When it comes to expansion or relocation, companies demand quicker decisions, quicker results, and innovative cooperation from regional and state agencies. It's not just about getting tax credits anymore. A state's willingness to really understand a company's needs, develop and deliver customized solutions, and stand ready as a long-term work-force development partner is a huge plus in attracting corporate investment.
The cost of hiring, training, and maintaining a quality work force is one of business' most expensive and complex operational components. States that freely relieve companies of these burdens have a strong recruitment advantage over states that don't - even over those states that may dangle fatter financial incentive packages. The bottom line? States that provide complete work-force development packages for free are landing big deals.
Gardner Denver Thomas Inc., an Illinois-based manufacturer of vacuum pumps and air compressors, is reducing costs through consolidation. Originally the company planned to shut down its 76-person plant in Monroe, Louisiana, and transfer that work to its larger operation in Sheboygan, Wisconsin. Louisiana quickly countered with an offer that included a one-stop, no-cost work-force development program. The company reversed course and instead shut down the Sheboygan plant and consolidated operations in Monroe, creating over 200 new jobs in that city.
One of the jewels in the Louisiana incentive package that caught the eye of Gardner Denver Thomas was FastStart, a new work-force training department created by the state of Louisiana. FastStart provides a highly skilled team to "assess the true training needs of the corporation and develop and deliver a multiphase customized training program, including pre-employment screening," says Jeff Lynn, executive director of the FastStart program.
"The relocation of our operation from Sheboygan, Wisconsin, to Louisiana has been progressing exceptionally well, in part due to the training support provided by the state of Louisiana's FastStart program," says Barry Pennypacker, president and CEO of Gardner Denver Thomas. "Despite the reduction in revenue this business experienced in 2009 as a result of the partial relocation, we saw 300 basis points of improvement in operating margin as a percentage of revenues between March and September 2009."
FastStart is especially keen on attracting manufacturing operations and corporate headquarters to Louisiana. "One of the things that sets us apart from other state work-force development programs is that we have skilled personnel who not only create the customized work-force solutions, but deliver them as well," says Lynn. "Assistance from many states is grant-based - handing out money that companies can use to offset the cost of their work-force development. But most companies don't have in-house expertise to use this funding effectively. They need someone to take over so they can concentrate on running the company - and that's what we do. By working so closely with them to develop a work-force solution that will guarantee their success, we build a trust and friendship that carries on as their operations develop over the years."
Although a lot of states implement work-force training through their community and technical college systems, FastStart also taps into four-year colleges and universities across the state, bringing more expertise across more industries (such as multimedia).
Setting the Standard
Before coming to Louisiana to develop FastStart, Jeff Lynn was director of regional project operations for Georgia's Quick Start program. Founded in 1967, Quick Start has provided customized work-force training free-of-charge to qualified businesses for more than four decades. Quick Start has long been considered the model upon which other programs (such as FastStart) are based. Quick Start provides strategic work-force consultation, pre-employment assessment and selection, customized post-employment and job-specific training, and leadership and professional development training that are integrated within the Technical College System of Georgia. Work-force training is delivered wherever and whenever the company needs it, whether it is in a classroom, mobile lab, or on the plant floor.
Quick Start continues to be a national leader - last year Georgia was ranked first in the nation for work-force development by CNBC. It delivered 223 customized work-force training projects in FY2009, which helped create or save nearly 16,000 jobs (about $477.5 million in payroll revenue to the state of Georgia).
"The main factor that makes Quick Start unique is the combination of the broad scope of industries we work with and the depth of our expertise in those fields," says Quick Start director Rodger Brown. "This is in part due to Quick Start's longevity and our focus on continually responding to changing industry needs. We have long-time relationships with business and industries [whose leaders] serve on advisory boards that help us address existing needs and anticipate future developments."
In June 2009, NCR announced it would build its new global headquarters and a new ATM manufacturing facility in Georgia, creating 3,000 jobs. Within days, a Quick Start team flew to Hungary to conduct the initial project study at NCR's manufacturing plant in Budapest. Quick Start's multimedia designers and software programmers have already produced web-based training modules for NCR's consumer help-desk and systems support team trainees. A pre-employment assessment process has also been initiated. "We studied their processes, talked regularly with the NCR team, and worked closely with the Georgia Department of Labor here in Columbus to get the training started," says Sean McMillan, Quick Start's director of western regional operations.
"This is a major operation," adds Rick Marquardt, NCR vice president of global manufacturing. "We're looking at the same challenges any start-up faces, but this is a very strong team and we're off to a great start."
Another Southern Example
Since its inception in 1971, Alabama Industrial Development Training
(AIDT) has provided services to over 390,000 workers and 4,000
companies in Alabama. An institution of the Alabama Community College
System, AIDT provides a total work-force delivery system at no cost to
employers for recruiting, screening, and training potential employees;
developing and producing training materials; providing training
facilities; and delivering customized services. AIDT also became one of
the first state work-force training entities in the country to earn
international ISO 9001:2000 certification for its quality management
system and also recently earned certification to the ISO 9001:2008
"Our pre-employment selection system filters applicants and offers
companies a pool to choose from that meets their specific
requirements," indicates AIDT Director Ed Castille. "Most companies we
work with tell us that having the right employee hired and then trained
is the most important item and will likely be the single most important
success factor in the long run for the company. Our system finds and
trains those employees."
AIDT offers comprehensive pre-employment selection and training,
leadership development, on-the-job training, maintenance assessments,
process improvement assessments, and industrial safety assessments and
training - all of which are customized to a company's specific needs.
These in-depth services are free to employers if they meet the minimum
criteria for number of jobs created and starting wages offered.
AIDT's turnkey approach to work-force development was a major factor in
global steelmaker ThyssenKrupp's decision to locate a new carbon steel
and stainless steel plant in Mobile, Alabama. On track to begin
operations in 2010, the plant is considered to be one of the largest
private industrial development projects in the United States in the
last 10 years. Construction alone has created nearly 30,000 jobs; when
fully operational, the plant will employ 2,700 workers and create about
50,000 ancillary jobs over the next 20 years - a huge boost to the
"One of the factors that made Alabama attractive for us was AIDT's
expertise in helping start-up companies obtain, train, and continuously
develop new employees," says Christian Koenig, spokesperson for
ThyssenKrupp. As part of that continuous process of improvement, AIDT
also assisted in the development and construction of the
50,000-square-foot, on-site training center, which it also operates.
Looking to the Future
A talented and highly skilled work force is always at the top of the
list for companies that are expanding or relocating. "Companies that
just look for cash incentives often don't [succeed] because when the
money's gone, there's no core value left," says Quick Start Director
Brown. "Work-force training is what builds the team that has the
commitment, skills, and dedication to keep a company going, to start
delivering return on investment from day one, and to support the
longevity of the business. It really depends on if the company is
making a short-term play to the balance sheet or is focused on a
sustainable business with a quality product or service."
Other states have attempted to model programs like FastStart, AIDT, and
Quick Start, but find it challenging if they lack expertise across a
wide range of industries, plentiful and experienced industry advisors,
a well-connected technical college system, or a history of exceeding
expectations when it comes to building relationships with industry.
"It's proven very difficult for other programs to reach the point where
they can consistently deliver the innovative training, fully customized
to a company's exact technology and process," says Brown.
Again, bear in mind that it's not always the biggest incentive package
that wins the contract, but the package that provides the most value.
In June 2009, V-Vehicle Company (VVC), a new American car company
headquartered in San Diego, announced it would build a $248 million
assembly plant in Monroe, Louisiana. The project will create over 1,400
direct jobs at an average annual salary of nearly $40,000, plus
"In the end, there were several states that met our criteria and had
very large incentive packages," comments V-Vehicle Company's CEO and
founder Frank Varasano. "In fact, Louisiana did not have the largest
incentive package. However, because of incentives like the FastStart
program, we knew we could identify and train the right people who will
ultimately be a large part of our success. It was the conviction that
Louisiana could provide this work force that sealed the deal."