Dean Barber

Archive for December, 2011|Monthly archive page

While We’re Here

In Uncategorized on December 18, 2011 at 7:19 am

Well, folks, it’s that time of year. Thanksgiving has come and gone. Christmas and a new year is near. It’s a time when Ol’ Dean tends to look back and count his blessings … no matter what has happened.

Probably because I am a bit of a sentimentalist (and an optimistic fatalist), I seek some quiet time on what I am doing and why.

As many of you know, this blog is written for a business audience as a business resource. I am a business consultant who is compelled to write on issues relating to the economy, manufacturing, unemployment, economic development, site selection (my particular bailiwick) and other such things as to put you to sleep.  (Good bedtime reading at no charge.)

Maybe this is an ego thing and I am simply a glory seeker trying to drum up business for myself, and there is probably some truth to that. But I would like to think that I am also offering up some important, topical subjects related to financial news and trends in the marketplace that is important to your business.

I do not expect (nor want) full agreement on any ill-thought conclusions that I may make, but if this blog sparks thought and debate, well, all the better reason for me to provide the flint.

But take heart, I am too weary and in no mood to write about the European debt crisis and how that could come back to bite us. I just don’t want to go there, not now.

But more and more, it looks as though the U.S. economy is faring somewhat better than most industrialized nations. As I heard one analyst put it, “We’re the cleanest dirty shirt in a laundry bag of dirty shirts.”

Most of the economists that I give some credence to, which include a Haitian witch doctor and an Appalachian moonshiner, predict sluggish growth for the coming year, probably less than 2 percent.

A Wisp in Time

When the Rev. Bill Graham, now 93, was asked what was the biggest surprise in life for him, his response was, “the brevity of life.”

It is so true. We are but a flash in the pan. Here today and gone tomorrow, a wisp in time.

“You are a mist that appears for a little while and then vanishes.” James 4:14.

“Everyone is but a breath, even those who seem secure.” Psalm 39.5

Even those who seem secure. I had to read that one a second time.

We are on this earth but a micro-second in the larger scheme of things – a mist that will vanish. If you can get your head wrapped around that, it poses a question, actually many questions: So what should I do while I’m here? How should I act with what time I have?

My wife and I this past week watched a documentary called “Waste Land” about the “pickers” at a landfill in Sao Paulo, Brazil. These were men and women who earned about $20 a day climbing and rooting through mountains of garbage for recyclables. Incredibly, this was not a place of despair.

Not only was there a dignity about these people, but they were actually optimistic about life. Despite their circumstances, their abject poverty, they could laugh and smile and love. We were touched.

The next night, for reasons that I don’t fully understand, we watched “Housewives of Atlanta,” and I was both repelled and saddened about how materialistic these women were. Much of their lives were centered on the outward display of wealth, as if that is supposed to demonstrate that they have their lives together. I am almost certain these women were not a happier lot than the garbage pickers.

The older I get, the more the bling, bling does not impress me. Mind you, I am not resentful of those who have so much. If you want to wear a $10,000 Rolex watch or drive a Lamborghini (One actually passed me earlier this week. It looked like a spacecraft), man, have at it. All I suggest is that you count your blessings and consider where that may take you.

Giving It Away

It took a while to come to this realization, but wealth accumulation is no longer a big deal or a motive for me. I already consider myself blessed in so many ways, so why would the dogged pursuit of money provide for me great happiness. And if I was truly rich in monetary terms, could I garner the strength and courage to give most of it away?

I would love talk to Warren Buffett and Bill Gates about this. I would want to know what has compelled them to give away most of their wealth. The two appeared together at a news conference in June 2010, asking other billionaire Americans to give away at least 50 percent of their wealth to charity.

Real estate and construction billionaire Eli Broad and his wife Edythe pledged to give away 75 percent of their wealth during and after their lifetime. Forbes has estimated Broad to be worth $5.7 billion.

“We agree with Andrew Carnegie’s wisdom that ‘The man who dies rich, dies disgraced,’ and we also believe ‘he who gives while he lives also knows where it goes,’” the couple said in a prepared statement.

These people are not only very rich, they are also very wise.

Buffett is opposed to transfer of great fortunes from one generation to the next. Buffett once commented, “I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing.”

A Noble Profession

I always thought there was something noble and altruistic about the profession of economic development. When I worked for economic development organizations, I felt that I was a part of a crusade of sorts designed to give back to the community through job and wealth creation. Somehow I also figured out that I was a dream maker as well.

As a result of a manufacturing plant being built, a son or a daughter of a plant worker there would be going to college. How do you measure that? How do you measure hope and aspiration?

Today, as a site selection consultant, my primary and immediate role is to assist senior management in finding the right and proper location for future operations. As such, I can only hope that my efforts will trickle down, creating opportunities in any given place.

My first goal is to satisfy my corporate client and improve my business. My second goal, dream maker. That is what motivates me. That is why I am doing what I am doing. So it’s not all about the money, although the money helps. It’s about making some sort of difference, impacting lives.

The Great Erosion

This past week we learned from newly-released census data that a record number of Americans have fallen into poverty or are scraping by on earnings that classify them as low income.

The original story by the Associated Press reported that one in two Americans are now officially classified as either low income or impoverished. The Los Angeles Times took a look at the same census data and concluded that it was closer to one in three.

Well, that certainly makes me feel a whole lot better, one in three.

Many middle-class Americans are dropping below the low-income threshold — roughly $45,000 for a family of four — because of pay cuts, a forced reduction of work hours or a spouse losing a job. Housing and child-care costs are consuming up to half of a family’s income. We have been witnessing the great erosion of the middle class. It’s got to stop.

A survey of 29 U.S. cities shows hunger has risen in most of them in the last year and is largely expected to increase in 2012, the U.S. Conference of Mayors said on Thursday.

Eighty-six percent of the survey cities reported requests for emergency food aid had increased in the last year, the study by the mayors’ group said.

It’s going to be awhile before we dig ourselves out of this rut. But despite the dysfunctional nature displayed by our federal government, never, ever, bet against America for the long term.

Is That So Crazy?

The need is great. But you already knew that. And whether you like it or not, we are in this boat together. You can avert your eyes, shut yourself off from the suffering of others or you can try to make a difference in a way that only you know how is best.

Instead of solely concentrating on yourself going up the corporate ladder, chasing that elusive thing we call “success’’, consider going down the ladder to help those in need.

I am not asking you to be Mother Teresa. But I am suggesting that while we are here, while we inhabit this very broken world together, let us think of ways to make it better, kinder. Is that so crazy?

While we are here, let’s make the best of it, for all of us.

Merry Christmas, Happy Hanukah, Happy New Year, everyone.

Need a partner in results-oriented site selection? Contact me, Dean Barber, at 972-890-3733 or at dbarber@barberadvisors.com Barber Business Advisors, LLC, is a site selection and economic development consulting firm in Plano, Texas. Please visit our website at www.barberadvisors.com

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Consider the Older Worker

In Uncategorized on December 11, 2011 at 12:49 pm

How, when and if we retire are hugely influenced by the times in which we live. Recessions  have a particularly nasty effect of decreasing our retirement savings, which prompts many of us Baby Boomers to want to work well past the age of 65.

For many Boomers who are saddled with debt and whose savings evaporated during the recent bust, retirement is simply not an option. So we press on with the belief that we will just have to work longer.

Between 2007 and 2010, the number of working Americans over 65 years old jumped 16 percent; while the number of under-65’s in the labor force shrank.

But recessions also mean for weak labor markets, which make work less rewarding and less available. That in turn also encourages older workers to retire. Faced with diminishing job prospects, they simply give up their quest for finding work.

The recent news that unemployment in October dropped from 9 percent to 8.6 should be mitigated by the fact that the decrease reflected a 278,000 gain in employment at the same time 315,000 Americans left the labor force. Left the labor force as in discouraged and stopped looking.

Ray Returns

Not my friend Ray. He is an older worker who gutted it out through an extended period of having no job. But this past week, Ray landed a job installing cabinetry in mobile homes in a plant six miles from his home.

With little education, Ray, 57, had been out of work for two years. His unemployment benefits had expired and the electricity shut off in his isolated cabin for six weeks. His dog, Cecil, didn’t seem to mind and remained happy, but it was gnawing at Ray.

Ray said his new job not only provides him some kind of financial footing, but restores his mental health and sense of dignity.

“You get beat down, depressed, wondering if you are of value to anyone. Even my thinking was getting blurred. I had a tape measure out and was measuring a board, and I couldn’t figure out what I was reading.”

Now Ray is happy along with Cecil.

Ray was in that 43 percentile group of the 13.3 million unemployed Americans that have been out of work for 27 weeks and more. But his nightmare finally ended.

Many workforce experts advocate retraining for unemployed, older workers. That makes a great deal of sense and I would certainly advocate it. But I’m not sure that it is always the right answer for everyone. The fact of the matter is that for many employers, a 55-year-old with a new degree is less attractive than a 25-year-old with the same degree.

If an employer can find somebody younger and cheaper, and there is a glut of them out there, why go with an experienced, more expensive older worker? Actually, there are plenty of reasons, but they are not always so obvious to a short-sighted employer.

The fact is that with age really does come wisdom and valuable experience. At the age of 57, that is the basis for my consulting business. I’ve learned some stuff that can help.

Keepers of the Flame

In the case of manufacturing, older skilled workers – such as those specialists in precision machining and industrial maintenance — are keepers of the flame so to speak, a deep reservoir of technical knowledge to be leveraged.

The scary part is that despite the overall trend for older workers to remain in the workforce, many of these highly skilled workers in manufacturing will nonetheless retire, leaving a skills gap for employers to face.

Of America’s 11 million manufacturing employees, 2.7 million (or 25 percent) are 55 years of age or older and likely to retire in the next 10 years. An October 2009 report by the Manufacturing Institute, Deloitte and Oracle showed that among companies involved in skilled production (machinists, craft workers and technicians), 51 percent reported shortages and saw increased shortages ahead as younger generations ignore the career potential of skilled manufacturing jobs.

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I have to believe that if our nation is going to retain its mojo as a manufacturing giant, we are going to figure out a few things fast. One is to how to better retain or hold onto these older workers’ knowledge longer, offering them perks in some form or fashion, even if on a part-time basis.

The second is to do a better job in building a pipeline for the future in which we can demonstrate to young people that manufacturing is really a pretty good option for a career choice if you only put in the time and hard work to develop the proper and needed skills.

A Trifecta of Challenges.

In January 2010, the Pennsylvania Center for Advanced Manufacturing Careers published a report on the workforce challenges facing Pennsylvania’s advanced manufacturers. The report highlighted a trifecta of workforce realities — rising skill requirements, an aging workforce and the lack of a reliable talent pipeline for new workers.

Taken together, these are obstacles that must be surmounted if the United States is going to remain a competitive force in the global marketplace. By the way, I remain hopeful that we will come up with the needed remedies, as I believe that the undeniable facts are dawning on everyone – business, education, liberals, conservatives, Republicans and Democrats.

It’s clear that our skilled manufacturing workforce has aged steadily over the past decade. An estimated one-third of the Pennsylvania industrial maintenance and precision machining workforce in manufacturing is now over age 50.

Now consider for a moment what these people have learned over time. A master machinist will have experience in CNC and conventional machining of parts from a wide variety of materials, often into very small, intricate shapes. CNC programming entails using CAM software, such as SurfCam, whereas an experienced machinist will know how to operate CNC vertical mills, CNC lathes, Wire EDM, EDM Drill, 4 axis (full contouring A axis) and 5 axis (tilting B with rotary C axes).

Machinists receive blueprints, charts or plans of a specified project and must interpret and visualize what the outcome will look like. They take a drawing and then machine a raw piece of metal to create a working part to meet precise specifications. To say that machinists are very knowledgeable is an understatement.

So let us not let this huge reservoir of knowledge among these older skilled workers go to waste. Some how, some way these people must be utilized to pass along their great knowledge to a new generation.

Are computers the key?

More and more, I am starting to think that computers are or can be the great equalizer for older workers. Over 66 percent of the jobs in the U.S. use computers. To remain employable, baby boomers need to embrace computer skills and technology.

I have a friend who was until recently the president of a large economic development organization. This man is quite talented and savvy in terms of running such an organization and the politics involved. But he is effectively computer illiterate. Email is about all he can handle and even that is a stretch for him.

Maybe my older friend would be more employable if he only had more functional computer skills. I don’t know. I’m not sure I have the answers. (Can you imagine a consultant actually saying such a thing? Well, I just did.)

Manufacturing employers are offering supplemental computer training to older workers in order to keep them on the job longer. They are also starting to focus on a work environment that caters to the needs of these older workers, including flextime where older workers are given more flexibility for leisure time.

In addition, employers are now creating or at least considering a workplace that is more conducive to the needs of older workers in terms of sight, hearing, and making hardware and software applications more accessible to them.

Yes, you can teach old dogs new tricks.

Geezer Startups

Finally, it would be appropriate for me to end this blog on a hopeful note. The fact is that older workers are becoming more entrepreneurial. Self-employment rises significantly with age. (Barber Business Advisors is proof of that.)

West Palm Beach, a retiree haven, also has the highest self-employment rate of any metropolitan area in the nation. Now reading that  raised an eyebrow for me.

Self-employment is particularly natural for older Americans, because it provides so much more control over working hours and conditions.

And may I add self-satisfaction and even fun.

Need a partner in results-oriented site selection? Contact me, Dean Barber, at 972-890-3733 or at dbarber@barberadvisors.com Barber Business Advisors, LLC, is a site selection and economic development consulting firm in Plano, Texas. Please visit our website at www.barberadvisors.com

What Happened to My Sweet Sunny South?

In Uncategorized on December 4, 2011 at 8:26 am

For decades, the South was the place to be for business – a haven from high taxes, labor unions, and stifling regulation.  Indeed, the South – and I am talking more specifically about the Southeast — was booming largely because of its pro-business climate and aggressive economic developers who were willing to play harder.

I liken economic development in the South to SEC football – hard and fast – with the Midwest and Northeast slow and even complacent by comparison. In the South, the overall mindset of economic development is “what will it take to make this deal happen?”

Whereas in the North, it’s been more process driven – “Fill out this 35-page incentive application and we’ll get back to you in two weeks to see if you might qualify.” The West often falls into this same camp or mentality as well.

Now these are generalizations, oversimplifications which are always unfair because there are always exceptions to such blanket statements. Certainly, there are communities nationwide that will go to great lengths to incentivize a project that brings the prospect of future job growth.

But now it would appear the worm has turned. Or at least something has happened. The South, which entered the recession with the lowest unemployment rate in the nation, is now struggling with some of the highest rates, according to recent data  from the Bureau of Labor Statistics.

Indeed, unemployment in the South (9 percent) is now higher than it is in the Northeast (8.1 percent) and the Midwest (8.5 percent), which include Rust Belt states that were struggling even before the recession. According to latest statistics released by the BLS on Nov. 22, of the states with the 10 highest unemployment rates, five are in the Southeast. My initial reaction: Whaddup with that?

Mississippi’s October unemployment rate was 10.6. For South Carolina, it was 10.5 and for North Carolina, it was 10.4. For Florida, the jobless rate was 10.3 and for Georgia, it was 10.2. Now from experience, I can tell you that all these states, with the possible exception of Florida (and that’s changing now) have had very pro-business climates with aggressive state and local economic development organizations well versed in the art of the deal.

So what has happened to my Sweet Sunny South? (Which is the name of a traditional song that dates back to the 1850s.) And that begs another question: Are we seeing a megatrend, some sort of reordering of the nation’s economic fortunes? Will the Great Lakes region, for example, make a comeback while the South revert into a region where growth stagnates?

Well, I am no economist nor do I play one on TV, but I will offer up some ideas for you to chew on.

A recent Brookings analysis found that many auto-producing metropolitan areas in the Great Lakes states are seeing modest gains in manufacturing, while Sun Belt and Western states are still suffering with sharp drops in home values. And therein may provide us with some answers.

We know this much — when factories in the North began shutting down and relocating to non-union states in the South, many people followed. That in-migration of people, and along with the resulting residential and commercial development, characterized economic growth in the South.

Georgia is a prime example of what went wrong fast. Georgia’s pro-business environment coupled with a great climate and aggressive economic development initiatives led many businesses to relocate there. The resultant housing boom propelled Atlanta into the top tiers of national growth.

Many new homes built and sold to first-time buyers, the riskiest group of borrowers. But as the recession kicked in, many of these homes began to lose value, and the first-time buyers, who were carrying higher debt loads and often employed in occupations more exposed to wage cuts and layoffs, found themselves way over the heads. And that’s when the good-times bubble done got popped.

The steady flow of people moving to the South is now sputtering, a sobering experience for those states that counted on more people moving in than out. For it is now becoming increasingly clear that a bad economy tends to keep people in place.

Net population gains from Americans moving to Arizona, Nevada and Florida from other states have been largely wiped out, according to migration data from the IRS. Mobility rates, as high as 20 percent in the 1960s and hovering around 18 percent in the ’80s, have been on a downward slide, hitting a low of 11.8 percent in 2008.

So it would appear that the South has to some degree been a victim of its own success. Will the South rise again? (I’m sorry, I could not resist.) Well, it has to. It has too many things in its favor not to rebound and resume a leadership role in the nation’s economy, despite occasional boneheaded moves by state legislatures that reinforce perceptions of intolerance and racial persecution. Yes, Alabama, I’m referring to you. (See Oct. 30 Barberbiz blog “Let Reason Prevail.”

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But I cannot stress enough how the housing crisis in this country has dampened or thwarted an economic recovery for the nation as a whole.

As housing prices continue to fall, more American borrowers fall into an negative equity position; that is, they owe more on their mortgages than their homes are worth. That negative equity is the single greatest problem facing the housing market today, because it not only creates or causes foreclosures, but it also stymies consumer spending and traps potential home buyers and sellers in place.

Negative equity rose to 28.6 percent of single-family homes with mortgages in the third quarter of this year, according to Zillow. That’s up from 26.8 percent in the second quarter. In real terms, that’s 14.6 million borrowers.

But 14.6 million might be a low number. That’s because it doesn’t factor in “effective” negative equity, which is borrowers who have so little equity in their homes that they cannot afford to move.

Mortgage analyst Mark Hanson contends that over 50 percent of all mortgaged households in the US are now effectively underwater — unable to sell for enough to pay a Realtor and put a down payment on a new purchase without coming out of pocket. And because repeat buyers have always carried the market as the foundation, this is why demand has not come back.

The fact is that today’s buyers are not-only skittish and skeptical, they are under no particular pressure to move the deal ahead. And that has translated throughout the national economy, where caution and fear continues to reign … at kitchen tables and in boardrooms.

But yet there are certain tantelizing hopeful signs that the U.S. economy could grow. Factory output expanded last month. Retailers reported a strong start to holiday sales over the Thanksgiving weekend, consumer confidence surged in November to the highest level since July, and Americans’ pay rose in October by the most in seven months.

Car sales also rose sharply in November, normally a lackluster month for the auto industry, with Chrysler, Ford, Nissan and Hyundai all reporting double-digit gains compared to a year ago.

But the debt crisis in Europe still lingers and coming presidential election in the U.S. make it difficult to predict the level of economic expansion. Michael White, chief executive officer of DirecTV, the largest U.S. satellite-TV provider, told Bloomberg last month that the uncertainty caused DirecTV to “slow our growth rate.”

“We’re tightening our belts in terms of spending,” White said. “We’ll cut back on overhead, hiring and programming.”

The labor market may be gradually healing, as the unemployment rate is edging down. The unemployment rate declined to 8.6 percent from 9 percent. But the decrease reflected a 278,000 gain in employment at the same time 315,000 Americans left the labor force.

“You’d like to see the unemployment rate coming down when people are coming into the job market, not disappearing,” James Glassman, senior economist at JP Morgan Chase & Co. in New York, told Bloomberg. “That’s probably exaggerating the trend in unemployment.”

Well, at this point, we will take what we can get. Any good news, no matter the caveats, should be welcomed. Maybe, just maybe, our long national nightmare is coming to an end.

We can only hope.

Need a partner in results-oriented site selection? Contact me, Dean Barber, at 972-890-3733 or at dbarber@barberadvisors.com  Barber Business Advisors, LLC, is a site selection and economic development consulting firm in Plano, Texas. Please visit our website at www.barberadvisors.com