$1.3 Billion Available to Help Communities Advance Manufacturing

The following is a release from the U.S. Office of the Federal Register:

Indiana is a manufacturing state. Now, there is federal assistance available to communities to support economic development strategies to expand manufacturing.

The Investing in Manufacturing Communities Partnership (IMCP) is a federal initiative designed to cultivate an environment for businesses to create well-paying manufacturing jobs in regions across the country, thereby accelerating the resurgence of U.S. manufacturing. IMCP rewards communities that employ best practices to attract and expand manufacturing through planning their economic development in concert with local government, business, universities, and other stakeholders. Such efforts also build on local assets and align investments to local industry needs, such as capital, workforce education, infrastructure and research.

To date, IMCP has awarded 44 communities a total of $7 million to support the creation of economic development strategies. In the newly opened second phase, communities will be able to compete for some $1.3 billion in federal dollars, and assistance from 10 cabinet departments and agencies. In addition, communities will have access to a playbook of federal economic development resources and a new data tool for assessing their manufacturing strengths. An announcement of the competition was released in December as were a Federal Register Notice, resource playbook, and data tools. Please note that, while the announcement indicates a March 14, 2014 deadline for applications, that deadline is no longer accurate and is in the process of being revised.

Learn more online.

Getting Ready for More Reshoring

Offshoring gained plenty of attention over the years as companies made economic decisions to place portions of their business operations in countries around the world. Now, "reshoring" is the term of choice. Signs indicate some of those production efforts will return to the United States.

The State Science & Technology Institute provides an analysis in its weekly e-newsletter. Excerpts are below:

Earlier this week, General Motors announced it will build a software development center in Michigan, joining a number of companies like Google, Caterpillar, GE and Ford who all have revealed plans to make products in the U.S. previously outsourced or purchased overseas. Although the prospect of a reshoring trend and resurgence in U.S. manufacturing has been a topic of debate, there are still skeptics who say the evidence of this movement is highly anecdotal and the U.S. still faces a future of offshoring.

Research by the The Hackett Group, Inc. released in March revealed that U.S. and European corporations still will move an additional 750,000 jobs to other low-cost locations in the next four years contributing to a total of 2.3 million jobs in finance, IT, procurement and HR that will have moved offshore by 2016. However, the same report data projects that offshoring in these areas will begin to decline by 2014 and eventually cease, echoing a growing notion that although offshoring still can be an economical decision for U.S.-based companies, reshoring soon may be the better choice.

There is mounting evidence that companies are indeed bringing manufacturing back to the U.S. Professor Simchi-Levi from MIT surveyed 108 U.S.-based multi-national companies and found that 14 percent of the respondents definitely plan to reshore some of their manufacturing operations back to the U.S. A similar survey by the Boston Consulting Group released earlier this year showed that 37 percent of all U.S.-based manufacturing executives surveyed and 50 percent with revenues surpassing $10 billion were planning or actively considering moving manufacturing back to the U.S. from China.

In another report by the Boston Consulting Group, the group projected 10 to 30 percent of goods in industries like computers, electronics, appliances, and machinery will be reshored this decade and about three-quarters of those reshored likely will shift to the U.S., adding about $20 to $55 billion annually to the U.S. economy.

But what exactly is bringing them back home? One of the greatest factors is undoubtedly labor costs. The average wages in China have jumped 10 to 25 percent a year, reaching $4 to $6 an hour in some plants, making Chinese production less of a bargain once fuel and transportation costs are considered. Simchi-Levi’s MIT survey indicates that respondents are considering reshoring in order to bring findings to the market faster, respond more quickly to customer needs, save on transportation and improve IP protection.

Authors of a recent PricewaterhouseCoopers report emphasized the importance in fostering U.S. attractiveness by keeping energy costs low, maintaining a stable currency, training a skilled workforce and improving the tax and regulatory environment to support the reshoring trend, especially for the chemicals, primary metals and wood products sectors who may gain the most from reshoring. The reshoring movement is still in its infancy, but it is getting harder to deny the numbers suggesting a U.S. reunion with some of its offshored operations.

 

Employee Training Tools are Accessible — and FREE

We continue to hear – almost every day – that employers are having a difficult time finding qualified, appropriately skilled workers to fill their many open positions. Training is also needed to help current employees develop the necessary skills and demonstrate readiness for higher level positions.   

A less skilled, less educated labor force was once able to fill entry- to mid-level positions, but the recession and economic uncertainty has forced companies to do away with jobs or combine them with others to cut down on costs. The incumbent worker training programs companies once relied on to help support employee training and development were reduced or eliminated. Technological advances over the past several years have compounded the issue by changing the job market to require a higher skill level.

This skills mismatch poses a problem for employers and employees alike. While there is no such thing as a “free lunch,” there is free assistance for Hoosier employers looking to improve their workforces. Many, however, are not aware of the programs available. Ready Indiana, the workforce development concierge of the Indiana Chamber of Commerce, serves as one way for employers to find out about programs and incentives that can help develop a skilled workforce.

An assessment and training program aligned with occupational, job-specific skills can be particularly beneficial. That’s one reason the Indiana Department of Workforce Development (DWD) offers WIN Career Readiness Courseware, which is a skills-based, online training tool used nationwide alongside the WorkKeys job profiling and assessment system.

All Hoosier employers can access the WIN courseware through their local WorkOne center – and it doesn’t cost them a dime. Employees can access WIN training at work, at home or anywhere the Internet is available to improve their skills and proficiency in 10 job-related areas:

The first three WIN modules (Reading for Information, Applied Mathematics and Locating Information) are commonly referred to as the three core assessments that make up a WorkKeys certification. While WorkKeys assessments are available for all of the modules, the three core assessments are typically what employers use to identify the skill levels (i.e. scores) a candidate needs to be successful in a particular occupation. 

So how do employers know which scores are appropriate for specific occupations at their company?  A second complimentary program offered through WorkOne is the WorkOne Job Opportunities and Business Services (JOBS) program, which is also free to employers. Through the JOBS Program, employers can have up to five positions “profiled” to define the job duties and scores (in the three core assessments) needed for that position at their company. Stipulations for using the service include a one-page application for employers, a hiring need and a position that pays at least $10 per hour. Utilizing the job profile in combination with the WorkKeys assessment yields a tool that is EEOC (Equal Employment Opportunity Commission) compliant, reducing concerns for human resource professionals.   

Another important tool offered through DWD and WorkOne is on-the-job training, a program that reimburses employers up to 50% of new hires’ wages during the first weeks (or months) of job-related training. On-the-job training is not a tax credit but an actual check sent to your company. The training/job must pay at least $10 per hour.

One main push behind on-the-job training is getting dislocated workers back into the workforce. Job openings must be posted on the state’s free employment service, Indiana Career Connect. WorkOne will recruit and screen applicants and then provide employers with qualified candidates to evaluate. Employers determine the training plan and commit to retaining the employee for at least six months upon successful completion of training.

Another specific focus of on-the-job is funding for “green” on-the-job training. Manufacturing companies that produce energy efficient products and components, or those that engage in energy efficient or environmentally-friendly processes that use fewer natural resources may qualify.

These are just a few examples of how employers can benefit from available programs and do a better job of finding or developing the employees they need so that more Hoosiers can get back into the workforce. WorkOne business service representatives are the first point of contact for employers in each region of the state. Ready Indiana helps employers connect to these and other workforce-related resources through a toll-free hotline at 866-444-1082.  Ready Indiana also offers an interactive, county-by-county map tool that delivers provider contact information statewide for workforce, economic development and community college programs available at www.readyindiana.org.

Kris Deckard is the executive director of Ready Indiana, the workforce development concierge service offered by the Indiana Chamber of Commerce. Visit www.readyindiana.org for more information about Ready Indiana activities and initiatives aimed at providing useful, actionable information and research employers can use to improve hiring and training of employees. Kris can be reached at kdeckard@indianachamber.com.

Advancing the Manufacturing Cause

We make things in Indiana — and America. So how are we going to excel at doing just that? The White House has some ideas. Or at least the Advanced Manufacturing Partnership steering committee does in the form of a report titled Capturing Domestic Competitive Advantage in Advanced Manufacturing.

AMP is a public-private partnership created by the Obama administration in 2011 with the goals of increasing investments in advanced manufacturing as well as new high-paying manufacturing jobs. The report offers 16 recommenations focused on three areas: enabling innovation, securing talent and improving the business climate.

Some of those recommendations:

  • Institute a national strategy that includes a systematic process to identify and prioritize critical cross-cutting technologies
  • Add a process to evaluate current/future technologies for research and development funding
  • Create a more robust environment for commercialization that connects manufacturers to university innovation
  • Develop a marketing plan to build excitement and interest in manufacturing careers
  • Implement a searchable national database of manufacturing resources
  • Increase community college level education investments to help develop a skilled workforce
  • Adopting tax reforms that level the playing field for domestic manufacturers, including lowering the corporate tax rate
  • Start new programs that include national manufacturing fellowships and internships

OK, there’s a plan with a lot of fancy words. Now the real work begins. It’s called IMPLEMENTATION.

Adviser: Get Ready to Run with Bull Market in Near Future

Steven T. Goldberg, a Washington, D.C.-based investment banker, has a positive outlook for the American economy. Though I’ve heard other guesses that we shouldn’t expect a positive turnaround until 2015, he’s a bit more bullish. He recently authored a column for Kiplinger noting six reasons why he sees a "major bull market" in the next year or two:

1. The long decline in housing prices is nearing an end. The excess supply in housing is dwindling. When home prices finally bottom, it will mean more employment for construction workers, real estate agents and people in related industries. It will also staunch the bleeding in the mortgage and banking industries. Plus, it will help revive consumer confidence.

2. The U.S. is undergoing a manufacturing rebirth. Higher wages in China are prompting some companies to relocate factories to the U.S. Ford and Emerson Electric recently brought back some manufacturing to the U.S., and Intel is building three new plants here. Boston Consulting Group sees China’s edge eroding because many Chinese workers this year received wage increases of 15% to 20% and because of high transportation costs to the U.S.

3. The "echo" baby boom is ready to invest. The children of the baby-boomers will soon enter the 35-39 age bracket — the time in life when, Levkovich says, they get serious about investing. He has studied actions of that group from 1900 to the present and finds a strong correlation between the size of that cohort and the direction of the S&P 500. He says the echo boom will more than make up for the pressure their parents put on stocks by selling investments to pay for their retirement.

4. Technological innovation is still spreading. Increased adoption of smart phones by individuals and companies in developed and emerging countries will lead to increased spending on these products, as well as on technology infrastructure, including better security software, faster chips, longer-lasting batteries and more broadband spectrum. The U.S. still dominates tech.

5. The U.S. is becoming less dependent on foreign energy sources. New discoveries of oil mean a near-tripling of production in the Gulf of Mexico by the end of the decade. Meanwhile, fracking and other advanced drilling techniques are dramatically increasing natural gas production and lowering its price. Also helping are tougher standards for auto fuel economy, which means we’re using less gasoline. What little oil the U.S. will have to import, Levkovich says, will come from Canada and Mexico. Energy independence would help our trade balance.

6. A solution to our fiscal crisis is on the horizon. In 2013, Levkovich thinks, Democrats and Republicans will overcome their bitter differences and adopt a debt reduction plan that will include both higher taxes and cuts in entitlement programs. If that doesn’t happen, he thinks bond investors will force a resolution in 2014 by selling Treasury debt and forcing up bond yields. "We continue to think that investors are unwilling to pay up for equities while the continuation of budget deficits and growth of national debt erodes the foundation of economic progress," Levkovich says.

Levkovich finds a lot of skeptics among individual investors, who continue to yank money out of stock funds, as well as professional investors, many of whom have decreased their allocation to stocks. But that’s just dry powder for the next raging bull market.

Skills Shortage Leaves American Jobs Unfilled

Workforce development and having a properly trained workforce is as critical as ever — and remains a very evident challenge in the United States. At the Indiana Chamber, we’re proud to have Ready Indiana as an affiliate program working to aid Indiana businesses and workers in this constant battle. (If you have any questions about workforce training opportunities or what the state has available that could benefit your business, contact Ready Indiana Concierge Kris Deckard at kdeckard@indianachamber.com.)

Scholars Thomas A. Hemphill and Mark J. Perry elaborate on this critical issue for The Wall Street Journal:

Following 12 straight years of declines, U.S. manufacturers added 109,000 workers to their payrolls in 2010 and another 237,000 in 2011. And in January of this year, the number of manufacturing jobs increased by 50,000.

Yet this vibrant sector is being held back—and not by imports. Instead there is a serious labor shortage. In an October 2011 survey of American manufacturers conducted by Deloitte Consulting LLP, respondents reported that 5% of their jobs remained unfilled simply because they could not find workers with the right skills.

That 5% vacancy rate meant that an astounding 600,000 jobs were left unfilled during a period when national unemployment was above 9%.

According to 74% of these manufacturers, work-force shortages or skills deficiencies in production positions such as machinists, craft workers and technicians were keeping them from expanding operations or improving productivity.

A majority of U.S. manufacturing jobs used to involve manual tasks such as basic assembly. But today’s industrial workplace has evolved toward a technology-driven factory floor that increasingly emphasizes highly skilled workers.

As Ed Hughes, president and CEO of Gateway Community and Technical College in Kentucky, accurately described the trend, "In the 1980s, U.S. manufacturing was "80% brawn and 20% brains, " but now it’s "10% brawn and 90% brains." This new trend, widely known as "advanced manufacturing," leans heavily on computation and software, sensing, networking and automation, and the use of emerging capabilities from the physical and biological sciences.

Faced with the shortage of skilled workers, manufacturers have begun joining with high schools, trade schools, community colleges and universities to train men and women with the right skill sets. In-house apprenticeship programs, a staple of the past, have largely disappeared, according to Dr. Peter Cappelli, director of the Wharton School’s Center for Human Resources. They’re too costly and time-consuming. Instead, he notes, companies are seeking out "just-in-time" employees who are already technically trained and ready to hit the ground running.

Mixed Message on Manufacturing

Make: an American Manufacturing Movement is a new report from the Council on Competitiveness that indicates policymakers are receiving vastly conflicting reports on the state of U.S. manufacturing. In addition, it prescribes five "solutions" to help keep the U.S. on top.

The State Science & Technology Institute offers the following:

Policymakers, the report’s authors contend, are bombarded with widely available reports and analysis that support one of three conflicting views (it is on steep decline, doing reasonably well or it is poised for growth) on the health and importance of U.S. manufacturing.

"In reality, elements of all three perspectives are likely true," according to the authors. U.S. manufacturing remains the world’s top producer and an important part of the U.S. economy — employing more than 11 million and contributing more than $1.7 trillion to the economy. However, emerging economies are increasingly becoming a threat to U.S. competitiveness. Going forward, the U.S has the potential to capitalize on emerging marketplaces, but to achieve this the U.S. must find solutions to the challenges it faces.

The report provides five "solutions" to maintain the nation’s status as the world’s top producer, resolve its manufacturing challenges and capitalize on growing international demand:

  • Enact fiscal reform, transform tax laws, regulations and other structural costs to spur investment, ramp up production, capitalize growth companies and create skilled jobs

  • Create fair and open global markets for U.S. goods and services to reduce the trade deficit and increase exports as a percentage of gross domestic product

  • Prepare the next generation of innovators, researchers and highly-skilled workers

  • Create national advanced manufacturing networks and partnerships, prioritize R&D investments and deploy new tools, technologies and facilities

  • Develop and deploy smart, sustainable and resilient energy, transportation, production and cyber infrastructures 
     

Don’t Get Angry; Get Informed

I’ve been with the Indiana Chamber for just over a year now and in that time I’ve gotten to write about many of the Chamber’s initiatives and programs. The more I learn, the more fascinating I find the work they do for the state of Indiana. One that has really been catching my attention lately is Ready Indiana, the Chamber’s workforce education initiative.

In fact, I think of Ready Indiana every time I see anything about the Occupy Wall Street (OWS) movement.

I know it doesn’t seem these two have a common link, but hear me out. I’ve been reading through various news articles and posts on Facebook and talking to what supporters I can find to try and figure out what exactly the OWS group is upset about (still haven’t found one actual common theme – to me it just seems that everyone who is angry about anything has backed this movement).

One of the gripes I’ve seen most often, however, has been about the fact that college students are graduating with major amounts of debt to enter a job market without well-paying jobs. Another facet of the movement is upset about the fact that the older generation doesn’t have the skills for the new jobs that are being created, or the money to go out and get the necessary education.

These two points are where Ready Indiana (and any other workforce development or education initiative across the nation) comes in – opportunities do exist for the experienced workers and those who are right out of school. Below are just a few examples.

On the Ready Indiana web site, www.readyindiana.org, there’s a long list of middle-skills jobs that Indiana can’t do without (computer support specialists, nurses, fire fighters, police officers, lab technicians, heavy truck drivers, and many more). The list includes the number of job openings in each field and the median earnings for 2009 – the lowest median earning on that list is $33,407; the highest is $67,280.

These middle-skill jobs require more than a high school diploma, but less than a four-year degree. Employers, community colleges, private career schools and apprenticeship programs offer the necessary training and skills for these careers. High schools are also beginning to offer more technical courses so that students don’t have to graduate and venture into the job market with huge debt.

To combat the workforce skills gap, Ready Indiana recently announced a partnership with the Manufacturing Skill Standards Council (MSSC), which will allow employers to train their current and even prospective employees in-house through a nationally-recognized training program for manufacturing and logistics. On-the-job training grants are available, and the completed certification is also good for six credits to Ivy Tech Community College.

There are jobs available – in fact, a common complaint by employers is that they cannot find qualified workers to fill their many open positions. This BizVoice® story that appeared in the July-August edition features Westfield Steel and is a good example of Hoosier employers practically begging for qualified applicants.

These are just a few small hints into what is available to Hoosiers who are willing to do the research and find existing job opportunities. Personal responsibility is an important key to finding employment, whether you’re fresh out of school or making a comeback into the workforce.

Protesting might get your anger or frustrations out, but it doesn’t give you an income, access to health insurance or a sense of security. Utilizing resources like Ready Indiana and the Indiana Department of Workforce Development, however, can lead to those important measures.
 

Manufacturing Study: Time to Act or Else?

In Indiana, we make things. Engage in a discussion about that topic today, and it’s typically referred to as advanced manufacturing. No matter the name, it’s important.

On a national level, the State Science & Technology Institute summarizes a recent study by Booz & Co. and the University of Michigan’s Tauber Institute for Global Operations.

The authors point out three significant findings that emerged from the study. First, contrary to popular belief, U.S. manufacturing has been much more productive. Currently, U.S. companies produce about 75 percent of the products consumed by the nation. Second, manufacturing will remain largely regional. According to the authors, no single country will become "the factory of the world." Instead, manufacturers will increasingly locate factories close to major markets, including the U.S., Europe and Southeast Asia. Third, labor costs and currency rates are playing a decreasing role in decisions by manufacturing executives. Instead, four other factors are driving manufacturers’ choices:

  • The skill level and quality of factory employees, especially for high-tech facilities;

  • The presence of high-impact clusters;

  • Access to nearby countries with emerging consumer markets and lower-cost labor; and,

  • A reasonably competitive regulatory and tax environment.

The authors contend that if U.S. business leaders, educators and policymakers make "a series of identifiable smart actions and choices" that a manufacturing-driven economy could produce up to 95 percent of all products consumed by the nation. According to the report, the series of actions and choices includes recommendations in four policy areas:

  • Attract the best workers — currently, the U.S. faces a shortage of qualified manufacturing employees. To address this problem, policy makers must develop educational initiatives that promote engineering, relax federal immigration regulations for trained knowledge workers (e.g., H-1B visas) and establish state manufacturing education initiatives (e.g., scholarships and other programs). Manufacturing companies must also offer a more collaborative workplace experience, attract workers by attending campus recruitment events and industry job fairs, increase college internships, form partnerships with local colleges and universities and partner with other manufacturers to jointly support specialized training programs.

  • Invest in high-impact clusters — In the context of manufacturing, clusters are essential to grow geographic concentrations of interconnected companies, suppliers, service providers and associated institutions. State and local governments can encourage clusters by investing in infrastructure—roads, ports, rail lines and communication links—for centers that have begun to form organically. However, studies have shown that governments should not seek to micromanage cluster creation.

  • Build a future with Mexico — Mexico offers a cost-conscious and attractive alternative to China and other distant offshoring sites. By developing production facilities there, manufacturers can tap a relatively low-cost labor pool and maintain tight links with R&D talent and facilities in the United States.

  • Simplify and streamline the tax and regulatory structure — Policymakers should reduce taxation levels and tax code complexity. In the Booz & Company survey, 61 percent of respondents cited government regulations and policies as having a negative impact on their companies’ U.S. manufacturing output.

Competing in the Manufacturing World

I see this phrase or a version of it often and use it myself occasionally: "In Indiana, we make things."

With that being the case, we (Indiana and the U.S.) need to be the best in the manufacturing business. According to a recent report from the Council on Competitiveness and Deloitte, it takes innovation and advanced skills development on one side of the equation complemented by research, technology and full commercialization.

The 16-page report is Ignite 2.0: Voices of American University Presidents and National Lab Directors on Manufacturing Competiveness. Five goals are outlined for colleges, universities and the national labs:

  • Continue to support the community colleges and universities though long-term government programs

  • Utilize community college more effectively to develop a skilled S&T workforce

  • Create conduits that connect talent and ideas at universities with the private sector and the local community in regional clusters

  • Implement university programs in math, science and manufacturing

  • Ensure that national laboratories develop mission-driven innovations and broaden the definition of national interests to include impactful economic development

The report also provides several recommendations to build a 21st century advanced manufacturing workforce and to fuel science, technology and innovation. In the coming months, the council is expected to release Ignite 3.0, which will highlight the perspectives of U.S. labor leaders.