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Who's Got Talent? Skilled Labor and the Location Decision

While immediate financial concerns may cause companies to shift focus, skilled labor still drives long-term success.

June/July 09
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Can We Develop It?
Sometimes the skills required either do not exist in sufficient number or are so novel that the talent base must be either enhanced or created wholesale. While the initial talent base can be identified from the local and regional pool, additional education or training programs must be created either within or outside of the company to fulfill the need.

Local and regional colleges meet this need on one level. Universities can produce a steady stream of graduates with finance, MBA, computer science, medicine, nursing, and other basic skills bases. These are key building blocks for 21st century jobs. Likewise, some industries can produce talent that can be adapted to other uses. For example, precision manufacturing for automotive uses may be adapted to medical devices. Chemicals technicians make for great pharmaceutical production professionals.

In addition, developing the local labor market is an ideal role for state and regional incentives. The best of all incentive packages are those that invest in both the long-term success of the company and the community. They are not zero-sum games but are instead practical tools for building a partnership between business and the public sector. Flexible, well-run industrial and occupational training programs explicitly fit these roles by training local citizens (also known as taxpayers and voters) to fill jobs for which a company has declared a need. The match between supply and demand is explicit. Even if more applicants receive training than eventually find positions with the company, the exercise raises the overall skills base for the community, making it a better target for further business attraction.

Can We Attract It?
Some skills are simply so specialized and so rare that companies enter the expansion and location strategy exercise with the explicit knowledge that no individual market will be able to satisfy their needs for talent. In these cases, they must be prepared to recruit this talent from a larger regional, national, and even global talent base. Certainly, locations with a significant cluster of existing skills and the programs to adapt them provide stronger starting points. But other locations - which perform better across the broader range of strategic need - can still attract a highly skilled labor force. Quality of life becomes a strategic concern in such cases.

A measure usually reserved for headquarters functions or those where a cadre of corporate officials are to be relocated, quality of life remains one of the most difficult concepts to define in location strategy, largely due to subjectivity. What may make for a great place to live for one family may not work for all. For example, consistent 80°F sunny weather, away from crowds, etc. might represent pure misery for a family that enjoys four seasons, snow, and the excitement of the city.

Still, successful companies do impact their ability to bring talent to their location through the quality of their own workplace as well as the quality of the communities in which they choose to do business. Such companies inherently understand their employees' needs and values and assimilate these into their location strategies.

Implications for Economic Development
While each of these is a key question for any company making a strategic location decision, local communities may not ever hear the question directly. Companies typically perform several rounds of screening and candidate elimination before contacting those communities in the "beauty contest." Once a company reaches this threshold, questions more often revolve around the availability of specific sites, infrastructure, and the tactical costs of operation.

Nonetheless, those communities that think about the types of industry they have now - and those they want to attract - benefit from taking an inward look at their own talent pools: those they can produce, and those they can bring to the area. Any downward disparity at best represents a competitive disadvantage. At worst, it represents a risk for losing business activity.

On the other hand, rich mines of definable talent can be fantastic attractors for business. Communities should take the time to understand the resources at their disposal and make sure that word reaches the willing ears of those looking for the right location.  

Christopher Steele is President of CWS Consulting Group, a business consulting firm specializing in location strategy, site selection, and industrial development. He previously served as President, Real Estate Line of Business at TranSystems and as a Senior Manager in Ernst & Young's Real Estate Advisory Services Group.

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