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North Carolina’s manufacturing line runs long. It started with busy hands building furniture, weaving textiles and creating needed products. Today, those outputs are joined by others for a range of customers, from aerospace to clean energy and healthcare. That growing list, along with a rapidly changing business environment, has altered manufacturing’s inputs. Not only have wrenches been replaced with multimeters and adding machines exchanged for artificial intelligence, but workers need the latest fine-tuned skills. Business North Carolina recently hosted a group of manufacturing leaders to discuss the industry’s current state, what it needs and where it’s headed. Their conversation was moderated
by Publisher Ben Kinney. The transcript was edited for brevity and clarity.
The discussion was sponsored by:
• Pitt County EDC
• Reynolds American Inc.
• The Rise Companies
WHAT’S THE CURRENT STATE OF NORTH CAROLINA’S MANUFACTURING INDUSTRY?
MINTZ: Manufacturing continues to be a growth industry. Economic developers are engaging companies that want to relocate or expand here. People want to come to our state.
You’re living under a rock if you don’t see current supply chain expenses and challenges, including those related to tariffs enacted by the Trump administration. Smaller companies are struggling to make it work, because many import a lot of supplies. We’ve created a global economy, and that can’t be changed overnight.
The people we talk to are trying to navigate tariffs. They’re developing innovative ways to understand their costs. Manufacturers are under pressure to be successful. The business is there. Everyone is moving along, trying to do their business.
SMITH: The private sector is better off than the public sector. We buy companies in bread-and-butter spaces, outside one venture capital play. Business is really good for us. Our companies have strong backlogs.
Tariffs have probably impacted retailers more than manufacturers. I could see manufacturers of household goods, such as appliances, being impacted more than we are. We use a lot of wire and raw metals, and we’re not having issues. We’ve controlled our costs.
If your business is in a good core space, especially one with a labor shortage, margins are good. Backlogs are great if you can supply. Things are good for you right now.
MARQUES: Manufacturers are attracted to North Carolina for many reasons. Its strategic location offers access to ports. There is infrastructure. The partnerships with local and state entities are focused, driven and supportive. The community colleges and workforce training programs are strong. All of those play huge roles when companies are making decisions in terms of business and positioning.
Our work is technical, and workers’ skills need to match that. The community must bring that skill set or be able to upgrade those skills in conjunction with us. Creating those workers isn’t the sole responsibility of local economic development teams or the N.C. Community College System. Manufacturers must be involved, too.
That will make North Carolina even more attractive.
Stability and certainty within federal policies is important to our business, and we don’t have that right now. It’s crucial to attracting and returning long-term investments in manufacturing stateside.
SHULL: BE&K is bullish on North Carolina and its potential. Labor is the biggest challenge. The state’s unemployment rate was 3.7% in April, which was below the national rate of 4.2%. Its population continues to grow. There are many good projects underway. Life sciences may be in a bit of a lull, but it has been busy the past few years. Its growth in North Carolina is exciting.
Many people question how tariffs will affect North Carolina. It’s on the East Coast, so it’s an easy beachhead for businesses setting up shop within our borders. It’s a day’s drive or a short flight from half the country, making it easy to reach customers and suppliers.
CRISP: Every day I work with talented welders, machinists, industrial mechanics and mechanical engineers. About half of our product line serves industry in North Carolina. The other part serves the naval defense industry, repairing and overhauling large capital equipment for aircraft carriers and build-to-print subcomponents of components such as missile-defense systems. We have a strong backlog.
Labor is at a premium, which works in our favor. Tariffs are creating confusion and affecting business in a negative way. Maintaining prices for more than a day is a challenge sometimes. But I’m optimistic about Carver Machine Works and North Carolina.
North Carolina has the Southeast’s largest manufacturing workforce, according to Gov. Josh Stein. That’s the result of aligning industry and education. The community colleges train young folks. They offset our aging workforce, which is one reason behind our current labor constraints. Add in the state’s low tax rate and it being an incredible place to live, and there are many things working in North Carolina’s favor. The state’s outlook is bright.
GAGE: It’s quite strong. Reynolds added 500 jobs last year and 300 jobs this year. Many are in manufacturing. We’re growing our Tobaccoville factory, which is a welcome change from years past.
Competition for skilled labor is getting hotter by the day. The average tenure of a production-floor worker was in the decades when I started with Reynolds. It’s less than 10 years now. We need to attract and retain workers.
HOW ARE THE INDUSTRY’S WORKFORCE CHALLENGES BEING ADDRESSED?
MINTZ: Companies that create internal workforce development programs have been more successful than those that don’t. They’re putting their heads together, doing things instead of relying on outside sources to provide workers. An Asheville company, for example, buses in workers. Others bring in non-traditional workers to do some jobs. The companies complaining less about workforce issues are the ones doing something about it on their own.
CRISP: We’ve altered our recruitment and retention approaches to match our current needs. We’re investing earlier, including onboarding workers before they’re ready to help row the boat, so to speak.
We’ve found that hiring locally improves retention. Someone accustomed to living in eastern North Carolina and mentored by our employees is more likely to stay compared to an “expert” recruited from miles away. We look for the right fit, and that includes an employee’s hometown.
MARQUES: Local people bring retention, and partnerships with local entities can train them. We are new to the region, but we have great partnerships with local entities. We’re deeply engaged. We don’t rely solely on workforce development from schools and community colleges. We internalize that responsibility.
We look for people willing to do the job: Will they give their best effort? That’s No. 1. We look at leveraging experience to move us into the future. One of our tech team leaders is in his early 80s. We’re looking at everyone. We can’t make the future happen without everyone.
The need to upgrade and evolve workforce skills isn’t unique to North Carolina. It’s a worldwide issue. Often there seems to be a disconnect between what manufacturers need and how workers — current and future — are trained. Companies need to be more involved. Educational institutions need to adapt their curricula to real needs. Those jobs are the responsibility of both parties.
We need to move quickly. Production in our first phase is ramping up, and our second phase will create about 850 jobs, mostly tech to engineer level. We’re discussing with different entities how to fill those positions without going too far from our Pitt County location or outside the state.
SHULL: Industrialists are typically private. But bring up talent attraction and retention, and they start talking. North Carolina’s low unemployment rate is challenging; it puts pressure on pay. It motivates people who think they have a better opportunity elsewhere. It’s key to show people that you can train and develop them. The industry may be slow coming to that party.
Industrialists seem to be better at finding customers than employees. They need to sharpen those tools, creating a place where people want to be now and in the future. There’s a shift to high-tech labor from craft labor. Give people the opportunity for more education, whether on the job or in a classroom. That creates opportunities to improve, whether that’s self-esteem, responsibilities or pay. That benefits the industry rather than detracts from it.
HAS THE PERCEPTION OF MANUFACTURING WORK IMPROVED?
SMITH: There has been a significant shift, thanks in part to a growing awareness of what’s happening to trade-school graduates versus those from four-year institutions. It’s the dichotomy of a four-year degree’s cost and job opportunities versus working in the trades, whether that’s as a plumber, welder, electrician, machinist or something else. Be a great machinist if you want to make a lot of money; we’ll be competing for you.
The state’s most important education resource is its community college system. If you want continued growth for North Carolina, then super fund community colleges. Create the workforce dynamics that we need to be successful.
A community college education is the best product you can get from a cost perspective. Don’t start at a four-year school. Start at a community college and get those two years of maturity, which are a big deal for 18-year-olds. Then decide what to do, because that low-cost platform creates opportunities.
It’s a “shiny candy mentality” with education; many people are enamored with football and basketball teams. College used to have a large social component. Technology has dramatically changed that. The world’s social dynamics have changed.
There are some neat programs out there. We were one of the first to do a signing day with kids. Instead of a picture with a jersey, athletic scholarship and their parents, they get one with a hard hat, job offer and their parents.
MINTZ: NC State’s engineering programs are welcoming more and more students from community college programs. Their knowledge and skills continue to grow as they gain experience on the factory floor. That pathway becomes more and more important as technology advances.
There’s a lot more focus on training engineers based on what they learn at tech schools. Engineers of the future will go through that trade school hands-on pathway. It’s an approach that other countries are probably already doing.
GAGE: It’s no longer your father’s factory. Advancements have come a long way. Our machines and processes lend themselves to electronics rather than mechanics. We invite local community college students into our plants and introduce them to modern manufacturing. We find a lot of traction when we meet students from community colleges.
HOW IS TECHNOLOGY RESHAPING MANUFACTURING?
MARQUES: Boviet uses a lot of technology to build its photovoltaic modules. We are highly automated and will be even more so in the future. Our state-of-the-art equipment is the best in the solar industry, and our Phase 2 will be the best in the country when it opens next year. AI is part of our present, and we’re preparing for it to be a bigger part of our future. We see many opportunities for it within our business, especially preventive maintenance. It won’t replace our technicians. It will support their day-to-day work. It will make our manufacturing better, faster, more predictable and more reliable.
We collect a lot of data. Human beings can only process so much of it. We must leverage technology to process all of it. Workforce development and training must support the understanding and use of new technology such as AI.
SHULL: The flourishing of the Internet of things — sensors and monitoring devices — has created a challenge. There’s a need to handle and assess the large amount of collected data in a meaningful way, whether that’s identifying emerging problems or opportunities to improve quality or productivity. AI can monitor and trawl that data in real time, highlighting trends or aberrations. Then a human being can determine if it needs to be acted on before it becomes a critical problem to production.
CRISP: We’re beginning to use AI for workflow processes such as proofing an email. But there will be a large expansion of its use in scheduling and resource planning in the coming years. That’s a big deal for a high mix, low-volume manufacturer like us.
It’s tough for a manufacturer of our size to be on AI’s leading edge. But we are preparing for it, and we rely on partners such as NC State Industrial Expansion Service, which has provided training, for help. While there’s a lot to grapple with, including security of our data, it’s a huge opportunity for our industry. There’s a tremendous amount of variability and tremendous amount of useful data that could be captured.
GAGE: Automation is here. It’s in our factory. We squeeze out as much efficiency as we can. An interesting application for AI is from a machine-learning standpoint, analyzing the best-performing complex in the factory, identifying what makes it great and applying our findings across the factory.
Our training department uses technology. Our Operation Skills Development team recently deployed HoloLens, an augmented reality headset. It allowed OEMs in Germany and Italy to watch our mechanics’ hands as they worked on their machines here, allowing direct feedback in real time.
MINTZ: We’re helping smaller manufacturers, who represent 90% of manufacturing in the state, to choose an approach to technology. They hear stories of what AI and automation can do. But many of those abilities come with a big price tag. The first thing small manufacturers say is they can’t afford to do it all. And they’re right.
But technology doesn’t necessarily require a major investment. We point out lower cost options that can be as helpful, especially with data collection and analysis. Some monitoring equipment connects to existing machines. It’s still technology, and it’s still collecting information that can be applied on the factory floor. That will help you as a small manufacturer.
HOW HAVE MANUFACTURERS SECURED THEIR SUPPLY CHAINS?
SMITH: There has been an awakening to the weakness of the supply chain. Tariffs and the response to them have exposed a significant riff — a manufacturer’s ability to ensure component flow into and product flow out of its factories.
I believe there will be a big manufacturing resurgence nationwide, especially in small parts, because you can put many in a shipping container. I think the small-parts business is coming back to America. And
it has as much to do with tariff costs as much as ensuring an intact supply chain.
SHULL: It started with the COVID pandemic, which disrupted supply chains. Many companies quickly shut down, because they were using just-in-time manufacturing. One source of supplies dried up, and everything stopped. After the pandemic, manufacturers began catching up on production while stockpiling materials. At this point, we’ve overcome all of that. People are happy with how their supply chain works.
Now tariffs have re-introduced uncertainty. If I source foreign parts, then I’m facing a second round of securing other means of ensuring a continuity of flow. The whole industry has gone from concerned with your own plant floor to being holistically focused on your entire supply chain. Even sending out your product for work before bringing it back for finishing can be affected.
It’s all vulnerable, whether from legislative interruptions or marketplace ebbs and flows. It’s one more place where technology may provide greater insight, improving planning and isolating you from disruption.
MARQUES: Tariffs’ long-term effects will solve supply chain issues. The current scenario needs to be restructured. Reshoring industry and suppliers requires time and clarity. That stability will help as the industry positions itself.
COVID caused a disruption, halting supply chains. Reshoring manufacturing is a solution that we are working on to keep them running. But we need clarity in terms of policies. They can mean many opportunities for the state, including developing logistics and infrastructure that can absorb and support more manufacturing. ■