Labor may be spare, but it’s out there.
And broad-ranging corporate strategies are finding it.
What would you ask for if you could get just about any expansion incentive imaginable?
That was the situation for United Parcel Service (UPS) in 1998. Its new cargo-sorting hub would employ 6,000-plus with a US$250 million annual payroll. Clearly, the kind of blockbuster facility that could’ve demanded a ton of lucrative incentives. But that wasn’t what the express mail giant wanted.
“UPS wasn’t interested in the traditional state incentives companies usually get. What they asked for was help in finding workers,” says Doug Cobb, president and CEO of Greater Louisville Inc. (www.greaterlouisville.com), which spearheaded recruiting for the area, already a major UPS center.
ABOVE RIGHT: Rocky Mountain Silicon? With nearby colleges supplying skilled workers and labor-attracting living costs, Broomfield in north Denver has become a high-tech hotspot, landing Sun Microsystems’ 3,500-employee engineering center (pictured) and Level 3’s 4,000-employee headquarters.
UPS’s response will certainly strike a ringing chord with most site selectors. Many areas, particularly in the United States, have miniscule unemployment. Labor, the No. 1 business cost and the fly-or-die factor in today’s brusingly competitive economy, often seems as rare as the dodo bird. But if your operations aren’t rapidly staffed and online, your window of opportunity may just rudely close on your nose.
Accordingly, corporations and development agencies alike are scrambling to pinpoint pockets of ready labor. It’s a tough task, but many companies have recently registered notable success. Here’s a look at a few of them.
Public-Private Partnerships
Public-private partnerships are one tool that’s leveraged expansions in the face of limited labor.
Just such an innovation met UPS’s concerns over labor availability in Louisville, where the Atlanta-based firm is building a 2.7 million-sq.-ft. (2.4 million-sq.-m.) facility that will be completed in 2001.
“A team of state and local public officials, economic development professionals and educational leaders came up with a unique solution: the Metropolitan College program, Cobb explains. “UPS pays half the tuition, and the state pays the balance.”
The Metropolitan College partnership spawned by the deal includes UPS, Kentucky state government and three local colleges: the University of Louisville, Jefferson Community College and Jefferson Technical College.
Metropolitan College students can pursue either a two-year technical degree or a four-year degree in any academic area they choose. And the college schedules classes to accommodate students’ work schedules at UPS. That strategy yields a major benefit for both UPS and the area: labor that’s employed while simultaneously broadening its skill base. Some 1,200 UPS workers have already signed up for the Metropolitan College program.
Another major labor challenge is coming from today’s dot-com companies, which often offer stock generous options that one day just might be worth multimillions of dollars. However long the odds, such potent, once-in-a-lifetime opportunities are tough to counter.
But some companies are. One is Andersen Consulting (AC at www.ac.com). In what AC officials describe as “an effort to attract and reward high-performing employees . . . [and] harnesses the value of the electronic economy,” AC is investing $200 million in e-commerce-related companies on behalf of its employees. Each year it intends to subsequently invest $100 million more, with employees getting the investments’ payoffs as “e-units.”
Explains International Chairman Vernon Ellis, “We’re doing this so those who build their careers with Andersen Consulting will be able to share in the wealth created by the firm.”
Tapping Underemployed Labor
For many other successfully expanding firms “underemployment” is the key strategic word.
Today’s tight labor market hides significant underemployment, most work-force analysts agree. While robust economic conditions have kept them employed, millions have gone through major work-life shifts, displaced by the ongoing gaggle of downsizings, mergers and acquisitions. Many of that number have gone from well-paying, skilled positions to jobs with significantly lower pay, often in the burgeoning service sector.
John Deere, for example, identified a major pocket of underemployment in historic Williamsburg, Va., where it’s locating a new 300-employee utility-vehicle plant.
“John Deere found the underemployment associated with this area’s seasonal tourism and retail businesses attractive, because it offered a ready pool of applicants who could be trained for production work,” explains Sanford Wanner, administrator of James City County (www.james-city.va.us).
Many development agencies have also become more aggressive in identifying underemployment, including the Greater New Braunfels (Texas) Chamber of Commerce (www.nbcham.org). Reports Chamber President Michael Meek, “Our labor surveys show that we have more than 34,000 underemployed people.”
New York used a similarly proactive tack to convince Crysteel Manufacturing that the city of Volney’s labor was an optimal fit for its 150-employee production facility. “The State Labor Dept.’s ability to provide a selection ratio of 8-to-1, plus pre-screening services, was critical,” says Michael Treadwell, Operation Oswego County (www.oswegocounty.org) executive director. “The availability of workers with metal-working skills was particularly attractive to Crysteel.”
Training Can Make the Difference
Sparse labor has also made training incentives even more valuable.
Such assistance helped convince Teletech to locate a 1,000-employee customer service center in Kansas City, Kan. “The project was on a very fast track. Demonstrating to Teletech that state and local organizations could effectively coordinate to hire and train the new employees within the necessary time frame was an important deciding factor,” explains Kansas Lt. Gov. Gary Sherrer, who’s also Kansas Dept. of Commerce and Housing (www.kansascommerce.com) secretary.
First, of course, you have to have the workers to train. And that’s made fast-growth areas popular location choices. Predictably, Florida’s sun-and-fun ambiance is providing more than a few.
“Orlando welcomes nearly 1,200 new adult residents every week,” says Darrell Kelley, Metro Orlando Economic Development Commission (www.business-orlando.org) president and CEO. That mushrooming populace has attracted a host of firms; the deep labor pool has kept them expanding. Recently, for example, SunTerra added its relocated 500-employee headquarters to its Orlando operations, and FirstUSA is doubling its local presence by adding 800 employees.
Another big labor plus for FirstUSA, Kelley says, was Orlando’s University of Central Florida and its 30,000-plus students. Other areas with large colleges and universities continue to be popular picks for high-skill operations.
Broomfield, Colo., for example, has capitalized on the skilled labor continually coming out of the University of Colorado in Boulder and Colorado State University in Ft. Collins. That, plus labor-attracting living costs far below traditional high-tech hotspots like Silicon Valley, has helped the Denver metro city land major high-end facilities like Sun Microsystems’ 3,500-employee engineering center and Level 3’s 4,000-employee
headquarters.
Similarly, the Middle Tennessee area’s 90,000 college and university students were a major draw for Dell Computer in Nashville. It’s the area’s first major high-tech operation. But Dell is so pleased by local labor force that its Nashville-area employment will hit 3,000 by mid-2000, four years ahead of schedule.
Skirting Over-Saturated Markets
Locating within clusters of similar operations has long been a favored labor-targeting strategy. But that tactic can backfire in drum-tight labor markets, touching off ever-escalating bidding wars and rampant job-hopping.
Delta Airlines avoided that over-saturation in setting up its new 225-employee reservation center in Huntsville, Ala.
“Huntsville at that time had never had a major back-office operation and therefore couldn’t demonstrate back-office labor productivity to Delta,” says Brian Hilson, Huntsville/Madison County Chamber of Commerce (www.hsvchamber.org) president and CEO.
But that back-office dearth also offered an advantage: a large untapped pool of military spouses and college students, prime candidates for the Delta jobs, and inordinately well-educated ones. Says Hilson, “Even though Delta didn’t require any college experience, 96 percent of their initial hires have college degrees, and some have graduate degrees.”
Luck Counts Too
Finally, some expanding firms are finding instant labor where other companies are shrinking.
U.S. Energy Dept. cutbacks in the Knoxville, Tenn., area, for example, created an immediate pocket of labor with in-demand technology skills. That’s facilitated a number of high-end locations, including the headquarters of Home & Garden
Television in Knoxville and Interactive Pictures in Oak Ridge.
Kelly Air Force Base’s post-Cold-War closing created another high-end labor opportunity in San Antonio, Texas. Lockheed Martin and a consortium of aerospace concerns have set up a new 1,000-employee unit for military aircraft maintenance and repair, employing many workers from Kelly’s Air Logistics Center.
In addition, says San Antonio Economic Development Foundation (www.saedf.dcci.com) President Mario Hernandez, “Employee skills at an existing aluminum rolling mill that was scheduled to close were a major factor in Alcoa’s decision to invest in the facility.”
Such labor opportunities, though, materialize only rarely. About all expanding firms can do is keep their ears to the ground and be ready to quickly capitalize. That, though, depends too much on luck to rank as a strategy. In today’s tight market, though, site selectors will take any break they can get.
