a Site Selection Web-only Feature, 2003
MANAGEMENT STRATEGY
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a Site Selection Web-only Feature, 2003
MANAGEMENT STRATEGY
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Laboring to Find the Right Mix
n the now-classic cult film "Office Space," cubicle dweller Peter confesses to his therapist: "Since I started working, every single day has been worse than the day before, so that every day you see me is the worst day of my life." The fictional Peter could just as easily have been speaking for millions of underemployed Americans who daily toil at jobs they don't like for less money than they think they should earn.
The problem for employers considering a new plant location is how to quantify those workers. For decades, ever since the Bureau of Labor started keeping track of employment statistics, the only number of relevance to site selectors was the jobless rate. That's not true anymore. Today, thanks to modern technology (new survey methods employing telephone, e-mail and the Internet), it's possible for a company to find out exactly how many people in a given market would trade in their old job for a new one – if only they had the chance. "We have a huge, underemployed work force, especially in the high-tech sectors," says Matt Szuhaj, senior manager for facility and location strategy for Deloitte & Touche Tohmatsu in San Francisco. "In places like Denver, you have people with Ph.D.s serving coffee. We are certainly at the bottom of the market in terms of labor availability and pay."
Six Trends You Should Know
Recognizing and adapting to this trend, as well as other trends impacting hiring needs, is critical to making the right location decision, say the experts. People who benchmark corporate labor practices point to six work-force trends driving the market:
• The number of underemployed workers throughout the United States has swelled by 15 percent since late 1998. Since then, underemployment has increased from 15 percent of the work force to 17.24 percent, according to The Pathfinders, a Dallas-based consulting firm that specializes in tracking the underemployed. • Despite the high jobless rate among high-tech workers in the U.S. today, the U.S. still does not produce enough scientists and engineers annually to meet future demand. In fact, the U.S. doesn't produce enough workers, period. A recent study by the U.S. Department of Labor's Bureau of Labor Statistics projected that by 2010, there will be 10 million fewer workers than jobs throughout the American economy. • The best places to find knowledge workers five years ago are still the best places to find them today, says Szuhaj: India, Scandinavia, Israel, Northern Virginia, Boston, San Francisco and San Diego. Szuhaj contends that any nation or community cannot fundamentally remake itself into something it is not. "The reality is that, if you are a high-tech software development company, the places that were leading centers of employment before are still leading now," he notes. "India has a huge cost advantage and a huge work force. Scandinavia has always done well because its cities have developed clusters that offer a high quality of life, great educational institutions and cultural amenities." • Lucrative job-training programs offered by state and local governments cannot solve all work-force woes, but they are getting better. "The best job-training programs are those that are the least bureaucratic," Szuhaj says. "Some companies are awarded $10 million in job-training credits but only use $1 million of it because it is too cumbersome to get it." • Most workers don't want just more money. They want better benefits and an opportunity to upgrade their skills. Pathfinders' research shows that workers typically want more training, higher wages, improved benefits packages and a better overall working environment. If they find these attributes in the right combination, they will change jobs, says David Brandon, a Pathfinders senior vice president. • The fastest-growing labor markets in America are the suburbs of major cities. These suburbs will grow even faster in the future. Rural areas will continue to see the slowest growth. In his landmark book, Edgeless Cities, author and noted Census expert Robert Lang reveals an entirely new landscape of suburban American cities that now provide the largest pools of office and industrial workers found anywhere in North America. He cites the lower cost of housing, extended highway and roadway system and proximity to commercial services that now proliferate throughout suburbia. Challenge: Get the Data – Fast
What does all of this mean for executives seeking available, qualified labor at a reasonable cost? It means that your need for quality data on local work-force attributes is greater than ever. Plus, you must glean it faster than ever.
When TRiSTAR Business Communities opened the 2,300-acre (932-hectare) Gateway Commerce Center in Madison County, Ill., 16 miles from downtown St. Louis, the developers used a sophisticated labor-tracking model to lure Procter & Gamble, Dial Corp. and Unilever to the industrial park.
"This development is designed for distribution-intensive companies and their service providers," says Kent Waggoner, vice president of business development for TRiSTAR. "According to corporate site selection consultants, the question that most often drives the search for a new business location is whether the candidate location has an adequate work force to meet the company's needs." Waggoner turned to The Pathfinders to find the data he nee ded. Pathfinders had found that their clients typically obtain less than 10 percent of their new hires from the ranks of the unemployed. Instead, the companies will staff a new operation almost entirely with formerly underemployed workers.
In the case of the Gateway Commerce Center, Pathfinders found that the area's labor shed of five surrounding counties had 59,700 people who were underemployed. Pathfinders defines underemployed workers as "those individuals who are now working but desire better jobs and who possess the skills, education and experience to qualify them for better jobs." Waggoner said the study taught him something else: "There is a large and competitive work force here in the logistics industry," he said. "They seem to possess the skills and experience needed to do well in logistics jobs, and they come at an affordable price. They are productive, and they are anxious to do this sort of work." In fact, of the nearly 60,000 people classified as underemployed in the region, 10 percent said they would change jobs for less than $8.70 an hour; 33 percent said they would change jobs for less than $12.60 an hour; and 50 percent said they would change jobs for less than $14.94 an hour. Moreover, the study found that 23,300 underemployed people in the market had experience working in the warehouse/distribution or transportation fields. About 17,300 workers had experience in manufacturing and/or assembly operations. Some 14,300 respondents indicated experience in driving forklifts or power trucks. The results of the study helped TRiSTAR seal the deal with the large industrial space users in Gateway, says Waggoner. "Being able to quantify the number that you can reasonably draw employees from was very important," he says. "The key number that came out of the study was 59,700 underemployed workers who would be willing to change jobs under the right circumstances. As we're thinking about the growth of Gateway, that's a huge number of potential workers for our tenants." 
Brandon said his firm has done similar labor studies for more than 400 markets throughout the country. "It was very clear that there were fundamental differences among the states in terms of worker preparedness for the workplace," he says. "There are many pockets throughout the country where workers still do not read or write very well. And no amount of incentives can make up for such a fundamental deficiency in worker skills." The question every employer must ask, notes Brandon, is "Do I want short-term money or long-term profitability?" Knowing the exact capabilities of your local labor market, he says, is the best way to start. 
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