While many West Michigan manufacturers are staying mum on a proposed federal COVID-19 vaccine mandate and how it might affect the industry, Nelson Jacobson believes it’s a conversation worth having.
“I’m really disappointed because this is a huge public health issue and when emotions get in, and it’s no longer about just following the science, it really has gotten political now,” said Jacobson, president and CEO of Grand Haven-based JSJ Corp.
“A mandate without some alternative options, I think, creates more noise and unnecessary conflict,” added Jacobson, whose company maintains a portfolio of manufacturing businesses and also has operations in China and Mexico. “Generally, when (mandates) come down from the federal government, let alone the president, there are so many hoops and so many ways it can be changed.”
Earlier this month, President Biden announced a federal vaccine mandate for all U.S. companies with at least 100 employees, which would affect about 80 million workers in the private sector. Workers that decline the vaccine would be required to undergo mandatory weekly testing.
The mandate also applies to any manufacturer that belongs to the federal supply chain, regardless of the company’s size.
The mandate — which still awaits specific rules by the federal Occupational Safety and Health Administration and is likely to face legal challenges — has rattled a manufacturing industry already grappling with its share of existential issues. The sector is struggling to lure enough people to its workforce while crawling through profound supply chain disruptions and rising costs of goods.
JSJ Corp. — which was established in 1919, just one year after the Spanish Flu pandemic — has shown it can endure a variety of crises. Jacobson points to the problem solving that got the company through previous challenges as a reason the government should trust the industry to maneuver the lingering COVID-19 pandemic safely.
“We’ve been through smallpox, polio, a depression, world wars … we know what to do,” Jacobson said. “I think we’re more than equipped to take care of our people and our communities without the federal government telling us how to do that.”
Biden’s mandate could prove particularly problematic for manufacturers already struggling to find enough workers, according to Jon Kok, a partner and co-chair of the Labor and Employment Practice Group at Warner Norcross + Judd LLP in Grand Rapids.
“Just talking to manufacturers, they don’t know what they’re going to do with this,” Kok said. “They’ll push and they’ll inform and try to get everybody to do it, but they just know there is going to be a significant portion of their population that is not going to do it.”
That’s going to put manufacturers in a tough position where they may either have to implement testing — which could prove costly, burdensome and “could be a real nightmare” — or terminate employees who still refuse to get vaccinated, Kok said. Violations of the rule would carry a $14,000 fine.
“This is the real concern of most of my clients, especially manufacturers,” he said. “There’s a lot of people who aren’t going to do it, and the government telling them they have to is not going to change their mind, so employers are going to be in a very tough position.”
The Michigan Manufacturers Association quickly rebuffed Biden’s announcement earlier this month, voicing clear support for vaccinations while calling the directive a heavy-handed move that takes away decision-making power from business owners.
“We have long supported — both with our membership and publicly — vaccinations,” MMA President and CEO John Walsh told MiBiz. “We believe in it strongly. And, the devil is in the details (of OSHA’s emergency rules). It could be a very costly endeavor for an industry already facing workforce shortages, a broken supply chain … and rising costs for goods. We may have one additional expense that small, medium and large (companies) would have to bear.”
Walsh pointed to manufacturing’s return-to-work efforts in the early stages of the pandemic as proof that companies can effectively navigate the health crisis.
He also pointed to the fact that while larger manufacturers might be able to more easily absorb the expenses tied with weekly testing, small and mid-size manufacturers may not necessarily have the money and infrastructure to satisfy the demand.
Still, the effect of the mandate on workforce numbers is a looming concern should the order take effect.
“At the present time, our manufacturers have been able to move forward safely with a workforce that has some vaccinated and others that are not,” Walsh said. “The rules could change the relationship. I don’t have an opinion, good or bad, until I see (the final rules).”
However, not all manufacturers view Biden’s mandate as a negative.
In Steelcase Inc.’s recent conference call with analysts to discuss the company’s quarterly results, President and CEO Jim Keane cited the rise of the delta variant and plateauing vaccination rates as reasons why many of Steelcase’s customers have delayed returning their workforces to the office, which was expected to ramp up around Labor Day.
“We sense many of our customers are quite eager to get their employees back to the office, and in fact, many companies have established vaccine mandates in recent weeks,” Keane said in the call. “The Biden administration recently announced federal mandates we believe will provide a clearer path for our customers and their employees and is a real positive for our business.”
Incentivizing the jab
West Michigan manufacturers have embraced a range of incentives to coax hesitant workers into receiving their COVID-19 vaccinations — from time off of work to cash.
Benton Harbor-based global appliance manufacturer Whirlpool Corp. this month confirmed to Bloomberg News that it is offering a $1,000 cash bonus to employees who got the vaccine.
“Early on, a lot of our manufacturers were offering a variety of things,” Walsh said. “You could have a full day off or get a gift card — it wasn’t dramatic in value but it was just enough to take someone that maybe wasn’t hesitant but didn’t feel like going. We did see some success with that, but then it plateaued like it did through the rest of the state.”
Eric Erwin, president and CEO of FloraCraft Corp., a Ludington-based manufacturer of foam products for crafting and floral applications, said he and his team offered a few incentives to the workforce, which is heavy on low-skill, low-wage workers.
This included cash, paid time off and hosting an onsite vaccination clinic for added convenience.
While Erwin said the incentives helped move the needle on vaccinations, a little more than half of his workforce is vaccinated, which Erwin considers to be a problem.
“Those are hard jobs to fill,” Erwin said. “If I throw a mandate out there, will I lose a percentage of our workers? Certainly that’s part of the calculus. … There is another camp that says (mandatory vaccination) is a potential recruitment factor. There are people that want to work in a safe environment.”
FloraCraft is seeing record business right now despite the challenges, and still is understaffed by about 10 percent. Erwin said he is nervous about the weather turning colder and a potential fall COVID-19 wave as more people spend time indoors.
He continues to nudge his workers to get the vaccine voluntarily.
“Half of that (unvaccinated) group is hesitant and concerned they don’t know what to think — they’ve been given information that is contradictory and they don’t know how to process it,” Erwin said. “The other half are hostile and have, I think, really bad information about their beliefs about government and regulations.”