Economic Development Opportunities – An Important Incentive in Attracting Companies to Your Region

by Dean Prigelmeier, President of Proactive Technologies, Inc.

When organizations try to create new jobs in their area – working with companies that are considering moving to, expanding to or expanding within their areas – skilled labor availability for many regional economic development strategies may include an offering that consists of one part skills assessment, one part general skill classes and a sprinkling of worker tax credits or grants. That seems to be what most incentive packages include, but is that because: A) that is what the other offers look like; b) it has been like that for decades; C) it is assumed that is all that is available; or D) all of the above?

For over forty years headlines sounded the alarm that those institutions that were training the workforce of tomorrow were not succeeding in their effort as discussed in, “An Anniversary That You Won’t Want to Celebrate: Years Later and The Skill Gap Grows – Is it Finally Time to Rethink The Nation’s Approach?“). Many skilled workers that are available to work do not have the skills that employers need today. Not completely satisfied with their answer to the inevitable question regarding the region’s skilled labor availability and how workers with specific skill needs will be found or developed, some economic development organizations are exploring other options and opportunities.

“Whether attracting new companies and helping them thrive and expand, or helping existing business to do the same, this approach is an important component of any economic development strategy.”

It is important to understand that the types of skills that employers are most concerned with – especially employer-specific task-based skills – most likely have not been in the local workforce, nor have any programs been available in local institutions to develop them, simply because these new jobs, with new skill requirements, have never been in the area. The types of skills needed for most modern manufacturing and advanced manufacturing have never been developed because the need was not present nor the data on these jobs available. Even if the need was present, by the time the skill is recognized, a program developed and a worker completed the learning, manufacturers either moved on or moved out.

Let’s face it, most organizations that successfully promote their region for economic development do so on the current low cost of labor, right-to-work status, low business and employment tax rates, economic incentives, availability of infrastructure and quality of life. They probably never needed a system in place to develop the skills necessary to attract modern and advanced manufacturing. Companies interested only in geographical, financial and aesthetic incentives have already moved. Other employers understand that if they want higher skilled workers, they need to expect to pay higher wages now or later when those skill levels are reached and competition for skilled labor kicks in.

If we were honest with one another, generally speaking community colleges and adult training centers are, at best, 10 -15 years behind the types of skills a prospective employee needs in order to learn and master the tasks required in modern facilities. It has always been like that, from time to time the gap surging deeper. The reason isn’t complicated; these institutions, designed as academic institutions first, have tried to fill a void in worker training with core skill development. However, they have never been embedded enough in today’s job environment to collect the job data necessary to be relevant nor have they applied the massive amount of government funding correctly to be that engaged.

I have written about another option for economic development strategies in past issues of the Proactive Technologies Report newsletter. For example, “Regional Workforce Development Partnerships That Enhance Economic Development Efforts” . In another, “Apprenticeships That Make Money? Not As Impossible as it Seems Part 1 of 2” and “The European Difference  and Part 2 of 2 – Setting Up an Apprenticeship Center”  I described one project that demonstrated a perfectly effective and inexpensive approach. For this project, Proactive Technologies was asked by a regional economic development office to attend a presentation in Germany for an employer that was considering a joint manufacturing venture in one of the state’s counties.

We listened to the concerns of the employer regarding whether the county in which the new facility would be located had the skilled workers it would need and/or a system to develop all the workers it would need as it grew. I was asked to offer a few slides on the structured on-the-job training approach we use and the hybrid worker training model it plugs into, utilizing the other educational institutions and resources in the area. The employer was satisfied, agreed to the project and my next trip back to Germany was to analyze 5 critical job classifications that were to be replicated at the joint venture site.

From the data we developed the structured on-the-job training programs. The job data was shared with the other project partners to help in the assessment and selection of job candidates that, once selected, would continue with the structured on-the-job training while the plant was being set up and the equipment installed. The data was also used to select relevant core-skill related technical instruction to build-up each worker’s core skill base.

Unlike legacy European apprenticeship systems which I talked about in the articles mentioned above (which is a system to develop all the skilled labor needed starting in grade school and providing solid choices to trainees to up-skill and correct-skill until they have reached management level) the U.S. system is a patchwork of pieces of approaches that vary from community to community, region to region. This isn’t anything new, and its shortcomings are talked about all the time. This void sometimes leads to a well marketed idea coming along, promoted by the same groups which will latch onto it making it seem legitimate and it becomes the standard for the next decade – eventually being tossed aside for an equally choreographed marketing campaign for another similar product. This approach has contributed to the decrease in employer’s confidence in the U.S. workforce development strategy and decreased hope that workers have in their role in the future economy.

This isn’t to say the European system doesn’t have its drawbacks. While their system is extremely effective for developing new workers from birth, their system doesn’t fair as well in absorbing displaced, dislocating, relocating or disadvantaged workers primarily because they never had to address these groups. There system always made adjustments to develop workers for expected skilled worker shortages, which included paid apprenticeships with apprentices learning and performing actual tasks for the employer for part of their credit. These apprenticeships were integrated into the employer’s business model as a “value-added” proposition, not a cost burden.

The European workforce development system is being tested these days as Europe faces more and more layoffs of workers too young to retire, an influx of workers from the East and refugees from the Middle East and South. These potential workers represent a wide range of relevant core skill levels upon which to build modern core skills suitable for employer-based task training. To deal with this phenomenon – new to Europe, common in the U.S. – they are trying to adapt their apprenticeships and related technical instruction to address less suitable candidates to fill their skilled worker shortage. Closing each individual’s core skill gap first is necessary before attempting the job-specific task training. One without the other leaves the employer and employee short of success.

In the U.S., it is hard to recognize a consistent strategy other than to give community colleges money, which they more often than not use to expand outreach for the same credit courses they have offered – maybe dusted off and repackaged. They might call their 2-year associate program an “apprenticeship” in order to qualify for apprenticeship dollars. But this is no solution to the US skilled worker shortage, which will remain out-of reach as the gap continues to grow. Offering this and assessments as the only solution may not be nearly attractive enough to Europeans and some Asian countries that effectively adopted the European model and who know the difference. To compensate, an economic development offering may have to give up more scarce resources.

One important component that a regional economic develop strategy can add to mitigate these disadvantages is a structured on-the-job training component, described in the articles above. The target job classification has to be accurately defined and any inputs to the workforce development process must be selected from the job/task analysis data to have the highest impact in developing the skills of workers for this target job. Otherwise any efforts will be less effective (proportional to the lack of job relevance). Having structured on-the-job training will guarantee the employer will at least have a worker development program that will produce competent workers for their job classifications – even if other inputs are less effective in developing core skills.

More specifically, this approach requires: 1) a thorough job/task analysis of the critical job classifications that the employer wants to replicate or relocate to your region;2) developing a structured on-the-job training to start training workers while the employer is building their facility; 3) concurrently with number 2, recruiting and assessing candidates for the job classification; and 4) concurrently delivering core-skill related technical instruction while finishing the structured on-the-job training onsite that leads each worker to mastering all of the tasks of their job. “Training to specification” is not a buzzward, in this case it is actual training to specification.

Some assessment products require a quick-and-dirty analysis of the targeted job and only point to the products offered by the same company that designed the analysis approach. Job-relatedness can be highly suspect and use for employee selection legally indefensible due to lack content validation. The job/task analysis data Proactive Technologies collects can also be used to select and “content validate” (for credibility, relevancy and Equal Employment Opportunity Commission compliance) assessment modules – the best, not the only – used to select the suitable candidates for the structured on-the-job training. Since an “assessment” is a “test” as defined by the EEOC, employers have to be careful when utilizing these instruments when employment, retention and promotion is the outcome.

The data can also be used to select the best and closely suited related technical instruction, or to update and enhance existing related technical instruction that has fallen behind.

Proactive Technologies has partnered with economic development  agencies in the past, and often partners with community colleges, technical colleges, career centers, 4-year universities and colleges and other state agencies on projects that involve business relocation, replication and expansion. While Proactive Technologies’ focus is the structured on-the-job training program development, implementation support and technical support, it works with its partners to increase the accuracy, effectiveness and efficiency of the workforce development effort while driving costs for the economic development effort down. Many projects grow in scope to this day, leading to more and more opportunities for all of the partners and the region, as well as the employers and employees.

Since this approach was designed for manufacturing, the same data for content validation that helps ensure EEOC compliance also provides the systematic approach to help companies comply with ISO/AS/IATF quality certification programs – helping them to expand their business within their industry group and for export. AND, once the structured on-the-job training infrastructure is set up for each company, they can use it to hire and quickly train each new worker they need – decreasing the per employee investment per each additional worker, and for cross-training workers to increase individual capacity and ROI.

Whether attracting new companies and helping them thrive and expand, or helping existing business to do the same, this approach is an important component of any economic development strategy.

Has your organization been searching for a solution that can make an offer more competitive? If your organization offers prospective relocators or expanders cash or tax incentives, or limited local learning services, but feel you can do better, contact us  and we can schedule an introductory live online presentation or join one already scheduled. If you are interested in more information or another presentation to a broader audience in your group, a follow-up online or onsite presentation can be scheduled.