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Area Development - Site Selection, Facility Planning and Workforce Development

Skilled Labor Availability: States Step Up Training Programs To Fill the Gap

It goes without saying that available labor, especially skilled labor, is considered to be a key driver in site selection decisions. Workers are often the lifeblood for a company’s operations.

November 2012
According to Area Development’s 26th Annual Corporate Survey, the availability of skilled labor tied with labor costs as the second most important factor in the site selection process. Among companies surveyed, 88.4 percent of respondents rated skilled labor availability as “very important” or “important” among site selection criteria. Companies require far more than just a dense labor pool; they want access to labor that has the right skills to meet their specific needs.

Over the past five to six years, availability of skilled labor has become even more important in business relocation and expansion decisions. The Fort Worth Chamber of Commerce meets with between 30 and 50 relocating companies each year. In every case, the top three priorities for companies are the site, incentives, and labor, not necessarily in that order, notes David Berzina, executive vice president of economic development for the chamber. “Labor is always in the top three. If you don’t have a response for either the quality or the quantity for the labor requirement for their specific project, you are going to lose the project,” he says.

Labor availability played a critical role in General Electric’s decision to relocate its locomotive manufacturing facility from the East Coast to Forth Worth, Texas. A key part of landing that assignment was the ability to source 750 to 1,000 manufacturing/engineering jobs. “In order to win that business, we had to have the answers they were looking for in terms of labor availability to satisfy that requirement,” notes Berzina.

Ultimately, the state of Texas awarded a $785,000 grant to train workers for the machinist and welding positions offered by GE Manufacturing Solutions for the locomotive manufacturing facility. Training programs are administered through Tarrant County College and North Central Texas College.

GE’s locomotive plant is expected to hire at least 500 people when it opens in December. In addition, GE also chose to build a neighboring 236,000-square-foot plant that will manufacture electric-drive wheel systems for heavy-duty off-road vehicles. That facility will employ about 130 workers when it opens in November.

Skilled Labor Shortages Persist
Although the national unemployment rate declined to 7.8 percent in September, unemployment remains relatively high compared to historical levels, and the numbers don’t necessarily tell the whole story.

“On the surface, it would appear that companies should not be struggling to find workers. But, in most cases, when you get down to the specific needs of a given client, there are challenges on the labor side even with the high unemployment rate,” says Mark Seeley, a senior managing director of the Labor Analytics Group at CBRE. “I think that is related to the fact that as operations have evolved, corporate America is now looking for more and more specialized skill sets.”

The IT sector, in particular, has been very robust over the past two to three years, and there is a real shortage of good IT talent. “There are very few markets that can supply the depth of IT workers that is needed, and that is a real challenge,” says Seeley. That being said, pockets of opportunities do exist.

Last year, CBRE worked with a large financial services client to consolidate its IT division from hubs across the country in Boston, New York, and San Jose. The goal was to create a single operation where the company could save on costs and create some efficiencies and consistency across its IT platform. Ultimately, the company selected New Orleans for its new facility, a move that will create 350 IT jobs in that market.

“There are opportunities out there that do have strong pockets of a given skill set that you can tap into if you are willing to look outside the markets that are on the typical radar screen,” Seeley notes.

Training Fills Current and Future Needs
States and communities across the country have become more proactive in working with companies and industries to ensure that companies have access to skilled labor. In fact, training programs and training grants have become a standard part of incentive packages.

For many firms, it is not only a question of what labor exists today, but also how a community or state can satisfy a company’s labor requirements as its needs continue to grow and evolve. “As we move into an even greater focus on advanced manufacturing, because there is so much technology and innovation on the plant floor, there is a heightened emphasis on the talent pipeline,” says North Carolina Deputy Commerce Secretary Dale Carroll.

To help satisfy those changing requirements, North Carolina works with existing and new employers to develop customized training plans. Those plans might include assistance ranging from pre-screening applicants to helping new employees obtain any technical certifications that they may need. North Carolina also is one of four states in the country selected by the Manufacturing Institute to implement a job-training program that issues nationally recognized credentials. Eight community colleges in North Carolina utilize the Manufacturing Skills Certification System.

One of the challenges facing manufacturing companies across the country is a growing population of veteran workers that are approaching retirement age. “There are ongoing efforts to help employers with the talent pipeline in order to backfill the vacancies that are created through upcoming retirements,” says Carroll. For example, Central Piedmont Community College is working with Siemens to provide co-op educational programs and internships, as well as customized training at the company’s recently expanded facility in Charlotte, which manufacturers gas turbines. Last year, Siemens invested an additional $350 million to expand the plant and add 700 new jobs.

States are increasingly recognizing the importance of being proactive and working with employers on an ongoing basis to meet their changing labor needs. “Without a quality work force, without the training programs in place, and without the financing of those programs, [residents] are going to have a hard time finding employment because the companies won’t come,” Berzina explains.

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