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Manufacturing Labor Staffing: Business Partner or Vendor?

February 14, 2020
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Manufacturing Labor Staffing: Business Partner or Vendor?

Who would you trust more to help fill your labor needs on the production floor, in the warehouse, on the dock, and throughout your plant: a business partner or a vendor?

With unemployment at a record-low, the labor market has become increasingly competitive and manufacturers are struggling to source and retain talent. Traditionally, temp staffing agencies have been the answer to plugging labor gaps: you tell them what positions to fill and employees quickly show up at your door, helping you reduce your time-to-fill rates. However, with 200% to 400% turnover rates, the cost of constantly recruiting, training and managing temps who don’t stick around dilutes much of its value.

Simply put, the temp agency model doesn’t offer a solution for improving turnover rates.

That’s just one of the reasons insourced managed labor has emerged as such a compelling alternative to temp staffing. Insourced managed labor provides a consistent and productive workforce that integrates directly with your team.

What Is Insourced Managed Labor?

Under this staffing model, managed labor providers supply both onsite management and a team of trained, competent workers. You manage only the onsite supervisor who, together with their team at headquarters, handles all the recruiting, training and supervision of the onsite managed labor team.

With a compensation package that includes competitive wages, medical and 401k benefits, and opportunities for advancement, managed labor employees stay on the job, becoming a reliable part of your team, with productivity metrics and other KPIs aligned with yours. Weekly KPI reporting ensures accountability and provides you with a level of confidence a temp agency cannot.

Getting Started with Managed Labor

On the surface, temp hourly rates can seem attractive. While often cheaper than managed labor hourly rates, temp agencies can leave you managing spiking turnover and sagging productivity that results in much higher “all-in” costs.

On average, temp agencies cost 25-50% more than managed labor solutions, negatively affecting the culture and bottom-line of your organization and leaving your HR staff stuck in a vicious cycle of train-retrain.

Here’s how it breaks down in a 10-employee example:

Labor Model
Temps
LACOSTA Managed Labor
Hourly Rate*
$11-12
$13-14
# Workers Needed
10
8*
Sub-Total**
$229K-$250k
$216k-$233k
Training Costs***
$15k-$30k
$0
Sub-Total
$244k-$280k
$216k-$233k
Savings Discovered†
$0
($10k-$100k)
Total
$244k-$280k
$133k-$206k

* Average for tier 1 skill set workers
** Annualized
*** HR employee salary of $60k/yr. spending 25-50% of their time on training
† It is common for managed labor employees to find $10,000 to $100,000 in savings and we have witnessed several cases in which $500k to $1 million+ were found; this savings does not include the value of up to 25% more plant output and the savings associated with improved safety – and safety ratings: incidents involving the managed labor team impact the managed labor provider’s TRIR and EMR (not yours)

Request a Managed Labor Audit

Reliable skilled employment can seem like a fantasy to manufacturers who have historically relied on temp agencies to end staffing shortages. But with managed labor, this is no longer fiction. Avoiding the “fill rates” and high turnover of temp agencies starts with assessing your labor needs.

To get started, request a labor audit from a qualified partner such as LACOSTA Facility Services to determine your scope of needs and KPIs.

Contact us to learn more about insourced managed labor solutions

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