Episode Show Notes
Episode 1 features Matthew McKenney, President & CEO of the Institute for American Apprenticeships (IAA), and Mace Gjerman, the Technical Training Manager for Peterson Caterpillar. Matthew and Mace discuss the organizational impacts of starting an apprenticeship program as well as resources for those looking to adopt and the benefits of implementation.
Matthew McKenney, President & CEO of the Institute for American Apprenticeships (IAA), joined the IAA Board of Directors in 2020. In 2021, he joined IAA as its Chief Executive Officer. Prior to joining IAA, Matt was the Workforce Development Leader at Hypertherm, Inc. on the Human Resources team. In his role, Matt led the development of workforce plans, designed skill-based training programs, and managed workforce pipelines. In the community, Matt works with schools, businesses, and state and federal agencies to develop and attain human capital. Matt is Chair of the Board at Headrest (which provides a 24-hour crisis hotline, residential treatment, outpatient counseling, and the Opportunities to Work program); serves on the NH Governor's Recovery Friendly Workplace Advisory Council; is the Business and Industry Associations representative on the NH Governor's Commission for Alcohol and Other Drugs, and serves on the Governor’s Advanced Manufacturing Education Advisory Council.
Mace Gjerman is the Technical Training Manager for Peterson University, the corporate training center for Peterson Cat, Peterson Trucks, SiTech NorCal, and SiTech Oregon. Mace has 45 years of industry experience and has spent 33 years at Peterson. In his time at Peterson, he has worked as an engine apprentice, engine technician, foreman, service manager, engine trainer, engine technical communicator, technical and training manager, including more than 20 years in the training department. Mace has a BA in Industrial Technology from Humboldt State University and has held a California State Teaching Credential. Mace is CAT Certified as a small and medium Bore Engine Instructor and a Truck Power Analysis Instructor. He is also certified in CAT Applied Failure Analysis Level I, and as a CAT 3500 and 3600 Master Mechanic.
00:00:00 - Introductions
00:02:30 - Defining modern apprenticeships and the five hallmarks of apprenticeships
00:04:56 - The types of organizations and skill sets that can utilize apprenticeships
00:06:38 - Their personal experiences with apprenticeships
00:10:19 - How apprenticeships create a pipeline for skilled workers
00:11:14 - Organizations that provided them support and assistance
00:14:17 - The importance of complying with standards
00:15:56 - How apprenticeships improve employee retention and engagement
00:19:21 - Getting company buy-in for apprenticeships
00:29:22 - Resources for SMMs to start an apprenticeship program
00:31:12 - Common objections to apprenticeships and respective responses
00:35:59 - Summary of conversation
Gregg Profozich [00:00:02] In the world of manufacturing change is the only constant. How are small- and medium-sized manufacturers, SMMs, to keep up with new technologies, regulations, and other important shifts let alone leverage them to become leaders in their industries? Shifting Gears, a podcast from CMTC, highlights leaders in the modern world of manufacturing from SMMs to consultants to industry experts. Each quarter we go deep into topics pertinent to both operating a manufacturing firm and the industry as a whole. Join us to hear about the manufacturing sectors' latest trends, groundbreaking technologies, and expert insights to help SMMs in California set themselves apart in this exciting modern world of innovation and change. I'm Gregg Profozich, Director of Advanced Manufacturing Technologies at CMTC. I'd like to welcome you. In this episode, I'm joined by Matthew McKinney, President, and CEO of the Institute for American Apprenticeships, and Mace Gjerman, the Technical Training Manager for Peterson Caterpillar. Matthew and Mace offer their perspectives on apprenticeships and explain why we should think of it as a quality workforce development program. We discussed the organizational impacts of starting an apprenticeship program, as well as the resources for those looking to adopt and the benefits of implementation. Welcome, Matthew. It's great to have you here today.
Matthew McKenny [00:01:18] Thanks for having me. I'm excited to talk about apprenticeship today.
Gregg Profozich [00:01:20] Absolutely. Matthew, can you take a minute or two, and tell me a little bit about your experience with apprenticeship programs?
Matthew McKenny [00:01:26] Yeah. I think first and foremost, I should share that I was an apprentice, so that's how I gained some of my skill set. I'm a believer from that perspective. But, for the last 14 years, I've worked in the apprenticeship space and helped Hypertherm, an employer, develop an apprenticeship program that's put almost 700 people — or more than 700 people — through it at this point.
Gregg Profozich [00:01:45] Excellent. Excellent. So it's great first-hand experience you'll be able to share with us today. Looking forward to it. And Mace, welcome. I'm happy you could join us today, also. Can you tell us a little bit about your background and your experiences?
Mace Gjerman [00:01:55] Yeah, thank you, Gregg and CMTC. Appreciate the opportunity. I'm the training manager with Peterson Caterpillar. Twenty years ago, we were working with San Joaquin Delta College in Stockton, California, and some other Cat dealers trying to start a training program. It was the staff at San Joaquin Delta that said, "what you're talking about is apprenticeship. You need us to help you get your program recognized by the State of California Department of Labor as an apprenticeship." And, so, I was involved from day one, 20 years ago.
Gregg Profozich [00:02:30] Oh, fantastic. I'm really looking forward to our conversation. I think we're going to have some great examples and some great insights to share. Let's get started. Today, to set the stage for our conversation, let's lay out the definition of what an apprenticeship program is. I think it changed over time and people think of union apprenticeships and apprenticeships back in the Middle Ages and things like that. What are we talking about exactly here, today, when we say apprenticeships?
Matthew McKenny [00:02:52] When I think about apprenticeship and I talk to people about apprenticeships, what I want people to think is that it's a quality workforce development solution. If you have a need for talent, apprenticeship is a framework that can be built around a training program that can offer you the talent you need. Apprenticeship has to have five hallmarks. It has to have employment — that's the thing we love about apprenticeship is employment is a requirement. It has to have related instruction on-the-job training, mentoring, and then it has to have scheduled wage increases throughout the program. And really, those five hallmarks are what define an apprenticeship. So to your point, there's a lot of — what I would even call it stigma — around apprenticeship related to the fact that it has to be this audacious program that is large and unmanageable. Really focusing on those five key hallmarks can make any apprenticeship work.
Gregg Profozich [00:03:42] Mace, anything to add to Matthew’s perspective?
Mace Gjerman [00:03:44] Well, I think Matthew did make a very important point about the five hallmarks of apprenticeship. When we looked at doing this, there was a very high level of concern on the administration of our company about inviting the state of California in and getting them involved in training our entry-level technicians. But, once we looked at it, we realized we were already doing those five things for our entry-level technicians anyhow. We were almost running an apprenticeship without the actual recognition. Ultimately, it became a very easy decision for us to enter into an apprenticeship agreement.
Gregg Profozich [00:04:23] So, it's not uncommon for companies to look at those five hallmarks and say, we're doing three or four or five of them already, we just don't have a formalized structure is what I hear you guys saying.
Matthew McKenny [00:04:32] Yeah, I would agree with that.
Mace Gjerman [00:04:33] Yeah, I think you're absolutely right.
Matthew McKenny [00:04:35] In fact, I would take it a step further and say most, if not all, employers are participating in those five hallmarks to some extent. They just may not see it that way.
Mace Gjerman [00:04:44] In today's labor market, I'd say a company involved in the trades is going to have a very hard time attracting and retaining employees if they're not involved in those five hallmarks.
Gregg Profozich [00:04:56] Okay, good to know. Thank you. So, you talk about apprenticeship programs and the five hallmarks. A lot of people may have the sense that, "I know a plumber who was an apprentice, and then a journeyman and working towards master, and he worked up through a union scale," — is it always a union thing? Or are there apprenticeships outside of union organizations?
Mace Gjerman [00:05:13] I'd say that's a common misconception that it has to be tied to or run by a union. Many apprenticeships are, as you say, a plumber — people are aware of that. But in our apprenticeship for Caterpillar service technicians, for example — which was started by a consortium of six Caterpillar dealers — only two were union and four were not. So, apprenticeship does not have to be tied to a union, it just has to be tied to the five standards we discussed.
Matthew McKenny [00:05:42] Mace, I think the point you bring up is good that actually, apprenticeship can be applied in organizations that have represented employees and employees that are not represented as well, too. So, if you bring the union to the table and have those discussions, it can exist in organizations that have both populations, which I think is important, because a lot of people don't think that that can happen either. I would also add to that, apprenticeship isn't just for the traditional trade. I think another misconception people have is that it's for skill-based trades. There are a lot of more modern, non-traditional apprenticeships out there that are in the software and IT space. Most recently, there's been an occupation registered for Human Resources specialists. Apprenticeship can span almost any job or role as long as the occupation is defined, and somebody's interested in registering.
Gregg Profozich [00:06:33] Excellent. So, it comes off of the shop floor and goes into the back office and other aspects of the organization.
Matthew McKenny [00:06:38] Correct.
Gregg Profozich [00:06:38] Let's talk a little bit about your personal experiences. When you started your first apprenticeship program — I know Matthew came up through one, but when you made the transition to starting to run them — what was the situation you experienced that led you to get started there? What was the situation that said, "okay, we really need to do this. We need to formalize this."? Mace, you can start off and I think you’ve already kind of touched on a little bit.
Mace Gjerman [00:06:57] So, at Peterson, we had three critical needs for service technicians. The first one was we were getting fewer and fewer people looking to become entry-level technicians. They just didn't seem to have the access, or the awareness, or the encouragement to look at going into our trade. Apprenticeship gave us a format in which to go out and recruit more aggressively. The other thing with, virtually, every industry, the explosion of technology has required that our technicians learn a lot more skills a lot faster. So, then they reach what we would call a journey-level in four years, then they, in fact, are totally qualified. The apprenticeship training, both in the classroom and on the job, has allowed us to really accelerate their learning. And the last thing is we have a large investment in onboarding and training an entry-level technician. One of the things that apprenticeship is delivered for us is a much higher level of successful completion, and also, much higher retention rate. So, we get a lot better ROI on our investment.
Gregg Profozich [00:08:11] Matthew, what was your experience?
Matthew McKenny [00:08:12] At Hypertherm, 14 years ago, they were experiencing significant growth. To keep up with that demand, they were actually doubling the size of their CNC machine capacity to make the consumables for the plasma cutters that they make. That was going to require them to hire 16 machine operators. Hypertherm’s primary location is in Lebanon, and Hanover, New Hampshire — that's a rural area of New England. So, finding people that have that skill set at that rate, there was no way that that talent existed. They knew they weren't going to be able to hire so, they had to find a way to build. The way we found to build at the time, was we stumbled across an organization called the Institute for American Apprenticeship that had a training program for CNC machinists. Leveraging apprenticeship, employers could sign up to sponsor graduates — meaning you had to hire the person. They were going to go through this training and when they graduated, they had the skills. We participated in a couple of classes and experienced the model of apprenticeship through an intermediary — which is the way a lot of organizations get introduced to apprenticeships. As a result, we decided to move that training internally to Hypertherm, and build what was called the Hypertherm Technical Training Institute, which ultimately, is where all the training for the apprenticeship takes place. Now when somebody comes to work at Hypertherm, they don't need any skills as a CNC machinist. They spend 10 weeks in a classroom and lab, learning the basics. Then they move out onto the shop floor with their mentor to complete their apprenticeship. Again, for 14 years that's served as a pipeline for growth at Hypertherm and provided the machinists they've needed to stay local. Ninety percent of the manufacturing for Hypertherm — which is a global organization shifts product over 60 countries — takes place right in New Hampshire. So, it's allowed them to build a pipeline. It's absolutely how they've sustained that pipeline.
Gregg Profozich [00:10:08] Those are some impressive results and it makes it a lot of sense — you have to be able to develop people that you have nearby. So, it sounds like apprenticeship was a really powerful tool and has had lasting value to Hypertherm.
Matthew McKenny [00:10:19] I would agree. I think one of the things that we didn't know when we were building it, and it's been sort of a silver lining, is it's also enabled accessibility to that role, and that skill set for people that otherwise wouldn't have been able to have it. So, people have come through the Hypertherm Technical Training Institute, from all walks of life, and a variety of skill sets, that wouldn't have considered becoming a CNC machinist otherwise. That's one of the things that we really value about the program.
Gregg Profozich [00:10:44] So, people entering the program there, do they have to have any basic skills, any kind of certificates, any kind of previous training?
Matthew McKenny [00:10:50] No. We do a level of aptitude assessment, meaning they have to have the aptitude and willingness to learn it. So, there are thresholds, right, from a mathematics perspective after meeting a certain threshold, but they don't have to have any machining skills. That all gets taught at the Institute.
Gregg Profozich [00:11:05] Excellent. Impressive program. So, in putting your apprenticeship program together, what steps did you take, and whom did you rely on for support and assistance?
Mace Gjerman [00:11:14] Yeah, as I previously mentioned, we were working with a group of other California Cat dealers to start a training program, with the support of Cat Inc., at San Joaquin Delta College in Stockton, California. We ran into an issue right away. In California, you cannot close classes off, in most cases, to the general student body. We couldn't offer our very specific Caterpillar service technician training courses, and have it only for the students, the apprentices, from those dealers. And it was fine. It was the apprenticeship coordinator that they brought to our meeting, and he said, "you're describing apprenticeship, this is exactly what you need to do." So, really, the college held our hand and walked us straight through it. The California Department of Apprenticeship standards were very helpful. It all came together very quickly. Then, after the fact, that same coordinator said, "You've already done 95 percent of the work to also be recognized by the Federal Department of Labor. Let's go ahead and finish that off." And, that's how our apprenticeship came to be recognized both by California and the Federal Department of Labor.
Gregg Profozich [00:12:26] Excellent. So, it sounds like you were most of the way there, you just didn't know how to connect the dots or didn't know the dots could be connected, to add some more value.
Mace Gjerman [00:12:34] Correct.
Gregg Profozich [00:12:34] So Matthew, you mentioned a little while ago about your involvement with the IAA, the Institute for American Apprenticeships, and some of their help but, go a little deeper on some of the steps it took as the apprenticeship program was starting out 14 or so years ago, as you mentioned.
Matthew McKenny [00:12:49] Yeah. So Hypertherm, when they decided they wanted to do apprentice CNC machinists, ultimately had to register the occupation. So, we worked closely with the State of New Hampshire, we worked with an intermediary, as you stated, which was IAA, and they helped us draft Hypertherm standards that were registered with the state. They were incredibly helpful at the state level and the US DOL. We got our standards registered with the occupation of CNC machinist as part of that standard. Hypertherm has since added several occupations to that standard, but we started with the CNC machinist. Once that was registered, we worked with the local community college to get the related instruction needed for the apprenticeship. You don't always have to use an external entity for the training, but in this case, we did because it was to our advantage. They helped us build the related instruction. We built on the job training model, so we framed out what the mentorship program and the training model would look like on the job for the work experience. The interesting part about that is it very closely aligned with the training that we were doing on the shop floor already. Most organizations are ISO certified and are required to maintain some level of training documentation. It's a matter of understanding that that training documentation aligns with the needs of an apprenticeship, and we just implemented it. So once we had all of the process lined up, and we were bringing apprentice in, it was really just a matter of recruiting people, getting them through the training, and then making sure they were getting the mentoring they needed. The documentation was in place, and we were off and running.
Gregg Profozich [00:14:17] Excellent. So, both of you mentioned a few times now certification levels. Mace, you mentioned the state and then the Department of Labor. What's the importance? What's the significance of having that registration or certification and complying with those standards? Matthew why don't to start off on that one.
Matthew McKenny [00:14:31] Sure. One of the great things about registering your apprenticeship is that people get a credential that's portable. Meaning if your program is registered with the US DOL — and most programs are registered with US DOL but, some states have a state apprenticeship agency, which is an agent of the US DOL, that's a choice that states make — that certificate is a benefit to the apprentice. Meaning, if I'm a CNC machinist, and I have completed my apprenticeship and I have this certificate, and then for some reason, I'm going to move — maybe my spouse got a job on the west coast and I live on the east coast — that credential is portable. If you apply for a job, and you show the employer that you have a US DOL certificate, or you're an apprentice, that credential carries some weight. You can't get that without registering with US DOL. The other benefit is, oftentimes, registered programs align with federal and state grant funding to help offset or provide incentives to the employer, which makes these programs more affordable. Oftentimes, that's critical for employer needs because these are expensive. They're big investments in individuals. They're good investments and people that have apprenticeships recognize that that investment is important. Mace talked about retention and higher skill set. Those are key elements of apprenticeship, but those offsets are also important and beneficial. That's another reason why you'd register.
Gregg Profozich [00:15:56] I think training often has that two-edged sword and you get different perspectives on it. It's the old saying, right, "what if we train our people, and they leave? Worse yet, what if we don't train our people when they stay?" So, I think you guys are kind of echoing around that. But let's talk a little bit more about retention does it forge a deeper relationship and loyalty when an employee knows that the company is investing in them and upping their skills and upping their wages in a structured way that goes with it. I'm investing in you because this is a partnership. Are there elements of that that come out of apprenticeships?
Matthew McKenny [00:16:28] I believe there are. I can talk specifically to Hypertherm. Hypertherm's turnover rate is less than five percent, which is actually amazing. But, I think the other thing to know about apprenticeships, is those credentials can be stackable. So, there can be an entry-level apprenticeship and, at Hypertherm, they built an advanced machining apprenticeship, so once somebody finished and got their journey worker certificate as an apprentice in the entry-level machinist role, they can move on to the programmer role and enter into another apprenticeship to get their training. So, retention typically comes with the ability for someone to see they have a career path and can develop. And with an 80 percent success rate, meaning more than 80 percent of the people that enter these programs graduate and are successful, they move through the programs and gain a skill set and then often stay. I think the other piece of it is apprenticeship programs also build skill sets that didn't exist before, meaning, oftentimes people didn't have the skills when they came into the role. So, even if they leave, there's a shortage everywhere for these skill sets. It builds momentum, and it builds a skilled workforce. Now selfishly, the organizations that are running apprenticeship programs want to keep those people and do a lot of creative things to do it. But if they leave, you've also created somebody that goes off into the world and provides value someplace else with a skill set that they didn't have before they started.
Mace Gjerman [00:17:48] You hit it was retention and its engagement. We hire entry-level technicians from five main areas. One is our apprenticeship. The second is from community college diesel programs. The third is typically for-profit trade schools. We actively recruit military veterans. We get entry-level technicians applying that are already in the industry but see the advantage of working at the Caterpillar dealer. And we've carefully tracked the retention in each of those five areas. And our apprenticeship is about 50 percent better retention than any of the other four. So, our investment is rewarded. And as we brought up mentoring, and on-the-job learning are such critical parts of apprenticeship — it's that mentoring and on-the-job learning where you create your engagement. Like all employers, we occasionally have an apprentice, some before some after they journey out and get their certificates, that leave and move elsewhere. Sometimes our managers are frustrated by that, but the point I tried to make is if they've been with us for four years, and we've failed to engage them, we need to look at ourselves and not them potentially.
Gregg Profozich [00:19:05] That's a good point. All right, so let's talk a little bit about the effect on organizations of apprenticeships, People in every organization react differently to change, tell us a little bit about how the program was received in your organization. What did you have to do to achieve buy-in from your managers and from your employees?
Matthew McKenny [00:19:21] As was the case with Hypertherm, there was resistance to change. Because, if you think about it, there was already a population of people in the organization that could run CNC equipment, had been in the shop and developed a culture and understood the processes. This program was bringing people that didn't have any experience prior, so ultimately wouldn't have been qualified for the role, putting them through a training program, and then they'd come out on the manufacturing floor. What's interesting is from a technical aptitude perspective, what we immediately started to notice is that the people that came through the apprenticeship understood conceptually what was happening out there more than many of the people that had been running the equipment for many, many years because those people were trained on the job only and not given any of the instruction or really taught the why something happens. It's more about, they knew how to make good parts, but they didn't understand why or how it was happening. As technology evolves, that happens a lot, right? People just get familiar with their role and the technology around them changes, but they don't fully understand why or what the changes are. So, it was interesting, because at first there was resistance, and then obviously, the organization and the people working in manufacturing saw the value in the fact that these individuals or graduates could do the job. But then suddenly, there was this want from the incumbents to also experience the training because they wanted to gain the education as well. And actually, in 2009, during the downturn, one of the things that Hypertherm did, because Hypertherm has a no-layoff philosophy — they're a pretty amazing organization — they actually took that opportunity when business was slower to pull the incumbents off the floor and put them through the training, so they could get the skills and experience it as well. And now, there isn't anybody on the manufacturing floor at Hypertherm that hasn't been through the Hypertherm Technical Training Institute and gotten that experience. It took time. It was a continuum. There was resistance upfront, and we did have our challenges, but then there was that recognition of value. It was certainly filling the need and has continued to do so. But then it got to the extent that it was showing so much value that the incumbents that had been there for a long time requested the training and were able to take it.
Gregg Profozich [00:21:34] Wow. It sounds like you went through all the five stages of change, often called the five stages of grief, right?
Matthew McKenny [00:21:40] Right.
Gregg Profozich [00:21:40] That whole human emotional cycle. It sounds like the organization and different people in the organization went through different parts of it at different times.
Matthew McKenny [00:21:48] Right. It took 10 years, but I aged 20.
Gregg Profozich [00:21:53] So, Mace, I'll ask you the same question. Organizations do react differently to change. How is the program received by your organization as you developed it?
Mace Gjerman [00:22:01] Well, first, I'd say we were very lucky. We're a privately held company and the owner of our company made it clear that he was a huge supporter and had a lot of confidence in this program from day one. Then he expressed that buy-in to the management, and that, of course, has a big effect and a privately held company. I would say most of our managers were already pretty much engaged with the coaching and mentoring and development of entry-level technicians. So for them, it was very easy. And actually, they appreciated the additional support they got from myself, our department, and the apprenticeship coordinator we had outside our company. We had a few managers that were more "go in the deep end of the pool and sink or swim," but that doesn't work in today's world with a competition for good labor. So I'd say those managers ended up needing some coaching, mentoring, and development, which ultimately was successful. The second thing I'd share is our employees on the floor, the peers of the apprentices. The absolutely number one comment — I can't tell you how many times I've heard it in 20 years — is "where was this program when I came up?" They see the education tuition-free, the tooling that we provide the apprentices, the uniforms, the coaching mentoring support, and they're just like, "it wasn't like that when I came up 30 years ago." So that's, that shows a lot of buy-in from the point of the peers of the apprentices. They really see what a good situation they're in.
Gregg Profozich [00:23:40] Yeah, because they get employees that are equally skilled and easier to work with. Right? And it's not like the experienced ones have to make up for the poorly trained or untrained ones. They come out of an apprenticeship fully trained and able to stand shoulder-to-shoulder
Mace Gjerman [00:23:53] Absolutely. And we provide our experienced journey and master-level technicians, the time required to coach and mentor the apprentices when it's needed. So they're not feeling under pressure that they're falling behind on their job while helping the new person with theirs. What we do see a lot of, those employees are the ones that are bringing us their next-door neighbor, their son or daughter, or their cousin. I talked to somebody today that one of his nephews already has gone through the program and works for us and has been very successful. And now, he wants to meet with another one of his nephews to see about getting him in the program. So that's where we've seen that engagement.
Gregg Profozich [00:24:40] That really speaks volumes of the value, doesn't it? When it's such a great experience, I want people I know and love that are close to me to go through it, too. That speaks volumes about the value. Let's talk a little bit, now, about measurements. What measurements did you look at to gauge success? And what were the results of the implementation of your program?
Mace Gjerman [00:25:01] For the skill gap, we use an industry-recognized skill and knowledge assessment. Each of the apprentices completes that assessment in their first week at school in the apprenticeship so that we can create a baseline. Then each apprentice completes it again two years later in their last week of their fifth and final semester. That allows us to measure, just in terms of skills and knowledge, what they've gained in the program. It allows us to identify a specific area — maybe our apprentices in this class have made a tremendous amount of progress in diesel engines and electronics and power trains, but have struggled with air conditioning. That allows us then to visit with the instructor at the college, review the materials being used in air conditioning and maybe come up with some suggestions, maybe provide some better training aids. Whatever it needs to improve in that one area. The good news is those assessments have shown that, on average, our apprentices after two years measure equal to what's expected of a journey-level technician with five to six years experience. The other thing we do is then track their on-the-job progress after graduation. All the education is front-loaded in the first two years, but after they graduate, they continue in the apprenticeship for two more — it's a four-year apprenticeship. And we find in our apprenticeship, those technicians reached the highest level of technician's skill faster than any others. Typically, that's becoming a field service technician, where you get a truck and you actually go out to the job sites by yourself to take care and repair equipment. Or they reach the level — which we test — which is called a master technician. Our apprentices get there faster than any other way we trained entry-level techs.
Matthew McKenny [00:27:05] I think I shared, initially, with the apprenticeship program starting at Hypertherm, that there was a need for 60 people and it filled that gap. I also think skill set or the need for skill set has grown over time at Hypertherm. The training, not just the initial apprenticeship, but the upskilling programs that also leverage apprenticeship, have allowed them to keep up with the needs. The most recent example, Hypertherm has started to automate many of their CNC machining cells — meaning not just assembly, but even the moving of parts is done with a lot of automation — and what they needed was technicians for that automation. Automation was relatively new, let's say in the last five years time for Hypertherm and getting more and more prevalent. So they leveraged an apprenticeship to do that. They took production support technicians — which are the technicians that typically were working on the CNC equipment — and they enrolled them in apprenticeship that was focused on the skill set of mechatronics, which is automation. They've been able to bring people up to speed internally that wanted the opportunity. The thing that's important about that is that the skill set available or the opportunity to post outside for that role and hire people, they weren't able to find it. So, they can build five for everyone they can hire. That is an amazing lever to be able to pull internally when you have people that want the skill set and are willing to learn it, versus having to go out and buy the talent. Because buying the talent is becoming an expensive game these days. And even if everybody was going to try to buy it, there's still not enough. You've got to find ways to build the talent you have and find ways to on-ramp people that want to learn it. I love Mace's example of the technicians because it sounds like they're really accomplishing that. People are moving through the levels, they're getting the support, and they're meeting the needs of their organization. That is an amazing example of the power of apprenticeship.
Gregg Profozich [00:29:00] I think you both are saying some very powerful things. Looking at the statistics the other day, I think the projections from the Census Bureau are that we'll have 3.5 million unfilled manufacturing jobs over the next decade. So, if an apprenticeship program can help me retain and enrich the lives of my loyal and current employees, that's got to be incredibly valuable.
Matthew McKenny [00:29:22] I would agree. I think the thing I would add to that too, is if you're a smaller-sized organization that doesn't feel like you have the internal capacity to build an apprenticeship, there are resources out there that help you. There are intermediaries that are focused on specific skill sets that will help you build an apprenticeship and provide the training that you need. Again, you may qualify for some of the offsets that are out there or incentive funds that will help you pay for some of that training. We do a lot of work in the state of California. California is a state that invests heavily in training and there are lots of opportunities out there. We help small businesses that only need two apprentices. Then we help them build a program and around that, and they leverage intermediaries and find ways to get offsets for training and still build the skills they need. So I think it can be scaled down to a small business. And it can be really successful in a large organization, but it looks different.
Gregg Profozich [00:30:17] Excellent. Mace, any thoughts on that?
Mace Gjerman [00:30:19] Yeah, I agree. As part of our involvement in apprenticeship, I'm actually currently the co-chair of our JATC — joint apprenticeship training committee. There are companies within our JATC represented like Peterson with 1500 employees, but there are also very small employers with six employees that need one more. So, they're participating in the apprenticeship with just a single apprentice. For them, it's just as critical to their success as a larger number of apprentices is to ours.
Gregg Profozich [00:30:55] Okay. So, apprenticeships can apply to any size organization. And if we get back to those five hallmarks, you're probably doing many of them anyway, it's just a matter of adding the structure around it, is what I heard you say earlier. So it can apply to any size organization — no organization is too small.
Matthew McKenny [00:31:11] Agreed.
Gregg Profozich [00:31:12] Okay, so let's talk a little bit in a little different direction. I think both of you are involved in organizations related to developing and promoting apprenticeships. What are some of the common objections that you hear? What's your response, in your experience, to that objection?
Mace Gjerman [00:31:26] I previously alluded to the fact that on the part of ownership, there was concern about getting the state of California and or the federal government more involved in our day-to-day operations. But, like I said before, ultimately, when we looked at what those organizations would require of us, we realized we are already doing it. So I say after 20 years, it's almost transparent to us that the apprenticeships are ultimately administered and overseen by the state of California and the Federal Department of Labor. I think also mentioned earlier that in this very tight labor market — you mentioned the millions of unfilled manufacturing jobs — employers really can't stay afloat if they're not doing the five hallmarks we've talked about, because that's what it takes to keep employees and keep them moving forward.
Matthew McKenny [00:32:21] Yeah, I think there are some things that intimidate employers. There is an administrative burden, especially if you're new to it. There's some tracking that has to be done. There's some reporting that has to be done on apprentice related to progress. But, if you seek to understand and, oftentimes if you reach out to the resources that exist — both at the state level at the federal level and there are lots of other professional organizations — that can help you navigate that. There are costs associated with it. I think that's at times a barrier. Apprenticeship can be complex, depending on what type of organization you have, and what state you're in. They look a little different from state to state. So, again, having somebody help you understand the landscape can really clarify a lot of those things. From my personal experience at Hypertherm, we structured the first program at sort of a large scale, because it was filling an immediate need. We built a program, we had an institute, and it was incredibly successful. One of the challenges we had getting any traction with a new apprenticeship at Hypertherm after that was when we used the word "apprenticeship," everybody fell into the perception that all apprenticeship had to be that big, that all of those things had to exist. And they really don't. If you want to start an apprenticeship with one person, and you've identified the related instruction, and you understand how they're going to get trained on the job, and you have a mentor, that's really all you need. So it doesn't have to be done on a grand scale. If I had it to do over, I might have started smaller, so people would have understood that apprenticeship can be very agile, and it can fit a need of just one very specific skill set, or it can be an answer to a very broad need as well. That's both inside small organizations and loc.
Mace Gjerman [00:34:01] Well, the opposite may be of Matthew's organization, we would start bigger. We started pretty small. We were a little unsure how this was gonna work, and what the return on investment we would get. Once we started to see that, we immediately started increasing the ante. We started recruiting much more aggressively and we raised our apprenticeship classes, just for Peterson, up to about 12 more apprentices rather than four.
Matthew McKenny [00:34:33] The thing I would share is that apprenticeship can be a viable career pathway. It's often considered an alternative to going to college but it doesn't have to be just an alternative. You can do both. The amazing thing about an apprenticeship is a) you're going to earn and learn. You're going to have a job and you're going to earn some money. You're also going to learn a valuable skill set. In many organizations that can be built upon. You can either take that experience and choose to go yourself if that's what you want to do. You can take that experience, and you can build and stack credentials as it relates to apprenticeship and find a meaningful career in a trade that is going to pay you very well. There's a huge need for many of these skill sets. But I think it should be looked at as a more viable alternative. It's the path I took. I might be biased in that sense. But I see a lot of young people trying to make a decision about what their career is going to be. Apprenticeship is a mechanism to ensure that you're employed. You get the education and a skill set — and I think the mentorship piece is amazing because you get to learn the job from somebody that's got the experience. You still have options. There are so many apprenticeships available across the country that can pay up to six-figure salaries. I think it should be something that's talked about more and considered when you're thinking about what your future is and what your work life is going to be post-education.
Gregg Profozich [00:35:59] Excellent points. Thank you for sharing that. And I think that I think we need to keep that top-of-mind because, in the manufacturing world, there is a huge gap in terms of skilled workers that are qualified for the roles that are out there. Apprenticeships, certainly, are one mechanism to help fill that gap and to get people engaged in that career path. In summary, I think I want to go through a couple of things that I picked up. When we think about apprenticeships, we should really think about it as a quality workforce development program. And an apprenticeship is going to have five hallmarks: employment, related instruction, on-the-job training, mentoring, and structured wage increases that go along with it. And apprenticeships can apply to either represented and non-represented employees. And they can be at any role, not just trades, which I found kind of interesting, and I think will be interesting to our listeners. In terms of standards and registrations with state and federal agencies, that registration allows the apprentice to have a portable credential and also allows the employer, in many cases, to access funding at the federal or state level to assist in the creation of and administration of an apprenticeship program. And in terms of a career path, it's very valuable to employees to have an apprenticeship program, because it offers a career path to employees within your organization. I may get one credential and we'll take one apprenticeship program, and then after a few years decide I want to take another one and move within the organization. Across the board, we're looking at at least an 80 percent success rate, strong retention, and really strong engagement of employees that go through a program. In terms of the organizational impacts of starting an apprenticeship program, there's always resistance to change the different levels, but the apprenticeships often prove their effectiveness very quickly. One of the keys to that change process working quickly is the management commitment — walking the walk and talking the talk about supporting that in terms of results. Reduction in time for people to learn the essential competencies and have the essential competencies and expertise in a given job. Upskilling job flexibility, upward mobility — lots of different results that come out of these programs. And there is sometimes an administrative burden that goes along with them in keeping up with the structure and following it, but there are also resources to support organizations as they think about adopting an apprenticeship program. So in that summary, did I miss anything? Anything either if you have to add?
Matthew McKenny [00:38:17] I think you did a great job that was incredibly well said. You're a good student.
Mace Gjerman [00:38:20] Yeah.
Gregg Profozich [00:38:21] Well, thank you. Clearly, you've got great experience in this and I really enjoyed our conversation. Really appreciate you being here today. Matthew and Mace. Thank you for sharing your perspectives and insights with me and with our listeners.
Matthew McKenny [00:38:32] Thank you so much. And Mace, it was great to learn about your progress.
Mace Gjerman [00:38:35] Yeah, Matthew, I'm going to look up the IAA. Very interested in that now and it was good to meet you. You also Gregg.
Gregg Profozich [00:38:41] Thank you both very much. And to our listeners. Thank you for joining me for this conversation with Matthew McKenney and Mace Gjerman, discussing small- and medium-sized manufacturers’ perspectives on apprenticeships. Thank you so much for your time. Have a great day. Stay safe and healthy. Thank you for listening to Shifting Gears — a podcast from CMTC. If you enjoyed this episode, please share it with others and post it on your social media platforms. You can subscribe to our podcast on Apple Podcast, Spotify, or your preferred podcast directory. For more information on our topic, please visit www.cmtc.com/shiftinggears. CMTC is a private nonprofit organization that provides technical assistance, workforce development, and consulting services to small- and medium-sized manufacturers throughout the state of California. CMTC's mission is to serve as a trusted advisor, providing solutions that increase the productivity and competitiveness of California's manufacturers. CMTC operates under a cooperative agreement for the state of California with the Hollings Manufacturing Extension Partnership Program (MEP) at the National Institutes of Standards and Technology within the Department of Commerce. For more information about CMTC please visit www.cmtc.com. For more information about the MEP National Network, or to find your local MEP center visit www.nist.gov/mep.