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Don Cunningham: Workers are Key to Business Locations

By Colin McEvoy on March 29, 2016

This column, written by LVEDC President and CEO Don Cunningham, originally appeared in Lehigh Valley Business on March 21, 2016. (Click here to read Cunningham’s previous columns.)

Don Cunningham

Don Cunningham

Once a year, a group of real estate location experts, who advise companies on where best to set up shop, gather to share their thoughts on what makes a state or region attractive to business.

This year the Site Selectors Guild met in Nashville, Tennessee, and their collective message was clear: the states and regions that supply the most abundant and qualified workforce will be the winners of tomorrow’s jobs.

By 2030, 95 million members of the Baby Boomer generation, those born between 1946 and 1964, will have retired. There will be about 40 million members of Generations X and Y, also known as millennials, to replace them. Availability of trained workers was the number one factor in the Site Selectors Guild’s annual survey report on what drives company location decisions.

Interestingly, the total operating cost of a particular region or state was ranked a distant second. Infrastructure and access to market ranked third, followed by a region’s ability to meet project deadlines in a timely way, which translates to limited development hurdles, regulations and governmental support and cooperation.

As I’ve done for two years now, I attended the conference on behalf of the Lehigh Valley, spending three days mingling with site selectors, listening to their presentations and elbowing out my counterparts representing other states and regions throughout the U.S. and the world.

The concern regarding workforce is not just one of simple math. It’s also a reflection of the changing nature of the workplace. Automation and technology is driving tremendous change, eliminating jobs and creating new ones at break-neck speeds.

The World Bank estimates that 60 percent of the jobs that will be held by the young people who enter the global workforce during the next decade do not exist today. And as smart machines take over routine tasks, the World Economic Forum is projecting that during the next five years, about 5 million jobs in the world’s 15 largest economies will be eliminated, particularly those in office and administrative fields.

This translates to a huge challenge for schools and employers. Quality information on the skills gap in a particular area last about as long as an NFL season. One of today’s current trends, according to the Site Selectors Guild, is the continuing attractiveness of U.S. manufacturing.

While there may not be as many jobs because of automation and technology, there is growing output. Escalating wages in Asia, a desire by companies to make goods closer to their customers, and the instability of shipping costs and tariffs, along with a concern for protecting intellectual property are some leading reasons for U.S. manufacturing growth.

Simply put, as more of our durable goods are made by machines there is less drive to move factories to low-wage countries and more interest in protecting the intellectual asset of that technology. This also has led to more internationally-headquartered companies seeking locations in the U.S. with Germany, China, Japan, and the United Kingdom leading the way in U.S. locations.

All of these dynamics lead back to workforce being the critical factor in location decisions. Process manufacturing and technical manufacturing are two of the largest areas where labor shortages are seen today, according to the Site Selectors Guild. New equipment, robotics and technology require very skilled and knowledge workers to run, fix and produce.  Manufacturing jobs are rapidly becoming more about brain than brawn.

Fortunately, the Lehigh Valley is well positioned to thrive in this climate. We not only have six excellent four-year colleges, but two highly regarded community colleges and three high school-level vocational and technical schools.

In addition, the region has a highly engaged Lehigh Valley Workforce Development Board (LVWDB). Last year, the Lehigh Valley Economic Development Corporation launched an Education and Talent Supply Council in conjunction with the LVWDB. This council, for the first time, links the education community with the a cross section of employers in targeted sectors to analyze skills gap and talent supply issue on a regular basis, linking employers to schools and job trainers.

According to the Site Selectors Guild, 63 percent of American CEOs say there is a lack of skills in the workforce. The Lehigh Valley is doing its part to ensure that isn’t true here and that we win the jobs of the future.

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