Work Force Training: Providing a Competitive Advantage For Expanding Companies and Bridging the Budget Gap for Colleges

You’re about to make a multimillion-dollar decision on where to site your new facility. It’s a decision that will reverberate — either positively or negatively — for years to come.

Of all the factors that go into making the correct site location decision, work force is at the top of the list.

By: Ken Krizner

http://www.expansionmanagement.com/smo/newsviewer/default.asp?cmd=articledetail&articleid=16087&st=3

Whether you need to staff a manufacturing plant, high-tech facility or call center, a knowledgeable, highly trained work force is critical to compete in today’s global economy.

But training employees is an expensive proposition. Often, companies can’t bear the cost alone.

At the same time, states are competing against each other to attract your expansion project.

The lure of tax abatements, reimbursements on construction costs and other incentives are always within reach. But those incentives can’t help your company stay competitive.

Work force training can have a direct impact on the competitiveness of your company. That’s why states offer to be partners with companies in work force training programs. In many cases, work force training is the determining factor whether a company sites its expansion project in a particular state.

“If it’s not the first issue that comes up, it’s in the top three,” said Ken Carroll, executive director of Bluegrass State Skills Corp. (BSSC), the commonwealth of Kentucky’s primary work force training organization. “More and more, we see work force training as the primary concern for companies. They want to know that we have the resources, both financially and on the service side, to be able to make sure they have the work force they need to be successful.”

Frequently, community colleges facilitate the training. Across the country, these institutions of higher education are significantly refining their work force development programs in an effort to help their local communities and regions attract expansion projects.

Community colleges already have the academic setting and the ability to establish a curriculum that meets the needs of companies.

“Community colleges have become pretty nimble in their efforts to provide types of job training activities that help build communities,” said William D. Law Jr., president of Tallahassee Community College (TCC) in Tallahassee, Fla.

TCC opened its Center for Economic & Workforce Development nearly a year ago. The 30,000 square foot, state-of-the-art facility is designed for work force training initiatives.

Law doesn’t believe a company would ever relocate to Tallahassee based solely on TCC’s work force training curriculum. However, the college has a role to play in the effort to attract that company.

“After [companies] figure out the tax incentives and infrastructure needs, community colleges come into play,” he said. “Businesses need to evaluate access to continually trained workers. I don’t know how a community that doesn’t have a way to train a work force gets a company to expand or relocate there.”

“A Valuable Resource”

Each state offers a work force training program, although the breadth of each program is different. Eligibility rules vary, as does the cost to employees, funding restrictions and wage requirements. Many states offer multiple programs — some to retain companies already located there and some to attract new companies.

In a poll of more than 70 corporate site consultants by Expansion Management, Alabama’s work force training program was ranked No. 1 in the country. Georgia, Virginia, South Carolina and Kentucky rounded out the top five.

Programs are judged not only in terms of their financial value, but also in terms of ease of usage and applicability. In other words, some programs may theoretically have a high value but are of little practical use to most companies. Likewise, some programs may be both useful and valuable, but are so wrapped up in red tape requirements that they are extremely difficult to actually use.

“In our state, the training program is absolutely essential,” said Ed Castile, executive director of the Alabama Industrial Development Training (AIDT), which helps new and expanding companies recruit and train their work forces. “Our work force is important to us. It’s one of our very valuable resources.”

AIDT, part of the state’s two-year college system, was established to develop and coordinate training programs for companies that are creating jobs in Alabama through startup or expansion.

The organization has provided training for more than 100,000 workers with more than 1,100 companies in 100 technical classifications during the past three decades.

Hyundai Settles on Alabama

AIDT has helped attract numerous companies to Alabama, including South Korean automaker Hyundai, which is building its first U.S. assembly plant near Montgomery. The new plant has prompted dozens of suppliers to locate facilities in the state. AIDT was part of the process even before it was known that Hyundai was the company.

Castile said he made presentations in California and South Korea, eventually showing executives how the organization could help Hyundai recruit and screen prospective workers, and eventually train those who were hired.

“The company wanted a pool of people they could select from and be confident in their abilities,” Castile said. “They were looking for skills, attitude and trainable people with a good work ethic.”

That helped convince Hyundai to site its plant in Alabama.

The automaker will create 2,000 jobs when the facility opens in 2005, but Alabama officials estimate that suppliers locating in proximity to the plant will create an additional 4,000 to 5,000 jobs.

Recent Hyundai suppliers to move to Montgomery include the Lear Corp., which will build a $14 million plant. The company, which will supply seats and wiring harnesses, plans to hire 285 employees.

Tire & Wheel Assembly Inc. is also planning to build an $11 million plant in Montgomery.

Another supplier is Hyundai Hysco, which will build a 180,000 square foot steel processing center in Greenville to produce the “outer skin” of Hyundai automobiles. The company will invest $30 million and employ 125 people.

Teksid Aluminum Components will expand its facility north of Montgomery to fulfill the company’s new engine component contracts with Hyundai. The company currently employs 456 workers in Sylacauga and plans to add 100 more workers.

Much of the work force training for Hyundai’s suppliers will be conducted by AIDT.

“It doesn’t matter if it is a large or small company, you still have to put a system together to find the right person for the right job,” Castile said. “It is not just training but finding the right fit for the company.”

It’s also about helping to keep a company competitive.

In an effort to keep Lennox Manufacturing Inc. in Marshalltown, Iowa, the Iowa Values Fund Board has earmarked $1.6 million that would go toward the training of employees in advanced manufacturing practices. The money is a loan that Lennox would not have to repay if it decides to expand its Marshalltown operations.

To stay competitive in the global market, the company proposes to implement more than 100 advanced manufacturing practices.

The company, a subsidiary of Lennox International, is deciding whether to invest in the Marshalltown facility or at other locations across the country, which are also offering financial incentives.

Lennox expects to make a decision by the end of the year.

The Marshalltown facility has doubled in size and employment since 1993 when Lennox moved air conditioning operations there from Columbus, Ohio, and began producing both furnaces and air conditioning units at one location.

Marshalltown produces most of the residential heating and air conditioning equipment marketed under the Lennox name.

At stake are more than 1,100 jobs at an average wage of $18.65 per hour.

If Lennox can successfully upgrade the skill level of the Marshalltown employees, it will invest more than $18 million in the facility over a four-year period, according to the company.

The Company Dictates the Training

As in the case in Iowa and elsewhere, work force training in Kentucky focuses on the needs of the individual company.

“It’s the company’s individual choice as to what type of training it wants,” Carroll said.

BSSC offers two types of programs: the Grant in Aid Program allows BSSC to administer and fund industry-specific training, and the Skills Training Investment Credit, which aids existing companies in their efforts to develop a skilled work force. Thousands of employees employed by numerous companies in numerous industries have been trained.

More than 300 employees at Citicorp Credit Services’ facility in Boone County in Northern Kentucky received skills upgrades after the company decided to expand in the commonwealth. The company moved into a 180,000 square foot facility about two years ago.

Kentucky is also home to numerous automobile suppliers, including many Japanese companies that have based their U.S. operations in the commonwealth. In many cases, the commonwealth is able to offer these companies work force training. Murakami Manufacturing U.S.A. Inc. located a 55,000 square foot motor vehicle parts and accessories manufacturing plant in Campbellsville, Ky. More than 100 employees work at the plant, which produces rearview mirrors.

Two other Japan-based companies, Daicel Chemical Industries and Toyoda Gosei Co., established a manufacturing operation in Beaver Dam, Ky. The joint venture, Daicel Safety Systems America, produces airbag inflators in a 65,000 square foot plant where more than 100 workers are employed.

BSSC offered skills upgrade for employees involved in both projects, and in both cases sent representatives to Japan to train the trainers.

Many companies that have found success in South Carolina and Georgia have taken advantage of each state’s work force training program.

In South Carolina, The Center for Accelerated Technology Training helps companies by customizing a work force training program specific to that company’s needs and required skills sets.

South Carolina Yutaka Technologies (SCYT), a Japan-based supplier of parts for Honda all-terrain vehicles (ATV), expanded its facility in Kershaw County, S.C. The $7 million project represents growth of the company’s existing catalytic converter product line, as well as the addition of an ATV aluminum wheel stamping process.

Equipment additions include a large press with related machining equipment to support the aluminum wheel operation. The catalytic converter process will be a highly automated line using numerous robots.

SCYT has added 70 full-time positions, and partnered with CATT to address employment recruitment and preliminary employment training needs.

“The quality of our work force allows us to successfully compete on a world-class level and that’s worth investing in as we pursue additional growth opportunities,” said Takashi Ezaki, president of SCYT.

Georgia’s Quick Start Program provides comprehensive and advanced customized training for businesses.

TI Automotive is investing more than $30 million to site a manufacturing facility in Hart County, Ga., to produce fuel-tank systems. The company will use Quick Start to train many of the facility’s high-tech operators through Northern Georgia Technical College.

The plant will manufacture blow-molded plastic fuel tanks and filler pipes for vehicles.

The facility will have two blow-molding press lines with an annual capacity to produce 1 million fuel tanks. Employees will use an innovative blow-molded filler-pipe process, according to the company.

Warren, Mich.,-based TI Automotive will initially employ 100 people and produce 350,000 automotive fuel tank systems annually. Groundbreaking ceremonies for the 145,000 square foot plant took place in July.

The state of Maryland (No. 6 in the poll) has earmarked $1 million in Workforce Investment Act Incentive funds to support existing Maryland businesses in the retention and growth of their work forces.

Tractor Supply Co., a retailer of farm and ranch supply products and services, will use work force training funds as it expands its operations in Hagerstown, Md.

The company will construct a 482,000 square foot distribution center (DC), which is expected to create 180 new full-time positions by 2006.

The state’s Department of Business and Economic Development will provide a work force training assistance grant of $50,000 for fiscal year 2005 and $25,000 for fiscal year 2006 to support the project.

Tractor Supply is investing more than $18 million in its mid-Atlantic DC, which the company hopes will be operational by the end of the year.

In today’s global economy, where companies can — and often do — relocate to other parts of the world in an effort to stay competitive, work force training lays the foundation for future growth.

It provides a strong benefit to companies that are looking to upgrade productivity and flexibility in their processes.

It’s a competitive advantage that companies can’t afford to do without.

Ken Krizner is managing editor of Expansion Management. He can be reached at [email protected].

Top 10 States http://www.expansionmanagement.com/smo/DocReserve/DocReserve_Content/Top 10 States.pdf

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Research Corner: Work Force Training Can Help Colleges Bridge Budget Gap

By: Michael Keating

http://www.expansionmanagement.com/smo/articleviewer/default.asp?cmd=articledetail&articleid=16100

Dollars are getting scarce for higher education. State appropriations for higher education fell 2.1 percent to $60.3 billion in fiscal year 2003-04, according to a survey by the Center for the Study of Education Policy at Illinois State University.

Businesses can support higher education in its time of need in one important way.

“Companies need to invest in higher education, and they can do that and upgrade their workers’ skills at the same time by spending their training dollars at nearby colleges and universities,” said Joyce L. Gioia, one of the authors of the new book, “Impending Crisis: Too Many Jobs, Too Few People.”

That includes businesses thinking of expanding to new sites, said Albert A. Vicere, executive education professor of strategic leadership at Penn State University’s Smeal College of Business.

“I would encourage executives contemplating an expansion or relocation to meet with the dean of the business school that’s near the site under consideration,” he said. “Every business needs some help in developing its people and their skills, and the business school can map out a plan of action, build a curriculum and deliver with a purpose.”

Phoenix International, an operating group within Deere & Co., has grown and prospered through its relationship with North Dakota State University. Phoenix International, which employs about 400 workers, manufactures electronic parts and systems for use in John Deere equipment.

Phoenix International has been a tenant in the NDSU Research and Technology Park in Fargo since 1999.

“Our interaction with the university has resulted in us being a more profitable, more vibrant company, and it has resulted in NDSU being able to turn out better graduates by virtue of their interaction with real businesses,” said Barry Batcheller, one of the founders of Phoenix International.

Some of the ways the two organizations work together include:

* NDSU faculty use Phoenix International facilities as education tools.

* Phoenix International staff teaches classes at NDSU.

* Phoenix International workers take advanced classes at NDSU, as well as computer skills classes offered at a nearby skills and technology training center under the auspices of North Dakota State College.

Worker training is key, said Tony Grindberg, executive director of the NDSU Research & Technology Park.

“The thinking went like this: If skill levels of workers increased and they became more valuable to their organizations, their wages would grow, hence our tax base would grow,” Grindberg said. “The model has worked well.”

Michael Keating is senior research editor for Expansion Management. He can be reached at [email protected].

State College Funding http://www.expansionmanagement.com/smo/DocReserve/DocReserve_Content/State College Funding.pdf

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