(Saint Paul Pioneer Press (MN) Via Acquire Media NewsEdge) Feb. 22--When Rick Pedrow landed an interview at the 3M Co. in 2002, he figured he was on track to be a 3M employee.
Instead, he found out the product safety engineer job was a contract position and that he'd be employed by an agency. When he decided to take the contract position, he believed he'd soon become a regular 3Mer.
"They said six months. But six months turned into 10 and a half years," Pedrow said recently. At the 10 1/2-year mark late in 2012, his contract wasn't renewed, and Pedrow was out of a job.
Pedrow, 54, says his experience as a long-term contractor wasn't unique at 3M. By the time he was let go, close to half of the staff in the product safety unit were contract employees.
Each year in its annual report, 3M gives out composite numbers on its total employment; it's seen a 10 percent increase in its U.S. workforce between 2011 and 2013.
While it never breaks out numbers on its use of contract employees, Jacqueline Berry, a 3M spokeswoman, said that contingent -- or contract -- workers now make up about 10 percent of 3M's U.S. employee base.
"A lot of that in recent years has been in IT (information technology)," Berry said. Some of that work is tied to a move announced by 3M in 2012 to integrate its global information technology platform, which enables the industrial conglomerate to standardize its varied business units around the world.
Contract workers also are found in 3M manufacturing roles and in warehouses, Berry said. That's done to help company staffing meet fluctuations in demand, she said.
While some Twin Cities' area recruiters have noticed 3M's increased use of contractors, they say the Maplewood-based company isn't unique. Following a trend that's been developing for more than a decade, contract employment -- especially for technical software-related positions -- has become standard for many businesses.
The shift may have been more noticeable at 3M, though, which saw sweeping changes to its corporate culture under CEO James McNerney, who was hired in 2000. As the first outsider to lead 3M, McNerney cut jobs initially and brought in General Electric's Six Sigma program, designed to find efficiencies and increase production. And the changes showed in 3M's financial reports, where operating profit margins rose from 17 percent in 2001 to 23 percent in 2005, when McNerney left to head Boeing.
It's not clear if that shift also translated to additional contract workers at 3M, or how quickly. But workers say contract employees are a regular part of the company now. And the pay for those positions can be competitive. Several former contractors in the product safety unit said their salaries had been $60,000 or more.
When Pedrow had his first interview at 3M in 2002, "my first answer was 'no, I don't want to come in a contract,'" he recalled recently. As his contract was extended, he continued to look for full-time opportunities. Pedrow had lengthy work experience in his field but said his lack of a four-year degree may have hurt his chances of landing a regular 3M position.
Meantime, a civil action brought against Microsoft over contract workers changed the landscape at 3M, at least temporarily, Pedrow said. The lawsuit, Vizcaino v. Microsoft, was brought in 1996 by "permatemps" -- workers at Microsoft who had been on contract at the software company for years.
After the lawsuit was settled in the early 2000s, Microsoft and other companies started being more careful about their use of long-term temporary employees. For example, contract employees couldn't be with Microsoft for more than 364 days at a time, and they had to be off for 100 days between assignments.
Pedrow said there were repercussions for him at 3M from the lawsuit. In 2004, he sat out for 60 days, he said. He then worked steadily on contract for two years, and then two years later was forced to sit out another 60 days.
"Somewhere around my fifth year, they stopped doing it," he said.
The employment firm that Pedrow worked for while at 3M, Volt, did provide medical benefits, though those were diminished after 2008, he said. During his tenure at 3M, Pedrow did interview for other jobs at a couple of different companies in the Twin Cities.
"I always kept my options open," he said. But what he really wanted was a permanent 3M position. "I really enjoyed my job," he said.
In 2012, shortly after a new manager took over in his division, Pedrow's contract wasn't renewed. He was able to collect unemployment after he was let go.
FINDING NEW TALENT
Roger Erickson, who worked as a reliability engineer in the same 3M division with Pedrow, also was hired as a contract worker in 2004, he said. Erickson does have a four-year degree and previously had worked for Seagate Technology in Oklahoma City, where he did high-tech testing of computer disc drives.
He was let go once while he was at 3M and then brought back, and finally laid off in 2008 or 2009, as the recession hit.
Erickson, now 64, said, "The question would come up to management, 'We want to be full-time, can we do it?'" But the answer was that the company wasn't hiring. Meantime, the positions that did get filled were younger people, also with college degrees.
"It was kind of disappointing to go through all that," he said. Erickson is now working to launch a business that uses technology to etch custom designs on wooden cremation urns.
Recruiters in the Twin Cities who match contract employees with companies say the market for such job placements is strong right now. But long-term contract positions that stretch over years aren't the norm, they say.
In about 2009, 3M brought in contract recruiters to find new talent, instead of having full-time 3M employees doing that work, said Chris Dardis, a vice president at Versique, an executive search and consulting firm in Minneapolis. "This was after 2008-09, when nobody was hiring," Dardis said.
When 3M reaches out to Versique, it's typically for senior employees and leadership positions, Dardis said. Versique didn't employ any of the contract workers mentioned in this story.
Coming out of the recession, 3M and other businesses had some uncertainty about hiring, so they said "let's go temp, and then scale up as business demands," Dardis said.
Versique's largest overall market for contract consulting is in information technology. That part of the recruiting business has been strong for years, he said, and recently has seen an uptick in permanent hiring of previously contracted employees.
"That points to optimism in the market," he said.
Usually, if a business doesn't want to hire a contract employee, it's because management is unsure about the business or doesn't know the longer-term outlook for a project, said Paul DeBettignies, a Minneapolis-based recruiter. He specializes in finding information technology workers for smaller firms and startups.
Area firms are still doing high-end computer software development work locally, he said. Specialized engineering work tied to product testing probably would be done locally too, he said, though quality assurance testing may more likely be done overseas.
Though the market has improved in recent years, getting hired for IT jobs still can be tricky, he said. Some companies will say "we have a 17-item job description. If you don't have at least 14 of those, we won't hire you," DeBettignies said. "And many companies are still trying to pay people what they were paying during the recession."
Kevin Maciej, who worked in the 3M product safety lab with Pedrow, was a contract employee. Maciej had a two-year degree in electrical technology and worked at 3M for a little over four years.
The end of his tenure there started with a fall off of a horse in 2011, which seriously injured his shoulder and hand. Maciej's recuperation took 10 weeks, and when he contacted the employment firm before his return date, he was told the firm had to contact 3M first.
Hours later, the call came back and Maciej was told his job's responsibilities had changed at 3M and he wouldn't be returning.
"The biggest thing is you have absolutely no protection" as a contract employee, he said.
For many IT workers, DeBettignies said, being let go from a job is a hiccup. "It depends on your skill set," he said. For a mid-level manager, though, a job loss may lead to a longer job search, as there's not the same demand, he added.
And the ongoing embrace of a contingent workforce also has put a focus on the Affordable Care Act and portable, government-subsidized health insurance. Whether that leads to even more flexibility -- for both employers and employees -- has yet to play out.
For Maciej, the job loss was a blow; he had been making close to $60,000 a year and felt that the work in the lab was his calling. He spent the next year on unemployment and looking for work, including positions at 3M, without luck. His lack of a four-year degree put him at a disadvantage to other job-seekers, he said, though he believes his job experience had given him the skills he needed to succeed in a new position.
Maciej, 41, has relocated to the West Coast where he now works as an apprentice electrician. He's gaining experience and preparing for a licensing exam, which he hopes will help him secure a new career.
John Welbes can be reached at 651-228-2175.
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