Episode 9: John Lund from Thern Talks Labor Shortages and How to Tackle Them

Transcript

Adam Honig: Hello and welcome to Make It, Move It, Sell It. On this podcast, I talk with company leaders about how they’re modernizing the business of making, moving and selling products. And of course, having fun along the way. I’m your host, Adam Honig, the CEO of Spiro.ai. We make amazing AI software for companies in the supply chain, but we’re not talking about that today.

Instead, today we’re talking with John Lund, the Vice President of Sales and Marketing at Thern.  Which is probably my favorite maker of cranes and winches worldwide. I mean, if I had to pick one company that does that Thern, of course, would be who I pick. John, welcome to the show.

John Lund: Thank you very much, Adam. I appreciate it and I appreciate being your favorite.

Adam Honig: Yes. Top of the list.  

John Lund: I’m not sure that you could name a number two, but it’s good to be number one.

Adam Honig: Well, you’re definitely number one. And you know, we’ve done some business together over time. I think that  a lot of people on the podcast are very eager to hear about the fun uses of cranes and winches. And, you know, for me, it’s the New Year’s Eve ball drop that always comes right to mind.

Maybe you could just start off by telling us a little bit about that.

John Lund: Yeah, absolutely. That’s a great stage for us to be on every year, right? And one that makes your heart stop for a moment every time that the ball drops, just saying.  Hey, this is a big stage that we’re on, you know, millions, if not billions of people watching.

But, a little over 20 years ago, we were approached to provide a winch that not only would raise and lower a heavy piece of equipment, but also do it in precisely one minute. So we’ve been part of the New Year’s celebration in Times Square for over 20 years.

Adam Honig: Wow. And so the thing that makes it really special is, not just the fact that it’s high up and everybody’s looking at it and stuff like that, but the fact that it has to descend exactly at the right time, is that what I’m hearing?

John Lund: Correct. So it’s partly mechanics and it’s partly electronics that makes that happen. And we tie it all together, with our winch and control equipment.

Adam Honig: I always figured there was some guy behind the scenes making sure it went exactly right, but no, you’re telling me it’s all automated. Is that what I’m hearing?

John Lund: It’s a press of a button. 

Adam Honig: Gotcha. 

John Lund: Timed precisely. In order to do that, we groove the drum, and we have wire rope that carries the ball up and down the platform. And, by synchronizing it precisely, we’re able to do it in exactly one minute,

Adam Honig: And is there like a third engineer onsite just in case you need somebody there? Or No, it’s at the point where you’re like – We’ve been doing this for 20 years. We got it. There’s no need.

John Lund: Yep. This is actually the second winch. They increased the size of the ball probably seven to 10 years ago and it required new winch and control. So, this is actually our second go round with the New Year’s Eve ball.

Adam Honig: Gotcha. Well, I’m super curious – is that level of precision in terms of timing important for other customers? Or is that really just a New Year’s Eve ball drop thing?

John Lund: No, Thern has three different divisions. We have an entertainment or a theater division, which is actually ties in with the ball drop in Times Square. We have an industrial division and a water/wastewater division. And, each of those different segments of customers have different requirements when it comes to precision.

Some don’t care at all and some care a lot. So the answer to your question, Adam, yeah. We have many customers that are looking for precision lowering and positioning applications.

Adam Honig: Gotcha. So is it mostly in the entertainment side of things? Like if you’re swinging Peter Pan around on the stage or something like that, you need to do that, but maybe not for Industrial?

John Lund: Well, actually, we manufacture a winch for a company in Texas that makes lariots for roping bulls. So our winch will actually tension those lariots and then take all of the residual tension out of them. So it’s really important that we pull to a precise measurement and then release it.

Adam Honig: That’s super cool. See, this is why you guys are my favorite crane and winch company. I mean, who does that kind of stuff? People just think, Oh, you know, they’re carrying steel beams and stuff like that, but there’s a lot more to it.

John Lund: Yeah, it’s very, very unique. We have a broad range of customers. Some that I can mention and some that I can’t. But, we have a number in the aerospace industry. NASA is one of our really good customers, so we’re thinking of them and the folks in Florida down the west coast today and this week as a hurricane rolls in.

But, yeah, our equipment moves aerospace equipment around. We have cranes that lift motors out of helicopters. A wide range of applications.

Adam Honig: Gotcha. How long have you been in the crane business for, John?

John Lund: Myself? I’ve been in manufacturing for a little over 30 years. I’ve been with Thern for five.

Adam Honig: Gotcha. So you’ve probably seen a whole bunch of changes in manufacturing during that time then.

John Lund: Oh, definitely. Yep. The progression towards Lean and Six Sigma, kind of rolls all the way through the various iterations of disciplines within manufacturing.

Adam Honig: You know, it’s really interesting. So we’ve been seeing a little bit of a pushback on lean, you know, with everything going on in the supply chain. People have been moving to more of a ‘Just in Case’ kind of method instead of ‘Just in Time’. Have you been seeing much of that at thern?

John Lund: You’ve been talking to toilet paper manufacturers?

Adam Honig: Actually, I was talking with a spray foam manufacturer, and that’s what they were saying. They were having trouble getting supplies. I mean, it was really a big challenge.

John Lund: It really has changed, Adam, over the course of the past two years. Fortunately, for Thern, our business has actually increased over the course of the past three years through the pandemic. A lot of infrastructure projects going on, which have supported our business. Also, a lot of theater projects, which were funded pre-pandemic, which allowed us to get into theaters because they were dark. And it allowed workers to go in without audiences to do major renovations and projects. 

Adam Honig: So what you’re saying is that when the pandemic shut down theaters in Broadway, those organizations took the opportunity to remodel?

John Lund: They did because there’s so much public funding within the theater business that many of our customers, when the lights went dark and they could no longer have audiences, they already had money budgeted for renovations. But trying to work those renovations in, when you’ve got audiences in and out of theater complexes, is sometimes really hard.

And so, rather than wait for the pandemic to be over to spend the money and do the renovations, they actually brought in contractors while they didn’t have audiences and were able to update their spaces.

Adam Honig: Wow!

John Lund: But back to your question though, Adam.  Just in case we hear that from our customers as well, they’re willing to pay a little bit more money for availability.

And one of the nice things about our products and our designs is that they’re modular. We’re able to either grow or shrink our products to adjust to our customer’s needs. So we can turn out a semi-custom product in the same amount of time or less time than some of our competitors can produce a standard product.

Adam Honig: Gotcha. And what gives you the ability to do that – is it just the design, the way that you architected the product?

John Lund: Yep, it’s, standardized frames. Then we can adjust the size of the drum of the winch and either make it wider or narrower. We can size up or size down the motors in the gear boxes that are associated with the winch. That really allows us to provide a customer semi-custom product with very little additional lead time.

Adam Honig: Yeah, no, that’s great. I mean, we’ve been talking with a lot of people who are focused on agility in manufacturing. Being much more flexible in how they’re doing things. So it sounds like you guys are kind of ahead of the curve on that approach.

John Lund: Yeah, and it’s really been that way.  Let’s say the foundation of Thern is flexible manufacturing and trying to be as adaptable as possible to the needs of our customers. And, really utilizing our engineering talent for a relatively small company, we have a very deep bench of engineers that, whether it’s mechanical or structural, they’re really able to come to the assistance of our sales department and our customers with rapid solutions that  address problems that are out in the field.

Adam Honig: Gotcha. But that also puts more pressure on the sales team in a way, I guess. Right? Because if everything can be custom, they really have to listen really well to what the customer needs. Is that something you work with them to do? 

John Lund: Yeah, it is – very much so. And it’s funny, so many people don’t really understand our product. They need it, but they don’t necessarily understand how it functions or what the inputs are. We do a lot of our business through distribution and I’ll joke with our distributors and say, ‘Hey, I just need you to find the opportunities.’

We’ll solve the problem. Here are a couple questions that I need you to ask. You know, what’s the power source that’s available for the winch? Is it electric? Is it pneumatic? Is it hydraulic? How much are you lifting or pulling? How far are you lifting or pulling it? How fast do you need it to move?

If you can get me answers to those questions, we can design a product that’s gonna just blow your customer out of the water.

Adam Honig: Gotcha. And do they ask those questions for you? Is that a challenge at all?

John Lund: Not really, but a lot of times you have to go back through the cycle again and say, ‘Hey, remember the questions that we’ve gotta ask? There’re a slightly different set of questions.’

When it comes to our cranes, we manufacture a small crane. A lot of people think of cranes as big tower cranes that they’ll see on construction sites. Ours, when you see it on a construction site, is barely visible. Our tallest crane is about 10 feet tall and has a boom that reaches out about 12 feet.

A lot of people think of cranes as being these big, massive structures, but ours are very purpose built. They rotate 360 degrees and a lot of times they’ll service those large tower cranes. The large tower cranes will be on site anywhere from three weeks, to three months, to three years, and they have their own maintenance needs when they’re on site and they can’t service themselves.

They’ll have gear boxes or motors that are 300 feet in the air. Well, how are you going to get those parts up there? That’s where our cranes come in..

Adam Honig: Gotcha. And so when you think about that, everything that’s going in the supply chain today – I was hearing you say that in some ways, it really accelerated your sales, which is awesome. Did it also present material challenges for the business as well in terms of getting the inputs to produce the cranes and winches?

John Lund: Yeah, our operations team has been absolutely fantastic in addressing those challenges and I’m thankful for them every day. I wouldn’t want their job. It’s easier for me to be out on the front end trying to create demand than it is trying to react to it. But it’s whack-a-mole, Adam.

Today, it’s fasteners. Tomorrow it’s motors. The next day, our galvanizer can’t coat product for us. And it’s been shifting throughout the pandemic for parts and materials. Pretty much all of it is labor inputs and shortages.

Adam Honig: Yeah. No, I know. We’ve been talking with a lot of people who’ve been talking about the shift of people in the economy and the kind of jobs that they want to work and the working conditions that they expect and so on. Has that been a challenge for you guys as well?

John Lund: You know, we’re pretty fortunate. We’re in a quasi-agricultural community. Our headquarters is in Winona, Minnesota. It’s right on the banks of the Mississippi River, right in Southeast Minnesota. We’re close to Iowa, we’re close to Wisconsin and, we’re located in southeast Minnesota.

So we draw from a fairly diverse group of people. And, we have employees that are part-time farmers and they supplement their farm income by working in our factory. All sorts of different talented folks that are drawn into our organization.

Adam Honig: Gotcha. So that sounds like a kind of a key advantage for the business, right? Or location?  You know of Drew’s four pillars. In your case, it’s about being able to get the right talent. I imagine – with my mental image of farmers – is that they’re pretty hardworking people, so they must be great people to have on the team.

John Lund: Yeah, they are. We just had one of our longest tenured employees retire last year and he was almost 50 years with the company. We had another gentleman this year retire with 43 years. So, a lot of people come and they stay for their entire career. Super talented machinists and folks that work with  electrical equipment and all sorts of different assembly operations within our facilities. Talented welders and again, things that play in from the farm, right?

A lot of these folks have to be pretty self-reliant and they take those skills that they learned growing up and apply them within our factory.

Adam Honig: Yeah. Wow. Makes perfect sense to me. So when you think about next year and, and the upcoming years for Thern – we’ve been talking with a lot of people who, I wouldn’t say are struggling with planning, but feeling like their planning for next year is a little bit cloudier than it’s been the past, with inflation, interest rates, supply chain disruption.

How do you think about the future? What’s your crystal ball looking like?

John Lund: The crystal ball’s a little fuzzy Adam, but I do see challenges up ahead. We’re seeing some slowing of capital investments. Some pullback, not necessarily full scale pullback, but just some caution going in. We see some customers reducing the number of pieces of equipment that they’re ordering.

Maybe they would’ve ordered six cranes and 12 bases, and now they’re ordering four cranes and eight bases. They might be delaying or pushing projects. We’re actually seeing some theater customers pushing projects that we’re supposed to deliver in 2022 into 2023. Just trying to be a little bit more cautious with their cash reserves.

Adam Honig: Yeah. I think that caution is definitely the word. It’s like people can’t see forward visibility, you know. A lot of people have invested in predictive analytics, but still, it’s all coming from data of the past and we expect the future is gonna be different.  We’re definitely seeing a trend of caution across the board here.

John Lund: It’s not panic, which is good. And there’s still a lot of investment and a lot of pent up demand as people try and recover from the pandemic. A lot of businesses are looking at labor trends and continued labor shortages in saying, ‘Hey, in order to continue my business and continue to meet my customer’s needs, I’m going to need to spend capital in order to replace the labor that I’m not having within my organization.

Adam Honig: Right, And that works well for your business, as does the big investment infrastructure that we’re gonna be seeing over the next couple years as well, I imagine.

John Lund: Mm-hmm. . Absolutely. Yeah. We get involved quite a bit with roads and bridge construction and aspects of those projects. So that’s, that’s certainly exciting for us going into 2023 and beyond.

Adam Honig: Let me ask you this question. So, I speak with a lot of people in manufacturing and I feel like one of the themes that I hear is that younger people are not often drawn to that sector. For one reason or another, I kind of suspect that there might be misperceptions out there about the sector. That they’re thinking –  model T  – that’s what they learned in school.

What do you think are the misperceptions that people carry around?

John Lund: Yeah, I think you’re exactly right. And, part of it is the drive for parents. It’s been this way for 20 years, right? You’ve gotta go to college. That’s the only way you’re gonna be successful. I’ve got a couple of sons that are in their twenties and several of their friends have opted for trade school versus  going to a four year college. And those guys are coming out with far less debt and far more opportunity than some of their college peers or folks that went to college. 

You know, welding has changed dramatically from where it was 20 or 30 years ago. Assembly operations don’t look the same as the old model T assembly line.

You pass a part down the line and you build it bit by bit. It doesn’t look that way anymore. We’re working with lasers. We’re working with robots. Manufacturing is definitely in the 21st century, and is moving rapidly in the adoption of technology in order to again be more efficient, more effective,  with the labor that we do have.

Adam Honig: Oh yeah. I’m reading this book about the economic history of the United States right at this moment, just in my spare time, cause I’m a nerd that way. But, it talks about the original division of labor and why they came up with that. Because all of the immigrants, early in the century, they didn’t speak the same language.

They were all educated very informally. And so Ford had to break it down into such small, kind of mindless steps in a way to make everything run. And of course, even today, graduating from high school, you would be extremely well educated in the 1910’s. So it’s just a totally different environment.  There’s so much technology going into manufacturing that I think we need to get people to be aware of that.  That’s just kind of where I’m at.

John Lund: Yeah. And so much in manufacturing now – it’s not unskilled labor. It’s skilled. It is really skilled labor. You need technicians to operate a laser table or some of the CNC milling machines. You need a good background in science and technology. Math is huge. Some of those jobs can be extremely challenging and extremely rewarding. And, we pay well.

Adam Honig: Yeah. Yeah, for sure. Well, John, this has been a really interesting conversation. I mean, first of all, of course, the use of cranes is always a great topic. Not only for those of us who have small kids who just love cranes anyway, but for adults as well.

But also talking about the changes in manufacturing and the just in case approach.  That’s super relevant to today’s leader in the space. And then just this whole idea about manufacturing as a leading edge technology opportunity for people.

I think that’s something really important that we need to get more of the word out on. So I really appreciate you joining the conversation here today and talking about those topics.

John Lund: You’re very welcome, Adam. It was fun being on your program.

Adam Honig: Yeah. So as a reminder, for listeners out there, you can find every episode of ‘Make It. Move It. Sell it.’ at spiro.ai/podcast. And I challenge you to say that three times fast. John, that’s a bit of a tongue twister for me. 

And, while you’re there, make sure you subscribe and if you like John’s and my conversation today about cranes and related things, maybe give us a thumbs up or a like, or something like that.

John, do you think people should do that?

John Lund: I would welcome it and if you’re interested in learning more about Thern, you can find us at www.thern.com

Adam Honig: And that’s T-H-E-R-N.com for those of you who might be spelling challenged like me.

John Lund: Thank you

Adam Honig: Thanks everybody for tuning in. We’re looking forward to speaking with you on the next episode.

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