SGS Tool Company Cuts Through Complications of Skills Gap

All 270 SGS associates throughout the organization, from entry level to CEO, receive 50 hours of training annually.

ByJeannine Kunz, Director, Tooling U-SME

SGS Tool Company’s commitment to continuous improvement and developing its associates is paying off with metrics related to retention and engagement well above industry average, all helping stem the skilled labor shortage it faced.

For instance, SGS, a 62-year-old Munroe Falls, OH, manufacturer of round, solid carbide cutting tools, has just 5 percent turnover while many manufacturers are seeing turnover rates of 23 to 30 percent. The average SGS associate has worked at the company for 15 years, and they have a low absenteeism rate (1.8 percent vs. 3 percent industry rate) and low Workers’ Compensation claims.

“We recognized the issues associated with developing a future workforce and started looking at how to address the pain about eight years ago,” says Jackie Schulte, director of Human Resources, SGS. “Today, we have a strong program in place to do that through training and recruitment.”

Brought on by a limited pipeline, a retiring workforce, reshoring, and the changing pace of technology, the gap between the need for skilled workers and the availability of this talent is profound. According to a recent SME survey, 9 out of 10 manufacturers are challenged to find skilled workers.

SGS took several avenues to address the growing skills gap issue. The company began working with area schools to establish a pipeline of future associates. It also adopted an internal training program, including online courses from Tooling U-SME, which delivers learning and development solutions to the manufacturing community.

“Access to a talented workforce is critical for manufacturing competiveness,” notes Chad Schron, managing director, Tooling U-SME. “SGS is a great example of how addressing its business pain led the company to put programs in place to improve its workforce and train the next generation for success.”

SGS stands out in an industry where, according to the same SME survey, more than half of manufacturers say they have no plans in place to address their need to find skilled workers.

The SGS Model

SGS employs Hoshin Kanri, a management system focusing all employees on understanding the company’s strategic direction and fostering their participation in achieving it through continual improvement training. “We believe education has a positive impact on an associate’s contribution to the company, so we are focused on providing effective learning tools for continuing education,” says Gary Miller, Training and Occupational Development manager.

The SGS model is based on Associate Integrated Management (AIM) Goals and Objectives. Department heads meet monthly with the CEO and COO to review these objectives, which include individual, department, and company goals related to sales, customer satisfaction, maintaining quality standards, and associate development.

To achieve these goals, one important requirement is that all 270 associates throughout the organization, from entry level to CEO, receive 50 hours of training annually. Typically, manufacturing associates take 10 to 20 Tooling U courses per year to fulfill the requirement.

“We now have offices in the U.S., China, Germany, and the UK,” says Miller. “It was important to get on the same page with our training to ensure the same scope and focus to increase efficiencies and maintain customer satisfaction.”

SGS manufacturing associates are measured semi-annually on:

  • Time in class (hours spent on each course)
  • Final exam test score meeting established goals (80 percent)
  • Completed classes
  • Progress on assigned class completion

“Every year, managers, or ‘coaches’ as we call them, sit with associates for a competency review,” Miller says. “The purpose is to develop meaningful knowledge, not measure how many classes have been taken in a specific amount of time.”

The program is provided at no cost to full-time and part-time associates. Career counseling is also a regular part of the process. Associates interested in pursuing promotions are encouraged to take, on a volunteer basis, required coursework in preparation to bid on a new job.

As a lean manufacturing company, SGS operates with fewer people, so it is difficult for manufacturing associates to attend an outside seminar. Instead, the company relies on Tooling U-SME online courses. According to Miller, the online model works well for associates who may learn in different ways and at different paces. SGS offers hundreds of courses from “What Is Grinding?” to “Mechanics of CNC.”

“SGS’s Tooling U program is intended to provide knowledge and enhance our associates’ skills and performance in areas that emphasize manufacturing fundamentals, teamwork, continuous improvement, and working smart,” Miller says. “This learning opportunity will provide for the future personal and corporate opportunities in the fiercely competitive global market.”

Growing the Pipeline

In addition to continuous training to address the skills gap, SGS also made recruitment a priority through programs to encourage the next generation to explore the benefits of a career in manufacturing including:

  • Certified apprentice program, recognized by the Department of Labor
  • Customized programs with Stark State College and the state of Ohio
  • Intern/co-op programs
  • Supporting U.S. high schools and colleges, providing sponsorships, tools, and expertise for programs around Baja cars, electric motorcycles, Battle Bots, etc.
  • Supporting the Bloodhound Project SSC (UK), a program encouraging students to participate in STEM (science, technology, engineering, math) programs through projects based on designing superfast cars
  • Participating in local high school and junior high Career Days and inviting classes and parents to come into SGS facilities to see R&D in action
  • Offering tuition reimbursement (100 percent if the student receives an A)

“Through our programs, we want to let students and their parents know that manufacturing today is not like the photos they may have seen of the old tire factories,” Miller explains. “Manufacturing is an exciting industry with plenty of career opportunities here in northeast Ohio and around the world.”

SGS’ focus on developing existing and future associates is helping the company combat a worrying skilled labor shortage and build a strong reputation as an employer of choice. “Engagement and involvement at SGS is high,” says HR Director Schulte. “We know that if we find the right people with the right attitude, who want to learn, we can leverage that for success today and into the future.”

Jeannine Kunz is director of Tooling U-SME (, where she leads a team dedicated to the ongoing education of the manufacturing workforce. An expert in the field of professional development and training, Kunz provides forward-thinking educational innovations and solutions for companies, academia and individuals. Tooling U-SME delivers learning and development solutions to the manufacturing community. More than 210,000 individuals and 5,000 companies and educational institutions use its online learning and assessment programs and other training options to address workforce needs. Tooling U-SME is a division of SME, a 501(c)3 organization that has been gathering, validating, and sharing manufacturing knowledge for more than 80 years.

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