Workforce 2017: Building 21st Century Skills by Area Development

Building a Thriving Manufacturing Workforce Page 68 How to Find Manufacturing Talent Page 73 Scouting Locations in an Era of Labor Scarcity: 10 Considerations Page 80

2017

Special Supplement to Area Development Magazine

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CONTENTS FEATURES

68 BUILDING A THRIVING MANUFACTURING WORKFORCE

EDITOR’S NOTE

n April, the national unemployment rate fell to 4.4 percent — near a 10-year low — and below the Federal Reserve’s median forecast of full employment. As the labor market tightens, companies across many industry sectors are having difficulty filling jobs — especially those requiring the skills needed for advanced manufacturing. Yet, as John Rees, director of Research at Avalanche Consulting, tells us, data alone will not help a company identify the community that best meets its workforce needs. Companies must look beyond the national unemployment numbers since they may be higher — or even lower — in specific areas of the country. And just because a location has a pool of available workers, those workers might not possess the specific skills a company requires. In fact, manufacturing has become more and more technologically or robot-driven. According to an Association for Advanced Manufacturing white paper, from 2010 to 2016, more than 136,000 robots were shipped to U.S. customers — the most ever in the robotics industry. And while the use of robots has decreased the number of workers needed on the manufacturing production line, the association notes it can take an average of 70 days to recruit a skilled manufacturing production worker.

The use of modern recruiting and training techniques will help a manufacturer to build an effective workforce.

73 HOW TO FIND MANUFACTURING TALENT Does a skills gap really exist — or does it depend on where you’re located and what you are willing to pay?

80 SCOUTING LOCATIONS IN AN ERA OF LABOR SCARCITY: 10 CONSIDERATIONS Data alone will not help a company identify the community that will best meet its workforce needs.

EXCLUSIVE ONLINE CONTENT…

Silver Tsunami Washing Over the U.S. Workforce It will take a creative and multi-tiered approach in partnership with communities, government, and educators for manufacturers to find the skilled work force they need.

SPONSORS/PROFILES ALABAMA

66 THE ALABAMA ROBOTICS TECHNOLOGY PARK — AN INNOVATIVE TRAINING CENTER info@alabamartp.org www.alabamartp.org

ARKANSAS

70 ARKANSAS: DEVELOPING THE WORKFORCE OF THE FUTURE shardin@arkansasedc.com www.arkansasedc.com

So how do companies find this manufacturing talent? Joshua Wright, director of Marketing and PR for Emsi, economic modeling specialists, says it depends on where a company is located and what it’s willing to pay.

FLORIDA

Additionally, innovative manufacturers are revamping their recruiting strategies by reaching out to educational institutions and community groups, according to Ed Potoczak, director of Industry Relations at IQMS, a global software company. They are also partnering with industry, governmental, and educational institutions. And once employees are hired, they are enhancing efforts to keep them engaged and drive retention.

78 FLORIDA —THE FUTURE IS HERE

74 CAPE CORAL, FLORIDA: A HOT SPOT FOR BUSINESS GROWTH dbrunett@capecoral.net www.bizcapecoral.com tvanderhoof@EnterpriseFlorida.com www.FloridaTheFutureIsHere.com

LOUISIANA

82 LOUISIANA’S CUSTOMIZED WORKFORCE SOLUTION paul.helton@la.gov www.OpportunityLouisiana.com/faststart

SOUTH CAROLINA

BREADTH. DEPTH. SUCCESS. SOUTH CAROLINA IS READY. pretulaks@sctechsystem.edu www.readysc.org

PUBLISHER: Dennis J. Shea ART & DESIGN: Patricia Zedalis EDITOR: Geraldine Gambale PRODUCTION MANAGER: Jessica Whitebook FINANCE: Mary Paulsen PRODUCTION ASSISTANT: Talea Gormican

ADVERTISING: Bill Bakewicz Valerie Krpata

DIGITAL MEDIA MANAGER: Justin Shea BUSINESS DEVELOPMENT: Matthew Shea WEB DESIGNER: Carmela Emerson

BUSINESS SERVICES: Barbara Olsen

2017 • 65

THE ALABAMA ROBOTICS TECHNOLOGY PARK — AN

INNOVATIVE TRAINING CENTER The Alabama Robotics Technology Park in Tanner, Alabama, is committed to providing a highly skilled, technically trained, and educated workforce; assisting public and private entities to develop new robotics systems and technologies; and promoting the creation, growth or expansion of companies through innovative technology solutions. RTP is one of the most innovative training centers in the country with three individual training centers, each targeted to a specific industry need. This specialized training, held to an ISO 9001-2015 certification standard, is offered at no cost to Alabama companies. Phase One, the Robotic Maintenance Training Center, is a 60,000-square-foot facility housing industry training programs where technicians are trained in industrial safety, robotics, and PLCs. Fully equipped with the leading industrial robotics and automation software in the world, this facility offers more than 30 industrial robots, an automatic welding lab, and a mock-up automatic manufacturing line. Phase Two, the Advanced Technology and Research Development Center, is a cutting-edge R&D facility focusing entirely on high-end robotics and automation projects. This 43,000-square-foot facility is used for the purpose of research, development, and testing of leading-edge automation and robotics used for industry, military projects, and space exploration. This facility also features a 0.95-mile outdoor circular test track. Phase Three, the Integration, Entrepreneurial and Paint/Dispense Training Center, allows companies to train in manual paint spraying techniques and robotic dispense training. The Integration/Entrepreneurial entity is used by Alabama’s new and existing businesses to build, install, and adapt automation equipment for new and existing manufacturing processes. The Paint/ Dispense Training entity offers opportunities for Alabama businesses to train in manual paint spraying techniques as well as robotic dispense training or can be used for dispense process 66 • WORKFORCE

research and testing. This 51,000-square-foot facility houses both aspects and began dispense training in summer 2016. In 2013, RTP debuted a mobile training lab that is used for outreach and to help teach K-12 students across the state of Alabama learn about careers in robotics and automation. The Mobile Robotics Training Lab is a 53-foot semi-trailer outfitted with the latest technology in robotics and automation. RTP also hosted the first annual AWS National Welding Skills manual and robotic competitions in December 2016. Student contestants from around the world showed their robotic arc welding skills and knowledge in the two-and-a-half-day competition. “With new companies moving to and existing companies expanding in Alabama, AIDT is continuously upgrading its skill set as a training organization,” said Ed Castile, director of AIDT. “By staying on top of new technologies and advanced production processes, AIDT is able to keep producing a highly skilled, welltrained workforce and keep our clients safe, productive, and profitable. We will continue to find ways to be innovative in our approach to training, developing, and recruiting the workforce.” Visit RTP at http://www.alabamartp.org/

Rick Maroney, RTP Director Alabama RTP (Robotics Technology Park) 6506 U.S. Hwy 31 Tanner, AL 35671 256-642-2600 info@alabamartp.org www.alabamartp.org

ADVANCED

ROBOTICS TECHNOLOGY & AUTOMATION TRAINING

ALABAMA RTP

ROBOTICS TECHNOLOGY PARK

TRAINING RESEARCH & DEVELOPMENT INTEGRATION & TESTING

www.alabamaRTP.org

WE ARE WORKFORCE DEVELOPMENT

WWW.AIDT.EDU

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BUILDING A THRIVING MANUFACTURING WORKFORCE THE USE OF MODERN RECRUITING AND TRAINING TECHNIQUES, AS WELL AS TECHNOLOGY TO IMPROVE KNOWLEDGE TRANSFER AND PRODUCTIVITY, WILL HELP A MANUFACTURER TO BUILD AN EFFECTIVE WORKFORCE.

hen asked about recruiting, hiring, and retaining skilled workers, most manufacturers across North America report that they are experiencing challenges. It is not surprising in light of recent observations by William A. Strauss, a senior economist in the Economic Research department at the Federal Reserve Bank of Chicago. In his keynote at the IQMS 2017 Pinnacle User Conference, “Economic Conditions and Factors That Impact Manufacturing,” Strauss explained that labor force growth is limited to an extent by the availability of potential workers. He noted that population growth in the United States is at 0.8 percent, and the population is aging. Baby-boomers represent a bigger portion of the potential workforce, he said, compared to younger members of the population considered to be in their years of prime employment. Compounding the recruitment challenge is that many parents of high school and college students envision factories as loud, chaotic places where the focus is on manual labor and the need for education is limited — a view far more accurate in 1977 than in 2017. The results are two-fold: Students with a strong academic focus are steered toward other career paths. Meanwhile, students placed in vocational tracks often lack the core science and math skills required for modern manufacturing jobs. Finally, the youngest entrants in the labor force, the millennials, bring a different set of priorities and expectations along with a fundamentally different relationship with technology. Fortunately, innovative manufacturers have developed strategies for overcoming these hurdles to build skilled and effective workforces. Let’s look at best practices in recruiting, training and knowledge transfer, employee engagement, and A multi-generational team provides experienced role models technology adoption they have developed to build and fresh ideas. modern manufacturing teams. By Ed Potoczak, Director of Industry Relations, IQMS

68 • WORKFORCE

Revamping Recruiting Strategies Today, attracting skilled talent extends far beyond manufacturers posting job notices to build a pipeline of people interested in their openings. Instead, it is important to generate a plan for consistent year-round public relations activities to present the company’s values, purpose in the market, support of individual employee interests, availability of ongoing training and education, modern technology, opportunities for advancement, and involvement in charitable and civic organizations. Manufacturers also need to reach out to providers of secondary and higher education along with community development groups. This may include sponsoring robotics design teams, offering plant tours, or participating in career fairs. Additionally, events can provide a positive peek behind the curtain, whether they are organized as part of national Manufacturing Day (www.MFGDAY.org) efforts or as independent initiatives. Another avenue is to creatively expose students in high school, technical schools, and community colleges through interactive tools such as EduFactor,1 a Netflixlike, cloud-based, video service developed by Edge Factor. Content features innovative designer-makers, the need for products in all aspects of life, and exciting careers in product design and production. Throughout these recruitment efforts, it important to reach out to women as well. According to 2016 data from the nonprofit Institute for Women’s Policy Research (IWPR),2 women hold fewer than 10 percent of jobs in the growing areas of advanced manufacturing, transportation, distribution, and logistics. Many companies that focus on engaging with young women in high school and college report greater success in filling important entry-level specialty and management roles.

Training for Today’s Job Demands Alongside recruiting, it is important to invest in training to help grow the pool of available skilled workers. In many cases, manufacturers can take advantage of opportunities to partner with industry, government, and educational institutions. For instance, Raise the Floor3 is a training program in the Cincinnati metropolitan area started by 26 women from the education, manufacturing, and

nonprofit worlds. It is helping fill middle-skill manufacturing jobs as a way for women to better their financial situation. Carissa Shutzman, a co-founder of Raise the Floor and a vice president at Gateway Community College in Northern Kentucky, said the group’s founders came together because of “a perfect storm” with a high number locally of unfilled, skilled jobs in manufacturing and a high percentage of under- and unemployed women. Another example is, 50 Strong, a subsidiary of midsize manufacturer Precision Thermoplastic Components. It has launched the 50 Strong Foundation,4 which awards scholarships to those engaged in or interested in pursuing careers in manufacturing. With these scholarships, recipients can defray the cost of attending a technical, vocational or trade school to grow their manufacturing knowledge and skills. Meanwhile, Dymotek, which was recently awarded 2016 Processor of the Year by Plastic News, demonstrates the success of combining outside education with in-house training and employee development. The company, which focuses on the demanding niche of liquid silicone rubber (LSR) molding, looks for people with the right culture and attitude — whether working at the local diner or auto shop. Then once they are hired, often as direct labor, the company educates them on LSR molding and manufacturing skills. Notably, some 24 percent of Dymotek’s full-time employees started as direct labor and then were promoted.

Engaging Employees Once employees are onboard, successful manufacturers recognize and address the different expectations of younger millennials and “Gen Edgers.” Older Gen Xers and baby-boomers remember starting careers with trivial, administrative tasks. By contrast younger employees are used to having adults, such as parents, teachers, and relatives, ask for their input on a daily basis. So they want to contribute immediately in a meaningful way. Communication is one key to engaging younger workers. Instead of simply assigning work, it is important for direct supervisors to consistently explain how those work assignments help colleagues, impact customers, and benefit society. Also critical is a commitment to mentoring

2017 • 69

ARKANSAS: DEVELOPING THE WORKFORCE OF THE FUTURE Rapid changes in our global marketplace require states like Arkansas to stay ahead of the growth in order to meet the needs of industry, especially in workforce development. Not only does Arkansas continue to lead the computer science and coding education movement nationwide, we are building foundations for student success in a variety of areas both in and outside of the classroom. When Gov. Asa Hutchinson took office in January 2015, he began the task of developing a workforce initiative that includes private-public partnerships with industries, twoyear colleges, technical colleges, and high schools. Through these mutually beneficial partnerships, students can have access to good-paying jobs after they graduate.

Gov. Asa Hutchinson speaks at Arkansas’ All State Coding Academy Competition. Hutchinson’s computer science initiative is growing a tech-based workforce.

For example, the Georgia-Pacific facility in Crossett developed the Federation for Advanced Manufacturing Education (FAME) program in collaboration with the University of Arkansas at Monticello College of Technology – Crossett. G-P offers a free education to students wanting to learn the advanced manufacturing process used at G-P’s Crossett plant. The company pays for tuition, fees, and books, and it pays the students to work at the mill 24 hours a week. When they have successfully completed the program, students will have a full-time job waiting for them.

In short, no matter what job skills are needed for businesses currently operating in Arkansas or for businesses considering relocation here, students are being given opportunities to respond to the demands of industry — whether it’s welding, computer coding, or manufacturing.

Other two-year institutions such as the University of Arkansas – Fort Smith and Arkansas Northeastern College are preparing workforces for the state’s growing steel industry.

Over the next 10 years, industry demands will undoubtedly continue to change. In Arkansas, we’ll stand ready to meet those demands with a trained and skilled workforce that is second to none.

We recognize that in today’s global economy, it is our responsibility to introduce students to 21st century career paths as early as middle school. While we are pleased with the growth of Gov. Hutchinson’s computer coding initiatives in high schools throughout the state, we are equally excited about the state’s computer science learning program called “Learning Blade.” This program introduces students as early as 5th grade to careers in STEM and technology-related fields.

A better-educated workforce is a vital component of attracting business and industry. It’s about setting the stage for companies to come to Arkansas, grow here, and be successful here.

Now, more than ever, Arkansas is open for business.

Scott Hardin, Director of Communications Arkansas Economic Development Commission (AEDC) 900 West Capitol Ave. Little Rock, AR 72201 501-682-1121 Fax: 501-682-7499 shardin@arkansasedc.com www.arkansasedc.com

70 • WORKFORCE

2017 • 70

ArkansasEDC.com/asa | 1-800-ARKANSAS

WE HAVE A WELL-TRAINED, EXPERIENCED AND EAGER WORKFORCE. STARTING WITH THIS GUY.

Some states say they’re serious about economic development. Arkansas is proving it, with a skilled and ready workforce that starts all the way at the top. Our Governor, Asa Hutchinson, is building the ideal talent delivery system with custom, ondemand workforce training to meet business needs and address skills gaps. The result is a state poised and ready to deliver market relevant workforce to the scale necessary to succeed. Go to ArkansasEDC.com/asa or scan this ad using the LayAr app on your smartphone to learn how you can join Asa and this amazing business venture we call Arkansas Inc. You’ll be in good company.

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“high-potential” employees. As new employees gain familiarity with how things get done, they should be thoughtfully challenged with meaningful responsibilities backed by guidance to provide coachable moments. Additionally, regular meetings for informal listening, feedback, and advice with seasoned employees and managers will be appreciated, and they will help minimize the risk of frustration leading to a quick exit from the company. While focusing on the wave of new talent, manufactures should also identify growth opportunities for Gen Xers who have years with the firm. These valuable employees, who often need to support growing family commitments, want to advance and unleash their passion to help grow the company. Importantly, integrating new employees into multigenerational teams can strengthen all workers. Exposing recent hires to the knowledge and style of experienced team members can provide them with helpful role models. At the same time, existing team members should be encouraged to leverage younger employees’ tech savvy, enthusiasm, and creativity to provide “fresh eyes” insights for the team and project.

Using Technology to Drive Retention Technology now touches most people’s daily lives — from millennials who don’t remember a time before smartphones to baby-boomers who use their mobile devices for shopping, social media, and more. These employees expect to take advantage of technology to make their jobs more efficient and effective. In particular, virtually every employee has a personal smartphone, so manufacturers can benefit by allowing — even encouraging — use of these devices for online research, collaboration, and social communications. Mobile devices also enable e-mail and text communications with colleagues and supervisors outside of business hours. Additionally, businesses can incent employees to use their smartphones for positive posts on social media to build the company brand. At the same time, preparing a reasonable policy for smartphone communications will protect intellectual property and confidential information. Investing in software to support operations in the back office and on the shop floor is increasingly critical. Well-integrated modern enterprise systems can provide ready access to valuable daily operating insights via many types of devices. Real-time data capture and analytics enable “instant” access 72 • WORKFORCE

to key information needed by the team to do their jobs whenever and wherever needed. Moreover, these systems help minimize the redundant work that frustrates all employees, empowering all team members to become more productive.

Enabling Effective Knowledge Transfer Many manufacturers face the need to accomplish a transfer of knowledge between retiring babyboomer managers, technicians, and operators and newer employees. Contemporary enterprise software provides powerful tools to support this effort. Notably document management systems integrated with other enterprise software can be used to deliver written work instructions, photo images, and even video clips for training employees on a work task or refreshing their skills. Manufacturers can make video recordings of experienced employees explaining how they do specific work tasks. These can be captured in one- to two-hour sessions and then edited later into short, digestible segments for daily use that can be accessed via the web or mobile devices. Additionally, manufacturers can leverage a significant amount of written and video training content provided by software vendors, equipment builders, and trade associations to their customers or association members. For example, the Precision Metalforming Association Education Foundation (PMAEF)5 is dedicated to the promotion and development of a skilled workforce for the metalforming industry. The PMAEF creates technical training materials for its manufacturing members to use in full-fledged apprenticeship programs or for refreshing skills.

In Sum To successfully build a sustainable, thriving workforce it is important to walk a mile in the shoes of those you seek to attract, hire, integrate, retain, and develop. By creatively applying modern recruiting and training techniques, creating meaningful work experiences, and leveraging technology to improve knowledge transfer and productivity, manufacturers will be well positioned to build an effective workforce.

http://www.edgefactor.com/edufactor/ https://iwpr.org/ http://www.raisetheflooralliance.org/ 4 https://be50strong.com/pages/50-strong-foundation 5 http://www.pma.org/news/article.asp?aid=8022 2 3

HOW TO FIND MANUFACTURING TALENT DOES A SKILLS GAP REALLY EXIST — OR DOES IT DEPEND ON WHERE YOU’RE LOCATED AND WHAT YOU ARE WILLING TO PAY?

or years, manufacturing executives have contended — in survey after survey and media story after media story — that they can’t find the talent they need to maintain and grow their operations. On the other side, academics and economics writers like Ben Casselman of FiveThirtyEight have argued1 that there’s “scant evidence” for a skills shortage in manufacturing. Which is it? Does a skills gap exist in manufacturing, or at least is it getting tougher to find manufacturing talent? Two things are certain: (1) The labor market is tightening, which is pushing up wages — even in manufacturing; and (2) job openings far outpace hires in manufacturing.2 Nonetheless, the best answer to the skillsshortage question is that it depends on where you’re located, the positions you’re looking to fill, and — perhaps most importantly — the compensation you’re willing to offer.

How to Spot a Shortage One of the best ways to spot a potential worker shortage, if you can find reliable data over time, is to analyze historic wage trends. When labor demand outstrips labor supply, wages should go up. “If finding qualified workers is so hard, for example,” Casselman notes, “then companies should be offering higher pay to attract and retain precious workers.” Metros With Fastest-Growing Manufacturing Earnings, That’s not the case 2012–2016 nationally. Growth in wages among manufac40.0% 33.4% turing workers in non35.0% 30.0% 25.1% supervisory roles has 25.0% 20.6% tracked about the same 16.8% 17.0% 20.0% 17.2% 13.3% 15.0% as the same category of 9.4% 7.5% 10.0% 6.3% workers in all private5.0% 0.0% sector industries.3 And Raleigh, Trenton, Corpus Christi, Columbia, San Jose-Sunnyvaleindustrywide per Emsi, NC NJ TX SC Santa Clara, CA which compiles admin2012–2016 Change in Manufacturing Earnings 2012–2016 Change in Private-Sector Earnings istrative data from the Source: Emsi 2017.2 Employees; earnings not adjusted for inflation BLS, growth in earnings was lower in manufac-

By Joshua Wright, Director of Marketing and PR, Emsi 2017 • 73

CAPE CORAL, FLORIDA: A HOT SPOT FOR BUSINESS GROWTH Cape Coral’s ideal, year-round climate, affordable real estate, and competitive cost of living continue to attract national attention. In fact, the Cape Coral metropolitan area is the fastest-growing in the nation, according to Moody’s Analytics. The Cape Coral Economic Development Office is effectively recruiting several new companies, among them corporate headquarters and several manufacturers. The largest city in Southwest Florida, Cape Coral is an ideal location for businesses ready to capitalize on the growing market. • As the 10th largest city in Florida, Cape Coral is an ideal location for relocating businesses due to its large, talented, and available workforce. • In 2017, Moody’s Analytics expects the metropolitan area’s population to expand 3.61 percent. The area is also projected to have the nation’s highest rates of employment growth (3.83 percent) and output growth (6.82 percent) fueled by expanding hospitality and housing markets. • The city boasts nearly 400 miles of navigable canals, and it’s surrounded by the Gulf of Mexico and the Caloosahatchee River, part of the federal Intracoastal Waterway, drawing international boaters. This key amenity is a boon to homeowners and business owners in several sectors: services, products and supplies, retail, and manufacturing. • A new conference center at the waterfront Westin Hotel will draw visitors from around the nation. The Cape Coral Economic Development Office has designed several areas of emphasis to enhance and tailor growth, including: • Veterans Investment Zone: The 240,000-square-foot Lee County VA Healthcare Center has exceeded its original projections in terms of patients, visitors, and service levels. This facility draws thousands throughout the region; an estimated 74 • WORKFORCE

Cape Coral is also known for ecotourism and is home to the largest population of burrowing owls in Florida — a big draw for birders and photographers from around the world.

260,000 veterans live in Southwest Florida. Nearby is the 15-acre Cape Coral Army Reserve Center. One component of this zone is the 222,000-square-foot Liberty Village under development on more than 430 acres of undeveloped land within one mile of the regional VA Healthcare Center. It will include a 131-bed assisted-living facility, 312 apartments, and retail. • Concourse at Cape Coral is a 171-acre parcel that is owned by the city, which will be seeking public-private partnerships for its development, including 55 acres for shopping and 50 acres for entertainment nestled in unspoiled nature with a lake on site. Competing in today’s global market can be demanding, so you want to be in a location with all of the right amenities: Safety, convenient transportation, and modern technological infrastructure are positives for your business and employees. Contact our Economic Development team to get started on your new business destination today.

Dana Brunett, Economic Development Manager City of Cape Coral 1015 Cultural Park Blvd. Cape Coral, FL 33990 239-574-0444 dbrunett@capecoral.net www.bizcapecoral.com

As the largest city in Southwest Florida with a year-round population of over 175,000, Cape Coral is among the fastest growing communities in the U.S. Our city offers existing facilities, industrial parks and a wide array of commercial sites. Forbes Magazine consistently shows the Cape Coral MSA in the U.S. top 10 for job growth. Join a host of reputable companies that already call Cape Coral home. At just 45% built out, our city is ideally suited for: • Medical • Corporate Headquarters • Light Manufacturing • Back Office Operations Why not build your business in a location that feels like a vacation the minute the work day ends? Contact our Economic Development team to get started on your new business destination today.

Cape Coral Economic Development Office (239) 574-0444 • (866) 573-3089 ecodev@capecoral.net www.bizcapecoral.com

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turing (8 percent) than all private-sector industries (10 percent) from 2012 to 2016 before adjusting for inflation. Skills gaps, though, are best diagnosed locally or regionally.4 The U.S. economy is composed of hundreds of metro area economies, some of which are similar or larger than the economies of major nations (e.g., the Los Angeles metro’s gross metro product at purchasing power parity almost equals Australia’s GDP).5 These MSAs, along with micropolitan and rural areas, combine to form an incredibly complex American economy. Next time you read or hear a bold proclamation on the truth or fiction of a national skills shortage, think about the complexity of our economy. All economics is local, and most skills gaps (if they’re not information, training, or wage gaps disguised as skills gaps) manifest themselves locally. So, where should manufacturing executives be most concerned about finding talent or most need to consider bumping up wages to compete for workers? Emsi looked at the 2012–2016 change in manufacturing earnings among the most populous 150 metros and in every state. (Note: These earnings are reported industrywide, so they include everyone from entry-level laborers to CEOs. We didn’t include supplements to income like 401(k) contributions.) We then examined wages and unemployment over time for a few key manufacturing occupations, both whitecollar and blue-collar positions, to get an indication of the jobs that are challenging to fill.

The Regions Seeing Manufacturing Wage Increases In the Raleigh MSA, the average manufacturing salary was $88,000 in 2016, up from $66,000 in 2012. That’s an increase of 33 percent before adjusting for inflation — more than 2.5 times faster than wages for all private-sector industries (13 percent) and faster than any large metro area. * Raleigh was one of several Southeast metros to see healthy manufacturing wage and employment spikes the last five years. Columbia, South Carolina, had the fourth-largest uptick among the 150 most populous MSAs, growing manufacturing wages 17 percent and jobs 6 percent. Mobile, Alabama; Fayetteville, North Carolina; and Savannah, Georgia, all ranked in the top

76 • WORKFORCE

10 with nominal wage jumps of 16 percent. In each of these metros, manufacturing salary growth from 2012 to 2016 outpaced private-sector earnings change. The same was true in Trenton, New Jersey, which ranked No. 2 with a 21 percent wage increase in manufacturing compared to 8 percent in all industries, and Corpus Christi, Texas (No. 3 at 17.2 percent compared to 6 percent for all industries). On the flip side are tech-focused metros like San Jose, Seattle, and Boston. San Jose ranked fifth in manufacturing wage growth (16.8 percent) and first in total private-sector wage growth (25 percent). The situation is much starker in Seattle, which ranked second in overall wage growth (16 percent) but 72nd in manufacturing wage growth (9 percent). These are high cost-of-living cities with ultra-skilled workforces. Tech manufacturing is an important part of their economies,6 but manufacturers haven’t kept pace in the salaries they’re offering. At the state level, Alaska (22 percent), Wyoming (15 percent), and California (12 percent) grew manufacturing wages the most in the last five years. Louisiana and North Dakota (both 11 percent) rounded out the top five, but manufacturing jobs in both states dipped from 2012 to 2016.

Bringing Unemployment Data into the Picture This data suggests that manufacturers in the aforementioned states and metros will face increasingly robust competition for talent. But wage trends are just one clue in the supply-and-demand picture. Another is unemployment. In January, Raleigh had an estimated 1,350 unemployed manufacturer workers, according to Emsi, which accounts for 5 percent of the metro’s total unemployed. Nationally, 8 percent of the unemployed have previously worked in manufacturing. In Trenton, there were just 254 unemployed in manufacturing, 4 percent of the regional total. Compare these two metros with San Jose, where 15 percent of the unemployed (over 5,400) were in manufacturing in January. The higher-than-average unemployment in manufacturing indicates that San Jose has excess manufacturing talent. These unemployed workers perhaps can’t find manufacturing jobs

Wages and Unemployment for Hand Laborers

that pay the bills or don’t have the advanced skills to meet industry needs.

Which Positions Are Hardest To Fill?

$12.60 $12.40 $12.20 $12.00 $11.80 $11.60 $11.40 $11.20 $11.00 $10.80

$12.49 $14.8%

13.4%

14.0%

11.3%

$12.02

$11.74 $11.49

16.0%

10.7% 9.8%

$11.52

12.0% 10.0% 8.0% 6.0% 4.0% 2.0%

2012

2013

Median Wages

A quarter of America’s 12.3 million manufacturing jobs are staffed in eight occupations, led by team assemblers; supervisors of production workers, inspectors, testers, and sorters; machinists; and hand laborers and freight, stock, and material movers. In our work with corporations developing strategic site selection and talent acquisition plans, we often come across companies that struggle to find hand laborers. This is also reflected in Manpower’s 2016 talent shortage survey.7 Laborers, after being absent in 2015, ranked higher than engineers and technicians in the top 10 hard-to-fill positions. Nationally, unemployment for hand laborers stood at 10.7 percent in 2016 after sitting at 14.8 percent in 2012 — an improvement but still a high jobless rate, which could be partially due to high turnover. What about wages? Median earnings for hand laborers rose 9 percent from 2012 to 2016 (4 percent on an inflation-adjusted basis). Still, the BLS reported that in 2016 these workers made just $12.49 per hour in median wages and $20.53 at the top 10th percentile. Another similar occupation that requires slightly more skills is packaging and filling machine operators and tenders. These workers are highly compatible to hand laborers, according to Emsi’s occupational compatibility index, and their wages have risen 9 percent to $13.60 per hour in 2016. Perhaps the most telling indication that the demand is rising for packaging operators? Their unemployment rate has dropped from 14.5 percent in 2012 to 8.2 percent in 2016, per the BLS’s Current Population Survey. These are both blue-collar factory positions. What about white-collar positions? One of the prime examples is industrial engineers. More than 170,000 of these high-skilled workers are employed in manu-

2014 Unemployment Rate

2015

2016

0.0%

Source: BLS

facturing (1.4 percent of total industry employment). Their median wages increased 7 percent the last five years and their unemployment rate has remained extremely low; it stood at 2.5 percent in 2016 and 2.7 percent in 2012.

The Bottom Line Manufacturers who are struggling to recruit workers have a few options. They can increase wages. They can consider other, more talent-rich locations. Or they can invest in automation. Many will likely do a combination of these things. (In most cases, companies need workers with advanced skills to run robots.) Regardless of the route they take, compensation is clearly on manufacturing executives’ minds. In Area Development’s 2016 Corporate Survey,8 labor costs catapulted to the third-most important site location factor after ranking No. 6 the previous year. Highway accessibility and labor availability, the No. 1 and 2 factors cited in the survey, have long been concerns, but rising wages are becoming more of a factor in business decisions. This is good news for workers and the economy, and a new reality for businesses.

* Raleigh’s manufacturing growth should be weighed against Durham-Chapel Hill’s decline. Among the 150 largest MSAs, Durham-Chapel had the biggest decrease in manufacturing wages, at -6.2 percent. Factory jobs also declined -13 percent there. This could be an artifact of businesses moving between the two twin MSAs (which used to be one joint MSA). 1

https://fivethirtyeight.com/features/dont-blame-a-skills-gap-for-lack-of-hiring-inmanufacturing/ https://fred.stlouisfed.org/graph/?g=dvZ3 3 https://fred.stlouisfed.org/graph/?g=6ZAc 4 http://www.economicmodeling.com/2013/12/03/using-regional-economic-developmentstrategies-to-diagnose-and-treat-skill-gaps/ 5 https://www.citylab.com/work/2017/03/the-economic-power-of-global-cities-comparedto-nations/519294/ 6 http://www.economicmodeling.com/2016/06/30/manufacturings-role-in-tech-markets/ 7 http://www.manpowergroup.us/campaigns/talent-shortage/ 8 http://www.areadevelopment.com/Corporate-Consultants-Survey-Results/Q1-2017/ responding-executives-confident-about-Trump-economy-skilled-labor-top-concern.shtml 2

2017 • 77

FLORIDA — THE FUTURE IS HERE

While the state has long been recognized for its impeccable weather, Florida’s pro-business climate is grabbing headlines in 2017. Over the last decade, state and economic development leaders have worked hard to make Florida the best state in the nation for business. With low regulations and even lower taxes, companies enjoy the freedoms to thrive. Beyond regulatory advantages, it’s Florida’s worldclass infrastructure that’s getting noticed. Florida supports more than 19.9 million residents and over 100 million tourists each year. From road to rail, to airports, seaports and spaceports, Florida will get your people, products, and ideas to the world — fast. It’s no surprise that companies are catching on. Over 50,000 businesses of all sizes and industries have set up shop in the Sunshine State since 2010, from education startup EverBright Media to automotive and transportation giant Hertz. Home to Worldwide Connectivity Florida is connected to the world in every possible way. From strong cultural and trade connections with Latin America to unmatched global reach via its modern ports, and its leadership in the budding commercial space industry, Florida is a true global hub for business. More than $160 billion of merchandise trade value flows through Florida’s ports each year, solidifying Florida’s status as one of the world’s leaders in international trade. The state is also recognized as one of the top five telecom hubs in the world. The

Network Access Point (NAP) in Miami serves as a major switching station for Internet traffic coming to and from Latin America, while other high-speed networks, such as the Florida LambdaRail and LA Grid, facilitate R&D efforts. A True Business Super State With the largest foreign-trade zone network and the fourth-largest GDP in the country, Florida is a leading player on the global scale. Florida is ranked the No. 1 state where Americans want to live according to the 2016 Harris Poll, and is well on its way to becoming the No. 1 state where Americans want to work.

Tim Vanderhoof, Senior Vice President, Business Development Enterprise Florida 800 N. Magnolia Ave., Suite 1100 Orlando, FL 32803 tvanderhoof@EnterpriseFlorida.com www.FloridaTheFutureIsHere.com

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WE HAVE AN EDUCATED, TALENTED AND DIVERSE WORKFORCE EAGER TO CHANGE THE WORLD. IMAGINE WHAT THEY’LL DO FOR YOUR BUSINESS. The only thing as impressive as our current workforce of 9.7+ million is our future one. Our colleges and universities are among the nation’s top performers of R&D and commercialization of technologies. So while we’re helping you succeed with today’s talent, we’re also preparing tomorrow’s. Discover what a future in Florida means for your business at ﬂoridathefutureishere.com or call 877-YES-FLORIDA.

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SCOUTING LOCATIONS IN AN ERA OF LABOR SCARCITY: 10 CONSIDERATIONS THE TIGHT LABOR MARKET HAS MADE AVAILABILITY OF SKILLED LABOR A PARAMOUNT CONCERN FOR COMPANIES LOOKING TO EXPAND OR OPEN A NEW FACILITY, BUT DATA ALONE WILL NOT HELP A COMPANY IDENTIFY THE COMMUNITY THAT WILL BEST MEET ITS WORKFORCE NEEDS.

oday, companies face one of the most competitive markets for labor in at least a decade. Twenty states have unemployment rates of 4 percent or less. Private employers have more than five million unfilled job openings, an increase of more than 600,000 positions during the past three years. Even companies without expansion plans are finding it increasingly difficult to secure workers. In January, a record three million Americans quit private-sector jobs, significantly offsetting the 5.3 million workers U.S. companies hired. The tight labor market has forced companies to make labor availability a paramount consideration when expanding existing operations and locating new facilities. While the availability of skilled labor has always played a role in the site selection process, it has often taken a backseat to other concerns such as site availability and business costs. This was even The Unemployment Situation truer during the recession. Securing sufficient 10% labor often proved relatively easy when millions of Americans were 8% out of work. With the labor market now reaching full employment, how 6% can companies scouting expansion and relocation locations find 4% an abundant and 01/07 01/08 01/09 01/10 01/11 01/12 01/13 01/14 01/15 01/16 01/17 skilled workforce? Month What questions Source: Bureau of Labor Statistics

By John Rees, Director of Research, Avalanche Consulting

80 â&#x20AC;¢ WORKFORCE

should they ask prospective communities? What data will help them make better-informed decisions? The following 10 factors should be part of any site selection discussion in which success depends on access to labor.

1. There is no national labor market —

all labor is local. Regardless of what’s happening nationally, it is critical to understand the labor dynamics of prospective communities as well as the specific workforce needs of your company. While the U.S. unemployment rate hovers near 5 percent, the figure is much lower in many regions of country (it is barely 2 percent in Ames, Iowa, and just 2.5 percent in Boulder, Colorado, for example). Alternatively, there remain metro areas where unemployment rates linger in the double digits. Even in communities characterized by high levels of unemployment, available labor may not align with your company’s operations. The unemployment rate for management and professional occupations, for example, is just a fifth of that for construction and extraction workers.

2. There are few truly local labor markets. Workers living within a community are rarely the sole source of your potential workforce. Labor markets do not follow strict jurisdictional boundaries. A substantial proportion of Americans cross county and metropolitan borders to reach their places of employment. Looking beyond the number of workers living within a community and examining the broader labor shed can have profound implications in determining a prospective site’s true talent pool. For example, every day Atlanta imports hundreds of thousands of workers from throughout Georgia. Workers are often willing to travel significant distances to secure greater employment opportunities. Nearly 10 percent of U.S. workers spend at least 60 minutes each way commuting to work.

3. Talent doesn’t always equal employment. When examining a community, it is crucial to appreciate the difference between jobs and people. Take Berkeley County, a community in the Charleston, South Carolina, region. It is home to fewer than 50,000 jobs but nearly 90,000 workers, a dynamic

completely absent in traditional sources of employment data. Fortunately, third-party vendors such as Emsi now regularly publish detailed information on the occupations of residents. The difference can be striking. Berkeley County, for example, is home to just 3,600 manufacturing occupations. More than 6,000 manufacturing workers, however, live in the community — a fact that hasn’t gone unnoticed by large employers like Volvo, which is currently building its first U.S. manufacturing plant in Berkeley County.

4. Look beyond unemployment rates. Without context, unemployment rates can be meaningless. It is like learning that the temperature is 50 degrees Fahrenheit without knowing the location or the season. While an unemployment rate can help quickly identify the number of unemployed people actively looking for work, it is of limited use in understanding how many people can be hired in a community.

5. Identify the talent magnets. When exploring locations for a new or expanded facility, it is important to examine the community’s track record of attracting new workers. In highgrowth regions, a continuous inflow of new workers into the region has facilitated substantial employment growth despite low unemployment rates. For example, both the Austin, Texas, and Lawrence, Kansas, metros had unemployment rates of 3.2 percent at the end of 2016. The labor similarities end there. During the past decade, the Lawrence region’s workforce rose by 2,200 jobs, an increase of less than 4 percent. During this same period, Austin’s workforce swelled by 270,000 jobs, an increase of 30 percent. Furthermore, U.S. workers are far less willing to move than in previous decades. Since the 1980s, the rate of domestic interstate migration has fallen by half. The result has largely created a winner-takeall environment in which a few metropolitan areas are absorbing a disproportionate share of skilled workers.

6. Find the Goldilocks locales —

those with wages that are “just right.” The immediate rewards of locales with the lowest

2017 • 81

LOUISIANA’S CUSTOMIZED WORKFORCE DEVELOPMENT SOLUTION Even before the Great Recession, Louisiana leaders set their sights on a new strategic direction for workforce training. Flexibility and innovation were programmed into state agencies and college campuses. New thinking expedited training. Skills in high demand received priority funding. And from this crucible of innovation, LED FastStart® was born. Eight years later, the Louisiana Economic Development program remains the U.S. gold standard for projectfocused workforce training. Louisiana’s nimble, collaborative approach touches the workforce supply chain at critical junctures: foundational programs in high school classrooms; intensive skills-training at advanced manufacturing centers on community college campuses; and industry-advised technology classes at research universities. With that foundation, LED FastStart professionals create a custom plan for recruiting, screening, and training a new workforce for expanding firms in target industries, such as advanced and traditional manufacturing, logistics, information technology, corporate offices, and petrochemicals. Manufacturers must create a net 15 jobs and service firms a net 50 jobs to be eligible for the cost-free, comprehensive solutions. Since 2008, FastStart has delivered highly customized training to 24,000 individuals at more than 150 expanding Louisiana employers. Increasingly, FastStart is a key influencer in why those employers choose to invest in Louisiana over other states and nations. “I was blown away with FastStart’s flexibility and their capability to customize,” says Tom Yura Sr., senior vice president and general manager for BASF’s chemical facilities in Geismar, Louisiana. The LED FastStart team includes dozens of experienced private-sector professionals from a range of

industries. The team’s goal — to help firms efficiently ramp-up through intelligent training — gives workers the skills they need from opening day. Customized training plans are drawn from an in-depth analysis of each company’s workforce needs. Elements of that training might encompass workforce safety, regulatory standards, industry-specific benchmarks, and leadership development for upper-level managers. Recruitment of well-suited job candidates is just as crucial. LED FastStart has created social media recruiting campaigns for technology firms as varied as video game developers Gameloft and EA, and Fortune 500 giants that include IBM, GE, and CenturyLink. Louisiana’s new approach to workforce development cultivates meaningful partnerships between state government, private industry, and higher education. In every case, regional workforce demand determines training programs and coursework. It’s a strategy that works for both employers and job-seekers, and one that spans the state.

Paul Helton Executive Director of Workforce Programs Louisiana Economic Development 627 North 4th Street, Suite 2-200 Baton Rouge, LA 70802 225-342-5543

paul.helton@la.gov www.OpportunityLouisiana.com/faststart

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operational costs can disguise federal immigration policy — long-term retention challenges. makes a thorough examination of As labor is often a company’s larga community’s demographic charest operational expense, locations acteristics increasingly important with the lowest costs often feature in the site selection process. WORKERS the lowest wages. Unless they are Communities that might appear at LIVING WITHIN geographically isolated from other first glance to have an abundance jurisdictions, employers in many of workers could be at risk of sufA COMMUNITY low-wage communities may find it fering a workforce shortage in the difficult to retain talent as existing years to come if they have a large ARE RARELY THE workers are continuously lured by foreign-born workforce or aging the higher earning potential that population. SOLE SOURCE can found elsewhere. This threat During the past decade, the is especially acute today when number of workers age 55 and OF YOUR U.S. workers are quitting in record older has increased at 20 times numbers. Over the long term, the rate of overall employment POTENTIAL some of the most stable sources growth. Today, more than 20 of labor are communities that percent of U.S. workers are age WORKFORCE. have lower wages relative to the 55 and older. While many AmeriU.S. but higher wages compared cans continue to work longer than to neighboring communities. This ever, the baby-boom generanot only provides companies with tion will eventually exit the labor a competitive operating environment, it also helps force. The impacts on individual locations will vary them attract a higher proportion of outside workers widely. In some Florida communities, more than half residing in the broader labor shed. of all workers are older than 45. To cite a previous example, although employers in Ames, Iowa, might 7. Today’s wages aren’t necessarily struggle finding workers in an era of 2 percent tomorrow’s wages. unemployment, they are also far less likely to be imJust as companies must appreciate the context pacted by a greying workforce — half of all workers surrounding unemployment rates, so too must they in the community are between the ages of 16 and 27. understand prevailing wage levels. After years of 9. Today’s students are tomorrow’s workers. relative stagnation, U.S. wages are rising once again. Local post-secondary institutions not only provide Perhaps even more importantly, they are increasing an insurance policy against an aging workforce, they across a wide variety of positions across the wage can also play an important role in delivering an imand skill spectrum. While inflationary wages have mediate workforce aligned to the specific needs of been traditionally associated with specialized work a company. Programs such as Georgia’s QuickStart such as software and information technology, last have long offered employers free workforce training year even Wal-Mart announced an across the board tailored to their labor needs. In recent years, other wage increase for more than one million workers. states have adopted even more ambitious higher In Texas, prior to the decline in oil prices, average education agendas. wages for truckers were increasing at a faster rate Several states now offer free community college than for software developers. Wages are the canary to high school students. In April, New York became in the labor force coal mine, and rapid increases may the first state to make tuition free at public four-year signal an increasingly restricted labor market. colleges. A requirement that students remain in the 8. Today’s workers aren’t necessarily state for four years after graduation to qualify for tomorrow’s workers. loan forgiveness will likely be a boon for New York An aging population — combined with shifts in employers. The requirement will not only increase

84 • WORKFORCE

the pool of available workers within the state, but these individuals will not be burdened with high levels of debt that might force them to forgo high demand, but lower-paying occupations due to financial constraints.

10. Not everything that counts

can be counted. While data can provide critical insights in the availability of labor, data alone will not help a company identify the community that will best meet its workforce needs. Quantitative information must be complemented with insights that can only be gleaned from discussions with local officials, local businesses, and economic development professionals. The presence of a post-secondary institution might be promising, but does the community have a track record of leveraging educational programming to support the needs of area employers? The state’s workforce website might feature glowing testimonials from high-profile companies, but what is the experience of smaller employers? What is the economic development vision of local leaders? Are they looking for a quick win or are they creating a long-term partnership that benefits all parties? The answers to these questions cannot be readily found on a spreadsheet.

Communities Are Responding to the Challenge Fortunately, communities are responding to emerging workforce challenges. Since 2010, Avalanche Consulting has conducted an annual survey of economic development professionals.1 More than 90 percent of the 145 economic development organizations responding to our February 2017 survey reported that delivering a skilled workforce has become more important in the site selection process. In response, survey participants are improving coordination with local colleges and universities, advocating for more career-oriented K-12 programs, and expanding access to workforce training. Ultimately, such initiatives will make it easier for companies to identify and invest in communities with the workforce necessary to thrive in today’s fiercely competitive environment.

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BREADTH. DEPTH. SUCCESS. SOUTH CAROLINA IS READY. readySC™ was established as an economic development training incentive designed to guarantee South Carolina could remain competitive through changing economic circumstances. It remains a key component of South Carolina’s economic development engine and has been recognized for more than 50 years as one of the nation’s premier programs of its kind. readySC is not a grant program but instead will commit to providing your organization with the recruiting and training services necessary to build your initial or expanding workforce. readySC will provide a qualified pipeline of training candidates and train those candidates to the specifications identified for entry-level positions in your organization. At no cost to qualifying companies, readySC provides recruiting, assessment, training development, project management, and implementation services. To qualify, companies must be (1) creating new, permanent, fulltime jobs for the state; (2) paying a competitive wage for the area; and (3) providing a benefits package that includes health insurance. readySC focuses on the recruiting and initial training needs of new and expanding organizations in South Carolina. It is a flagship program for the System and continues to be a top incentive for the state. More than 85 percent of companies who’ve made the decision to locate to or expand in South Carolina rank readySC’s services as playing a significant role in their ultimate decision to move here. readySC’s services are designed to build your company’s initial workforce; however, South Carolina’s efforts do not stop there. Working in tandem with the local technical colleges, our Apprenticeship Carolina™ program, and our e-Zone job retraining program, we strive to take your workforce from initial startup or early production to 100 percent proficiency. From your organization’s initial startup and early production goals 86 • WORKFORCE

to the company’s long-term growth strategy, South Carolina offers a comprehensive workforce solution custom-designed to meet your needs. Since its inception in 1961, readySC has played a key role in all of South Carolina’s major economic development wins, including GE, Michelin, BMW, Bridgestone, Boeing, Continental, Volvo, and Mercedes, among many others. readySC at a glance: • Trained nearly 4,000 individuals in FY 2015–16 • Trained over 289,000 people since 1961 • Served 78 companies last fiscal year • 53 percent of last year’s projects were new companies to the state, while 47 percent were existing companies undergoing expansions Breadth. Depth. Success. South Carolina is ready. Let readySC put their unparalleled experience to work for you. For more information visit our website at www.readySC.org.

Susan Pretulak, VP, Economic Development readySC – A Program of the SC Technical College System 111 Executive Center Drive Columbia, SC 29210 803-896-5276 pretulaks@sctechsystem.edu www.readysc.org

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