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Workforce, Water, and Access to Consumers Key in Winning Development Battles

By Colin McEvoy on April 18, 2016

This column, written by LVEDC President and CEO Don Cunningham, originally appeared in Lehigh Valley Business on April 18, 2016. (Click here to read Cunningham’s previous columns.)

Don Cunningham

Don Cunningham

It was quite interesting to listen to world economic and global thought leaders recently in the midst of a United States presidential race. While daily headlines rage with the exhortations of Donald Trump turning back the clock for American workers to a bygone era and building walls, delegates from 32 countries met at the annual World Forum for Foreign Direct Investment to review the latest trends in international business and foreign investment.

Suffice it to say, there’s a disconnect between telling people what they want to hear and what is actually happening.

The world is getting smaller and more interconnected, skills development is more critical for workers, robots are rapidly replacing menial tasks on both the shop floor and in the office. Productivity will continue to climb with a need for fewer workers.

The countries and regions with water supply, the best energy prices, the quickest access to a large market of consumers, and a workforce with the best skills will win the development battles of tomorrow.

Some, like Peter Zeihan, a geopolitical strategist and author of the recent book, The Accidental Superpower, see the United States as well positioned for the future because of its consumption-led economy, energy self-sufficiency, and millennial generation population.

“Electricity prices in the United States will be less than half the global average for the next 30 years,” Zeihan told the more than 350 delegates who met for three days in San Diego.

I was fortunate to once again be one of those delegates. The last meeting of the World Forum in the United States was in Philadelphia. At that time, the Lehigh Valley Economic Development Corporation hosted an excursion of delegates to study the rapid redevelopment of the 1,800 acres of former Bethlehem Steel Corp. property in Bethlehem.

This year, in Southern California, there was much discussion on water resources being critical to future manufacturing and industrial growth. Southern California has to import water from Northern California and from other states by using the Colorado River. Two percent of total electricity use in the state is to move water from the northern part of the state to the south. Hence, San Diego has the largest desalination plant in the United States.

While the technology exists to remove salt from ocean water for consumption, it is an expensive process and the debate centers on who will pay for it.

“The desalination technology exists to help solve regional water problems,” said Mark Lambert, CEO of IDE Americas, a world leader in water treatment solutions. “The differential is between the price of water and the value of water. Water is viewed as if it’s air; it’s viewed as though it should be free or very cheap.

“But, what is the price you’d be willing to pay for water when you have none?”

Areas like the Lehigh Valley with abundant, low-cost and high-quality water supplies are very attractive to companies looking to develop new locations.

As is a common in any discussion today of economic development, there was much discussion on workforce, talent and labor supply. A session entitled “The Coming Workforce Development Storm” drove home the point.

“There is a war for talent out there,” said Carine Clark, president and CEO of MaritzCX, a Utah-based technology and software company.

Martin Ford, a Silicon Valley entrepreneur, and author of New York Times bestseller Rise of the Robots, offered an interesting twist on the topic. His premise is that automation and technology development will continue so rapidly that robots will soon perform most menial shop and office floor jobs. He said that the declining cost of robotics drive companies to fill some vacancies with machines.

Ford said that there were 194 billion hours of labor in the United States in 2013, which is the same amount as there was in 1998. His translation is that labor costs will no longer be a major factor in company location decisions but that proximity to major markets of consumers will be more important.

There was no talk of building walls to keep people out of countries only discussion of building bridges to the future to grow economies across the globe.

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