latest technology. Get a hundred percent out of the latest technology.

"In the first instance, you need to be able to afford the latest technology. Can the federal government make it easier for companies to purchase the latest equipment? I think the answer to that is yes. Offer more incentives on depreciation."

Flannagan says the Small Business Administration helped Stan-Cast to take out manufacturing loans in the past to enable them to service the automotive industry as an independent company. Programs like that should continue, he says, but from time to time it is threatened.

Stan-Cast Inc. was sold last December to a Clinton injection molding company called Injectronics. The company services the automotive industry.

"I took some of my own advice and looked to the future and said, 'Okay, how am I going to position Stan-Cast for five years from now? How am I going to protect Stan-Cast employees that have been with me fifteen or twenty years with another ten or fifteen years to go?' We looked for a strategic partner. We were fortunate that we were able to put together that kind of win-win relationship."