North Dakota manufacturers going full steam ahead on automation
Automation and robotics are seeing increased usage in factories across North Dakota. Despite fears that automation will lead to job loss, company officials say this isn’t the case. “There is such a shortage of workforce, we automate because we have to,” Rod Koch of WCCO Belting explained.
WAHPETON, N.D. — Gazing across the production floor of WCCO Belting’s manufacturing facility in Wahpeton, it isn’t difficult to spot examples of automation at work.
For the rubber belting producer that’s been a staple in the city of 8,000 people for over 60 years, automation comes in packages both large and small, Vice President of Operations Rod Koch and Senior Manufacturing Engineer Travis Mackey noted. “There’s a thousand little things,” that are the byproduct of automation, Koch said Monday, March 7.
Automation is at play in all stages of production, the two pointed out. Running across the ceiling are automated hoists for lifting objects. Meanwhile, the floor of the factory features a machine that pulls rubber belts for custom cutting, another to straighten and align rolls and a third that shrink wraps finished products. All are repetitive, not-so-ergonomically-friendly tasks which used to require human labor. Now, all of these tasks are automated.
That’s not to say that WCCO Belting’s production floor is devoid of human activity. Many of the firm’s 285 employees, 50% of whom are women, provide a hands-on touch overseeing the automated equipment.
The implementation of automation hasn’t been in an effort to reduce staffing, Koch explained. Rather, it’s a response to the current conditions of the labor market. “One of the biggest reasons we use automation here at WCCO is the fact that — you’ve heard the saying, I’m sure, that necessity is the mother of invention — we lack staffing,” he said.
A ‘very popular’ program
The workforce shortage is exactly the reason automation has been at the center of a tax credit offered by the North Dakota Department of Commerce.
A previous iteration of the tax credit was allowed to sunset in 2017, Dave Lehman, the advanced manufacturing business development manager for the department, said. It was brought back in 2019 with the passage of House Bill 1040 .
In its current form, the automation tax credit offers a total of $1 million per year to help businesses defray the cost of implementing automation. A company can receive up to 20% of the cost back in the form of a tax credit, though that amount is prorated once requests top $5 million. For as long as Lehman has worked for the Department of Commerce, demand for the tax credit has been “very popular,” he said.
At the crux of the tax credit, Lehman explained, is the staffing issue Koch has experienced. “With the workforce the way it is right now, there’s an even larger push to automate the factories’ operations,” he said. “I think it’s going to continue to become more popular.”
The future of the automation tax credit is uncertain at the moment. The 2019 measure brought it back for four years, meaning 2022 is its final year. Whether or not there will be another iteration of the tax credit will be determined by the North Dakota Legislature.
Though many larger firms have already begun using automation, Lehman said the technology still has growth potential in the state because smaller companies have yet to take the leap. “We have a lot of smaller guys, however, that haven’t been using a lot of automation and I think that there’s a lot of potential for that,” he said. “The main thing here is to get more factories automated.”
Picking up the slack
In addition to WCCO Belting, equipment manufacturer Steffes has been among the beneficiaries of the automation tax credit.
According to Jeremy Jahner, the company’s director of manufacturing, Steffes’s use of automation dates back nearly 20 years. The primary focus over the past two decades has been using robotics for welding.
Among the reasons for using automation in welding, Jahner explained, is that robotics offer repeatability and quality which human labor cannot match. Robotics can also take humans out of harm’s way by handling large, complex weldments which create reach and ergonomic issues.
Jahner added that the labor market has also dictated the implementation of automation. “There tend to be fewer and fewer welders coming into the industry,” he said. “Looking at that trend, one way to combat that is with automation.”
Next for Steffes, Jahner said, will be adding a new powder coating system into its Grand Forks and Dickinson manufacturing facilities which uses automation. “We’ve got some difficult parts to powder coat,” he said. “With the speed we want to be able to powder coat those you just can’t, fatigue-wise, maintain the same speed and accuracy that a robot can.”
The emphasis on speed is a reflection of the growing demand for Steffes’s products, Jahner noted. “Demand is increasing for a lot of the products that we’re building right now. We see that going into the future,” he said.
Here, automation fills the void of open positions. Jahner said Steffes is virtually always looking to hire more welders and automation helps bridge the gap. “The biggest thing we get is it’s very, very repeatable. It’s going to do exactly what you program it to do again and again and again, and it doesn’t fatigue,” he remarked. “You can ask a machine to do things that aren’t physically possible at the rates you’re asking it to do.”
Thus far, Jahner said the combination of human and machine has been a good mix for Steffes. “We can either, to use the old adage, throw more people at it, or we can use a combination of people and automation,” he said.
The rise of automation and robotics has naturally stoked fears that machines will take jobs away from humans.
So while Koch highlighted the consistency, quality and safety benefits of automation, he believed that mass job loss sparked by automation couldn’t be further from the truth. “All of North Dakota really has a staffing shortage. It’s a common misconception that people automate to eliminate positions. We automate because we can’t fill the positions,” he said. “The idea is to automate processes to require less physical work content of the existing workforce so they can run all the equipment we need to make our products.”
Koch said WCCO Belting has made a “concerted effort” to boost hiring over the past year, but they’d still “love to add quite a few people,” to fully staff their 150,000-square-foot facility.
The factory’s growth over the decades speaks to the rising demand for the company’s products. Koch said the custom belts the company manufactures are among the most unique in the world and are why the small company from Wahpeton exports to 20 different countries.
Automation plays a central role in allowing that growth to happen, Koch said. For example, the facility’s cut-to-length machine used to require up to four operators. With assistance from automation, the machine can be run with just two people, freeing up hands to run other equipment.
New equipment is constantly arriving, too, Koch said. Two new machines will go online this month and a third will be arriving in Wahpeton after that. All will require human hands, meaning when automation takes someone off of one machine, another one is open. “We’re constantly adding equipment. We’re a very growing company,” Koch commented. “It’s not that those people are going to be unemployed. I need them to go run the new stuff.”
At Steffes, Jahner said automation has shifted some of the company’s top welders into “home-grown” promotions to technicians. “Yes, we need fewer people that are actually welding, but now we need more technicians that are programming and maintaining the robots,” he said. “We’ve had quite a few individuals that have shifted their work.”
Jahner said that those who’ve taken to the new technology have moved into new roles. “It does allow an opportunity for those people that are willing to learn the technology and embrace the new technology. They can move up into a different type of role,” he remarked.
Lehman said this sort of job shifting has been the case across the state as companies embrace automation. A byproduct has been increased wages for those who do move into a higher skilled position, he said.
Like it has at WCCO Belting, Lehman said that automation can not only perform tasks, but also allow employees to do other things. “If they can free somebody up on some of the manual labor and have them operate a robot or free them up to go into another department or area, that’s been a huge help for these companies,” he said.
Lehman estimated that the state is 20% understaffed and that automation could help fill that hole. “Especially in this labor environment, it’s not about cutting jobs so much as it’s being able to supply the market with the people that they have,” he said. “I have yet to see anybody reduce headcount because of automation. What they’ll do is they’ll shift positions around.”
Koch took Lehman’s assertion even further. “I can absolutely guarantee automation will never cause somebody to lose their position here. I guarantee you. There is such a shortage of workforce, we automate because we have to,” he promised. “It’s not just Wahpeton, it’s the entire country.”
Here to stay
Companies like WCCO Belting and Steffes prove that, despite its detractors, automation will have a place in the workplace throughout North Dakota for years to come. This is especially true if workforce issues continue to persist and hamper production.
For Steffes, Jahner said the company is unable to fill positions as quickly as it would like to. Automation, he continued, is a way of combating that difficulty.
The next major evolution Jahner expected would be deploying robots to tend to other robots. He envisioned that would mean using one robot to load and start a second. “Today, Steffes would have employees loading parts into the robot and starting the robot,” he explained. “The next point of that is a robot loads the weld station, then another robot welds it.”
Though it would seem even further advancements in automation would threaten employment, Jahner insisted those fears would not come to pass. He said that programs like the automation tax credit, which Steffes has received every year it’s been available, allow the state to compete. “It’s important for Steffes and it’s important for North Dakota. It’s allowing us to stay competitive and keep that work in North Dakota,” he commented.
Lehman hoped the automation tax credit would be renewed beyond 2022. He said he would like to see automation adopted among more companies, acknowledging that the initial financial and psychological barriers are the most difficult to overcome. “The first one is really a pretty big purchase. Once they get over that hurdle, then I think it becomes a little bit easier,” he said.
Lehman also envisioned automation would allow for “lights out manufacturing” in the state, meaning factories could run even when no one was around. It’s all in the name of helping North Dakota compete in the international marketplace. “We’re competing with the rest of the nation and really the rest of the world. Anytime you can’t fill an order, you run the risk of losing market share,” he commented. “Essentially what we’re looking at is how do we make more in North Dakota so we can maintain that market share and compete with the rest of the world.”
I can absolutely guarantee automation will never cause somebody to lose their position here. I guarantee you. There is such a shortage of workforce, we automate because we have to ... It’s not just Wahpeton, it’s the entire country.
Koch projected that the declining birth rate means labor issues will continue to be a reality for companies. “We have to figure out smarter not harder,” he said. “We have to figure out how to do the same amount of work while requiring less physical labor.”
He added that the automation tax credit has enabled some of the improvements WCCO Belting has implemented. “Programs like that are very critical for smaller companies like WCCO because one of the limiting factors for automation, or course, is proper funding,” he said. “Anytime we can get state assistance like the automation tax credit or other programs, it’s hugely beneficial for a company like WCCO to help us improve the quality of the work content for our workforce.”
Even with all the automation that’s already in place, Koch noted there are boundless opportunities for improvement. He referenced WCCO Belting’s employee suggestion program, which has put 1,600 employee suggestions into place across the facility since 2014. New ideas, he said, are always pouring in.
Lehman agreed that automation will play a crucial role in keeping those new ideas coming. “If we want to grow manufacturing and we only have so many folks that we pull into the manufacturing arena, then automation is really an important piece that will help us grow manufacturing in North Dakota,” he concluded.