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32nd Annual Survey of Corporate Executives Commentary: Labor Is Paramount

A community that does not have the adequate labor profile is devastating to a project’s success in that location.

Q1 2018
The fact that about 90 percent of the Corporate Survey respondents indicate labor costs and skilled labor availability as “very important” or “important” to a location decision must not be understated and offers lessons to both companies wanting to select the optimal site and to communities seeking to grow their economic base and win projects. While incentives, tax structure, high quality of life, and access to customers/markets are always key project drivers, a community that does not have the adequate labor profile is devastating to a project’s success in that location, and also limits the economic developer’s ability to successfully compete for a project. Additionally, since labor is often the highest operating expense associated with a project, much more than the cost of real estate or taxes, misreading the labor market can further reduce profitability of a location due to high turnover, inability to fill positions, and/or the need to recruit from outside a labor shed area to find and relocate workers.

For the corporate entity seeking to reduce risk, a detailed and comprehensive study of an area’s established labor pool and talent pipeline is critical. This would include a demographic analysis of workers in the marketplace by occupation and skill, a deep dive on overall labor market migration (and population migration) trends both historically and looking forward, a thorough analysis of training providers and educational institutions (and the types of graduates/skills they produce), and an in-depth discussion with employers regarding availability of workers and competition for local skilled labor among firms.

For economic developers seeking to win more deals, an equally thorough understanding of their communities’ labor force is critical. Where are your skill gaps and what can be done to encourage local universities, community colleges, and trade schools to meet labor market demand? What is your long-term demographic plan to create/attract talent and stay ahead of trends in workplace and industry to position your community to win? How can you effectuate a conversion of the unemployed or underemployed to meet industry demand via on-the-job training and workforce training grants/incentives? How and where can you guarantee that next significant corporate investor/project its future workforce?

As technology continues to grow and markets innovate, the question of available labor and cost will remain at the forefront of the site selection decision. As a company — or community — investing in your economic future, are you thoroughly prepared for success?
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