The October Jobs Opening and Labor Turnover Survey (JOLTS) produced by the U.S. Bureau of Labor Statistics points to significant long-term trends in the U.S. labor market. More
9 Dec 2015
U.S. advanced manufacturing appears to be on the verge of a significant renaissance. Moving manufacturing from other nations to the United States or re-shoring is an important factor behind this trend. The Boston Consulting Group has predicted that re-shoring may bring up to three million manufacturing jobs back to the U.S. from overseas by 2020. China and other low-wage countries are at a tipping point.
Harry Moser, president of Reshoring Initiatives, thinks that, “Labor costs were the number one factor companies considered in relocating or sourcing manufacturing to supply the U.S. market.” Chinese wages have been increasing at 18 percent annually for the last ten years. Much of that cost savings is now gone. Other factors in this re-shoring trend that Moser cites include “a desire to get products to market faster, and a more rapid response to customer orders; savings from reduced transportation and warehousing; improved quality; reduced theft of trade secrets, and the elimination of bribes paid to corrupt foreign officials.”
A prominent example of a recent re-shoring decision is provided by General Electric which moved appliance production from China to a unionized facility in Louisville, Kentucky. This factory is producing new high-tech models of water heaters, refrigerators, and washing machines. It required an investment of $800 million and created 1,300 jobs. Among the reasons for moving this manufacturing back to the United States was the ease in producing new high-tech model designs. Costs in China had risen due to inventory and delivery problems. In the end, GE was able to reduce the retail price of these appliances by 20 percent. GE officials have stated that they intend to move a significant part of their appliance production back to the United States.
Other reshorers include: Apple, Ford, Caterpillar, Whirlpool, Master Lock, Electrolux, Google, Prodigy, Wham-0, and Freeman Schwabe Machinery. A wide variety of industry sectors are embracing re-shoring, including fabricated metal products, chemicals, machinery, transportation equipment, computer/electronic products, and medical devices. Harry Moser estimates that re-shoring added 40,000 jobs to the U.S. economy in 2013.
“There is a great potential for the re-shoring of manufacturing to the US,” stated Eric Spiegel, chief executive of Siemens in America. “But if companies have problems finding qualified people, a lot of it won’t happen.”
Call centers, R&D, IT, and financial services are also returning to the United States, but all these sectors depend on closing the current skills and jobs disconnect. Among the more promising approaches gaining momentum across America are public-private regional partnerships.
What RETAINs Are
Since the early 1990s businesses have been forming local and regional cross-sector public-private partnerships with local community institutions. To describe these many systemic solutions to the skills-job disconnect, I have coined the acronym RETAINs (Regional Talent Innovation Networks).
RETAINs are reinventing regional talent delivery systems by modernizing education-to-employment infrastructures. They are non-profit intermediaries that provide the linkages among elementary/secondary schools; institutions providing post-secondary career technical, and general education programs; and business workplace-based training and education. Their chief goal is to produce more well-educated regional talent that can support a tech-driven, 21st-century U.S. economy both in the short-term and in the long-term.
RETAINs have varied names – High School Inc. in Santa Ana, California; the Vermilion Advantage in Danville, Illinois; the Community Education Coalition in Columbus, Indiana; the New North in northeastern Wisconsin; or New Century Careers in Pittsburgh, Pennsylvania. More than 1,000 other non-profit RETAINs exist across the United States and nations throughout the world.
Why are RETAINs formed? They are established to stop businesses from closing, the tax base from shrinking, and people from leaving by reinventing the regional talent pipeline connecting better prepared people to skilled jobs and careers. RETAINs frequently begin when the pain of maintaining the status quo is greater than undertaking major reforms of the talent-creation system by building a broad collaborative network of partnerships.
What RETAINs Can Do
RETAINs are all about creating local systems that both reeducate those already in the workforce and better prepare a larger proportion of students for current jobs and careers that will be created in the future by the ongoing jobs revolution. RETAINs act as neutral intermediaries that provide a place in which different groups can gather and safely collaborate. They produce cross-sector programs that support skill needs common to many businesses.
RETAINs succeed because individual groups form a new shared vision of a larger community arising from a variety of isolated silos. Each group has is own agenda and needs. But each also has an influence on the whole community, and each depends on the success of the whole community.
RETAINs are of particular interest to small business owners because they offer a viable way of pooling their resources through joint programing that will inform, attract, and prepare skilled workers. RETAINs link regional employers together as a collaborative network that integrates training organizations, educational institutions, and other community-based organizations. This reduces the individual company’s investment in employer-provided education and training.
RETAINs recognize that the development of a student’s academic knowledge and career skills are no longer mutually exclusive silos. Both the informational content of 21-st century jobs and the speed of continuing labor-market changes have now ended this division.
Today’s reality is that all students must be prepared for some form of postsecondary education – 2- or 4-year college degrees, technical certificates, or apprenticeships. Integrating the required 21st-century skills and career and technical education into the entire education system (elementary, secondary, postsecondary, workplace learning) will make this a reality. The required direction for all K-12 education is to prepare every student for this transition without remediation to a postsecondary education.
This is the primary reason why many RETAINs have as part of their network liberal-arts, college-prep, career academies, or to adopt a simpler term for this discussion, comprehensive career academies (CCAs). They are a growing phenomenon in high schools across the United States. Over 2,500 CCAs are already operating. Many are smaller learning communities within larger high schools. Some are stand-alone career high schools in healthcare, IT, and various STEM areas. They blend a stronger liberal arts curriculum with specific practical career-education courses, internships, and pre-apprenticeship experiences.
RETAINs also support apprenticeship education programs. Apprenticeships are post-secondary skill-training programs that combine paid, supervised, on-the-job learning experiences with related classroom academic instruction. Apprenticeships provide students with an advanced set of skills leading to certification in specific career areas including technicians.
Apprenticeship has been underutilized in the U.S. labor economy. We need each state to consider new legislation and regulation reform that will clear the way for apprenticeship programs in more technical occupations at the college and adult-education level. This means giving businesses, unions, and educational institutions incentives to collaborate and removing artificial regulatory walls that have in the past frustrated efforts to form or expand such important talent-creation programs. For more information on current registered apprenticeship programs across the 50 United States access: http://www.doleta.gov/OA/sainformation.cfm.
RETAINs also help promote stronger ethical business practices across a region. They help minimize the poaching risks and promote a more positive overall regional business culture of sharing rather than stealing workers from each other. In my work with RETAINs, I have found that this new talent vision comes from several people in the community. Who are these people? They are:
No single business sector can effectively rebuild regional workforce delivery systems by acting alone. RETAINS as cross-sector public/private partnerships help focus on building sustainability and growth for all their business members. By participating in them you will discover that many other businesses share the same concerns and learn how to work together in solving this skills-job crisis for employers, community members, and your regional economy.
Shifting global economic conditions will continue to increase re-shoring opportunities for many U.S. businesses. Local RETAIN initiatives will help more companies take full advantage of the re-shoring trend that shows promise in increasing employment and productivity in many U.S. business sectors.
Edward E. Gordon is the author of Future Jobs: Solving the Employment and Skills Crisis (Praeger, 2013). He is the president of Imperial Consulting Corporation and taught in higher education for 20 years. He can be contacted at www.imperialcorp.com.