Heresy: Just How Real is the Skills Gap?

I wish I could claim a good portion of the ideas or concepts that I espouse as my own, as originating with me, but that would be a lie. That would be wrong. Then again, I am a consultant.

But the fact of the matter is that few of us are true trailblazers in the original thought department. Generally, we will take ideas that we hear from others and adopt and modify to our own liking. It’s a shake and bake process for sure.

Some of us don’t even go that far. We merely post links on social media sites such LinkedIn and Twitter when we read something that we think is sufficiently important or interesting. That doesn’t take much thought really. I guess it tells others that we are at least reading.

“Hey, here’s an article about how three-toed sloths could provide a cure for cancer.” Link.

Now I might read that one.

Occasionally, however, I will come up with a novel idea. I am thinking about naming, for purposes of project work only, mind you, different portions of a 700 acre industrial park after the local economic developer’s dogs and cats.

It’s obvious that she loves her animals, so what better way than to refer to that field in the southwest quadrant as “Binky” or “Fred.” It just might make the site certification project that we’re about to embark on a little less intimidating. We’ll see.

Last week, I was in Brunswick, Ga., in my role as the all-knowing, sage-like consultant. The local economic developer, a very talented individual and a friend, had me onstage with another all-knowing site selection consultant who saw the world quite differently from me, which was probably good from the standpoint of our audience. But my friend challenged us to determine what might differentiate his community from that of others.

My message was simple and Yoda-like. “Invest in yourself, Luke. Use the Force.”

The local newspaper never saw the wisdom in that, but they spelled my name right.

Picking Up the Slack

It has been my view for a while now, based on my readings and firsthand interviews, that many more manufacturing companies do not offer in-house training programs as much as they once did.

Part of that is no doubt a cost issue. Set aside training within a manufacturing operation would entail removing people from the production process, which could prove to be very costly.

But it is increasingly clear many manufacturers operate are under the mistaken premise that it is somebody else’s job to train their workforce. That somebody else is typically the local community college, which may or may not be well plugged into the needs of the local business community.

Now please understand that I view any technical school or community college that attempts to meet the needs of its business community as a great asset for that particular community. I have recently run across some very first-rate efforts in Mount Pleasant, Texas, and in Brunswick, where again I spent a few days last week.

In both communities, educators are exposing and offering young people a path toward a career in manufacturing as an alternative to the traditional four-year college degree. In Mount Pleasant, it’s happening at its new Industrial Technology Training Center. In Brunswick, high school students can go to the three-year-old Golden Isle Career Academy, whereas graduates can enroll in the Altamaha Technical College,

This is good stuff. Both Mount Pleasant and Brunswick are investing in their human resources, which can only bear fruit. This is the Force that I was talking about.

This does not, however, abrogate the responsibilities of manufacturers to train their own, despite the good and worthy efforts of economic developers and educators. Manufacturers, too, have to step up to the plate not only with their own in-house efforts but welcome high school educators and guidance counselors within their plant walls to educate the educators about what a modern manufacturing environment is all about.

Even if local manufacturers take such a proactive role in developing a true partnership with local educators, you then still have to ask if classroom curriculum alone will ever be a full substitute for on-the-job, hands-on training. Is it realistic for employers, particularly manufacturers, to expect that a newly hired tech school graduate, or anyone for that matter, to take a new job with no needed ramp-up time?

These are the questions being posed by Peter Cappelli, a professor at the Wharton School of the University of Pennsylvania. Based on my own experiences and what I have discerned to be true on the ground, I think the good professor may be onto something, as it is apparent to me that many manufacturers are no longer offering the kind of in-house training that they once did.

And then they lament about not being able to find the right job candidates at a time when there are more unemployed people in this nation than employed in our manufacturing sector.

Crazy Talk, Heresy

Think about that for a moment. Certainly, not everyone should or could go into manufacturing environment for a job. That’s a given. If nothing else, it takes aptitude and desire. But are some employers being irrational about what is expected in terms of skill sets if they are not willing to bite the bullet in terms of training? In other words, and I know this is heresy what I am about to suggest, but could some of this “skills gap,” which we hear so much about, actually be contrived? Could some employers be contributing to the problem?

Cappelli: “If employers really are willing to leave a position open for months and months while they keep searching, rather than spend a week or so training somebody, or, just give them a week or so of ramp-up time, they’re doing something wrong.”

Last month, I wrote about Bison Gear, a Chicago-area-based company that invests in its human resources knowing there will be beneficial payback down the line in terms of productivity and quality. See link: https://deanbarber.wordpress.com/2012/05/06/a-company-that-gets-it/

I was very pleased and gratified to tell that story. But I could not help but wonder if Bison Gear might be the exception to the rule. I’m not sure. I just don’t know. I wish I did. Did you hear that? A consultant who said he did not know. You may want to underline that.

Death by Software

In his writings for the The Wall Street Journal and in his new book called “Why Good People Can’t Get Jobs,” Cappelli also suggests that application tracking software that many companies employ could be contributing to the problem.

“For every story about an employer who can’t find qualified applicants, there’s a counterbalancing tale about an employer with ridiculous hiring requirements,” he told the Journal. In many companies, software has replaced recruiters, he writes, so “applicants rarely talk to anyone, even by email, during the hiring process.”

An HR executive in Philadelphia told Cappelli that as an experiment, he (the HR exec) applied for his own job, only to learn that he was rejected or rather screened out by his company’s application tracking software.

“Most systems, for example, now ask potential applicants what wage they are seeking — and toss out those who put down a figure higher than the employer wants. That’s hardly a skill problem,” Cappelli said. “Meanwhile, applicants are typically assessed almost entirely on prior experience and credentials, and a failure to meet any one of the requirements leads to elimination. One manager told me that in his company 25,000 applicants had applied for a standard engineering job, yet none were rated as qualified.”

Cappelli told me the same story about 25,000 applicants for one job when I interviewed him a few months ago. And no one was qualified? Really? Is that a skills gap or a reality gap?

Mind you, I know that some companies do and will go to great expense and effort to bring in an experienced and qualified skilled technician for their shop floor. Dave Erickson, president of Brunswick-based Haven Integrated Tube Processing Systems, said his company hired a staffing firm to find a precision machinist, who subsequently was located in the Midwest and made the move to Brunswick.

Erickson, who serves as chairman of the Brunswick & Glynn County Development Authority, said such extreme measures were called for because his company was not finding the person with specialized knowledge locally. I’m sure this happens with some frequency nationwide.

We’re Not Germany But …

But for most manufacturers, the trigger can be pulled locally if they are only willing to invest time and money to bring the job candidate along via in-house training. I hesitate to mention Germany, but I will.

Yes, I know we are not Germany, but I think we can learn from Germany and its established manufacturing apprenticeship programs that it continues to nurture. Germany did not sustain the devastating job losses in manufacturing that we did during the first decade of this century. Could there possibly be a correlation? You think?

My message to Brunswick is the same to any community. Invest in yourself. Invest in yourself in terms of human resources and invest in yourself in terms of infrastructure. You do this and you are building a better business climate. You are building a future for the next generation.

While the message is simple, the doing is not. The doing is always the hard part. Which is why Yoda flew back home to Texas.

Dean Barber is the principal/owner of Barber Business Advisors, LLC., a site selection and economic development consulting firm based in Plano, Texas. He can be reached at 972-767-9518 or at dbarber@barberadvisors.com Please visit our website at www.barberadvisors.com

Right on the Chin: Decimated Wealth for the Middle Class

I don’t think it is a stretch to believe that there is a link between the historic bloodletting that our manufacturing sector suffered during the first decade of this century and what has been an erosion of the American middle class. I think the two go hand in hand.

Back in April, I wrote about how manufacturing in this country was decimated with the loss of 5.5 million jobs between 2000 and 2010, with an average of 15 manufacturing plants a day closing. (See April 15 blog: A Kick in the Gut: What Really Happened to American Manufacturing — https://deanbarber.wordpress.com/2012/04/15/a-kick-in-the-gut-what-really-happened-with-american-manufacturing/ )

Mind you, manufacturing has made relatively small gains in the past two years in terms of job growth in comparison to what has been lost, and the United States still retains the largest manufacturing sector in the world, but, boy howdy, we have taken it on the chin as has our middle class.

American families’ median net worth fell dramatically between 2007 and 2010, plummeting nearly 40 percent to levels last seen in the early 1990s, according to a report last week by the Federal Reserve.

In its Survey of Consumer Finances, the Fed said the median net worth dropped from $126,000 in 2007 to $77,300 in 2010.

“Although declines in the values of financial assets or business were important factors for some families, the decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices,” the Fed report stated.

As the Washington Post so adeptly put it, “Over a span of three years, Americans watched progress that took almost a generation to accumulate evaporate. The promise of retirement built on the inevitable rise of the stock market proved illusory for most. Home ownership, once heralded as a pathway to wealth, became an albatross.”

I think that pretty well sums it up.

But I would submit that the collapse in housing prices aided and abetted an overall collapse in consumer demand, which largely drives our economy, with the resulting recession and the continued funk that we still find ourselves in. Across America, in the boardrooms of corporate suites and at kitchen tables, there is a nagging uncertainty that is still hanging with us.

And uncertainty is never a friend of capital investment, as I tell my friends in economic development. And it never drives consumer spending.

The wounds of the recession, which history will show was a cataclysmic collapse, have not healed for many families. Indeed, the recession has not ended for millions of Americans who remain unemployed or underemployed. They are still coping in what has been a halting recovery at best.

The middle class, that vast sea which moves consumer demand, has struggled to reverse the damage, while the wealthiest families saw their median net worth actually rise. Without trying to demonize or put to any sort of spin to this, there has been an increased concentration of wealth in our country. That is just a fact.

Two historians, Walter Schiedel and Steven Friesen, contend that income inequality in America is at levels even higher than those in ancient Rome. They say the top 1 percent of earners in ancient Rome controlled 16 percent of the society’s wealth, whereas the top 1 percent in current day America controls 40 percent of the country’s wealth.

Now I cannot absolutely verify that this is so. I cannot say for certain, as has been reported, that the net worth of the bottom 60 percent of Americans is less than that of the Forbes 400 richest Americans or that the six heirs to Wal-Mart had the same net worth in 2007 as the bottom 30 percent of Americans.

But if this is even half true (I think there are more half truths lurking about in this world than 100 percent truths), I don’t think that bodes well for either our economy or for our democracy for that matter. It is no great revelation that money can have corrupting influence on elections and those who govern us. That Supreme Court decision allowing billionaires to pump untold amounts of money into super PACs certainly didn’t help.

Now please understand that I did not go tenting along the old campground with the scruffy Occupy Wall Street crowd, even if I am capable of looking scruffy myself at times. But I do not dismiss their foundational argument that income inequality is a big problem for our country.

Truly, I am no socialist as I will always believe in market-driven economies, and people building successful businesses and getting rich in the process. If you work hard and chase a vision that takes hold, why shouldn’t you be rewarded as an entrepreneur?  And if you want to live large and flaunt your money, have at it. I truly have no wealth envy of anyone doing their bling bling.

Every man a king, as Huey Long would say.

But I must admit that I have a great admiration for the seemingly humble way that billionaire Warren Buffet lives and carries himself.  Here’s a man that prefers pub food and lives rather modestly in the same house that he bought in Omaha in the 1950s.  I mean, how cool is that?

And truly I don’t believe you can call Buffet, one of the most successful investors in our capitalist system, a leftist wingnut, because he might have the audacity to hold the opinion that he should pay a higher tax rate than say his secretary.

But the despite the huge and growing gap between the bolstered rich and the decimated middle class, both groups are of the increasing same opinion that the United States is heading in the wrong direction economically and won’t recover for another two years at the earliest. That is not class warfare, but rather a shared vision of the future. Whether they blame President Obama, well, that’s a whole another question.

Despite the fact that the recession was supposed to have officially ended in June 2009, 39 percent think the downturn won’t end until 2014 or later and 15 percent say the recession will never end.  Those are the findings of an April 2012 report called the Mendelsohn Affluent Barometer and as reported by CNBC.

This underlying pessimism does nothing to bolster consumer confidence, which in the end is the big driver for how the economy goes. The fact is that demand worldwide is softening, even in China. And if Europe tanks, as it very well could, it may be a very long haul for the middle class regaining wealth and stability.

To that end, Europe really could be Barack Obama’s Waterloo. I am not predicting that yet. I’m just saying that Europe may hold the key to whether the world economy will grow or languish. Frankly, I’m not sure the whole Eurozone concept can work as it is currently structured.

With no constitution that bounds them together, but rather something more akin to an articles of confederation, the bonds that keep these diverse 17 nations together seem to get weaker every day.

And the truth is that there’s really not much we – our government – can do to influence events as they unfold over there. We can only watch this train wreck happen or be averted, the consequences having huge ramifications on our lives over here.

Already the consumer is pulling back as retail sales in May showed a second consecutive month of decline. Eight of 13 major retail categories showed sales declines last month, according to the Commerce Department.

Now you would think that the recent uptick in factory employment and a return of some production to the U.S. from abroad would help retail sales. But that has largely not been the case because sluggish wages are squeezing workers’ incomes and spending.

Manufacturing workers averaged pay of $19.15 per hour in the U.S. in April, 3.2 percent below their peak in March 2009 and back to where they were, adjusted for inflation, in 2000. The fact is that wages for many manufacturing workers aren’t keeping up with inflation.

The Employment Cost Index shows that manufacturer’s labor costs were 2.7 percent lower in the first quarter of 2012 than in 2005, adjusted for inflation. If wage stagnation has been the story for U.S.  manufacturing, that has not been the case for China and Mexico, which may play a contributing role as to why some re-shoring has and will take place.

And while the absence of wage growth may make some manufacturers more likely to hire, it is not a trend that will necessarily encourage young people, most of whom are already skeptical of manufacturing as a viable career choice, to enter the ranks of the factory employed.

And it is somewhat ironic and puzzling that many older (and more experienced and knowledgeable) workers have been purposely shown the door by many companies who seek to cut costs by hiring a younger crop at lower wages (when they can find them). That might make sense from an accounting standpoint, but it can come back to haunt you if you are engaged in age discrimination and/or purging your organization of knowledge.

And on today’s plant floor, knowledge is a valuable commodity. Invariably, the most knowledgeable workers are the most experienced. You learn by doing and the more you have done, the more you have learned. It’s called life, the great trial by fire.

Currently, there  more unemployed people in this country than those working in manufacturing. That’s not good. Maybe it’s because I grew in a manufacturing family or have helped manufacturing companies find future plant sites that I have such an affinity for manufacturing.

But I cannot help but believe that our nation’s fate – the fate of our middle class — hinges on the health of our manufacturing sector. It boils down to an investment in human resources, even in the worst of times or maybe especially in the worst of times.

It was the best of times, it was the worst of times. Now where have I heard that before?

Dean Barber is the principal/owner of Barber Business Advisors, LLC., a site selection and economic development consulting firm based in Plano, Texas. He can be reached at 972-767-9518 or at dbarber@barberadvisors.com Please visit our website at www.barberadvisors.com

Watching a Europe on the Brink

You know the old saying that there are few certainties in life except for death and taxes. But we live in a time of particular trepidation – just when it seemed like business conditions were improving and sustained growth was possible, a string of bad economic news of late has us pondering the future with a more dim view.

Mind you, there has been good news – the automotive industry in the United States has made a nice comeback and there are indications that our housing market may finally be firming up.

But the dark clouds never seem to fully subside, creating an aura of uncertainty in the minds of business leaders, who even at the beginning of the year foresaw an improving revenue picture but not a corresponding move to hire more people.

I have purposely avoided writing much about the European debt crisis, largely because it has dragged on and on with little resolve. But now I think there is good cause to pay attention to what is happening over there, as it can and probably will come back and bite us over here.

Economists are debating the degree to which the slowdown is temporary or a reflection of fundamental economic weakness. In short, they don’t really know, which means CEOs in boardrooms don’t really know, which translates into uncertainty. All I know is that uncertainty is never the friend of capital investment.

And that was the message that I tried to convey this past week to Oklahoma Southeast, a nice and hospitable group of economic developers from that region of the state. I was among a group of site selection consultants who were invited to spend time on the Choctaw Nation. It was a very pleasing affair and I learned much about the region.

One of the highlights of my visit was a round-table discussion (minus the round table) in which the economic developers wanted to hear the consultants’ take on trends and the future.

Afterward, I felt a bit guilty, because I was the only consultant to use the “R” word, suggesting that what happens in Europe, possibly in the next few weeks, could dictate whether we have any sort of growth or lapse into another extended period of stagnation and pain. (I also lamented the trend of manufacturers abandoning in-house training in favor of farming it out solely to community colleges.)

Most of my remarks concentrated on the big picture, as I left the suggestions at the micro level to the other consultants. I mean, how many times and different ways can you say be responsive to requests for information and build a good website? Closer to the ground, I told the locals to concentrate their efforts on helping their existing industry, as that is where the jobs are and it would be unlikely they would be recruiting much in the near term.

None of the other consultants threw anything at me, which was nice.

But the fact of the matter is that while I remain bullish on the future of the United States for the long-haul, I believe that we are in for a bumpy ride for the next several years. Furthermore, I see no convincing evidence that a re-shoring trend will create a manufacturing renaissance with millions of more jobs created. Certainly, there will be some re-shoring and resulting job creation, but it will not be the tidal wave as some pundits predict.

That is not to say that we should not try to do our best to develop a national strategy to help our domestic manufacturing sector. Manufacturing, more so than any other sector, is key to building and sustaining wealth and stability in this country for a wide variety of reasons. I won’t go into all those reasons here and now, because I have bored you in past blogs by doing so.

But I do want to go back to Europe for a moment or the Eurozone, if you want to talk like an economist or an all-knowing consultant. (Kids don’t try this at home.)

President Lyndon Johnson could not fathom how a “damn pissant little country” – his reference to Vietnam – could prevail over the most powerful country in the world. Well, we all know how that turned out.

I will not refer to Greece in such demeaning terms, but you still have to wonder how this country, never a source of economic weight in our times, could have such a massive effect on the health of a global economy. But apparently some postulate that how goes Greece could have a huge influence on how goes Spain and Portugal and Italy, where bankers are increasingly nervous about their level of debts and a psychology that can produce a run on the banks.

Spain is the latest and greatest firestorm. A bailout for Spain, reeling from a recession and the bursting of a property bubble, may dwarf previous rescues. So far, European governments (mostly Germany) and the International Monetary Fund have made 386 billion euros in loan pledges to Greece, Ireland and Portugal.

But Spain’s economy is more than twice the size of those three countries combined. Spain may receive as much as 100 billion euros ($126 billion) in a rescue of its banks, according to El Mundo, the largest digital newspaper in that country. David Mackie, an economist with JPMorgan Chase & Co., says aid for the Spanish government and banks could total 350 billion euros.

Spain’s intention to request external financial assistance is “the most significant and alarming development in the two-year-old eurozone crisis,” said Nicholas Spiro, managing director of Spiro Strategy in emailed comments.

“One of the two southern European economies that matter most to the future of the eurozone, and the bloc’s fourth-largest, is no longer capable of managing its own financial affairs. Two years after Greece went bankrupt, Spain is now flirting with insolvency,” he said.

In my book, flirting with insolvency means flirting with recession in Europe, which could mean a global slowdown in demand.

Of course, this is all too important to us because we sell stuff to Europe. When the economies there sputter, it means less demand for our manufactured exports, which have been a key driver to our economic growth, will also sputter.

U.S. exports to the 27-nation European Union fell 11.1 percent in April to $22.3 billion, but for the first four months of 2012 were 3.5 percent above the same period last year. The EU was the United States’ second-largest export market last year.

Already, some American companies are feeling the adverse effects of the European debt debacle. Ford will likely lose between $500 million and $600 million in Europe alone this year, according to Thomson Reuters,

“I think we’re going to see a focus, again, on the macro-economic picture,” Brian Lazorishak, portfolio manager with Chase Investment Counsel, told MarketWatch. “There’s some U.S. economic data coming out. Everybody’s also on hold, waiting for the next shoe to drop in Europe.”

And that’s the message that I wanted to convey to my economic development friends in Oklahoma – that corporate America is largely on hold, waiting for clearer signs on what the future holds on the world stage. I think it explains why U.S. employers added just 69,000 jobs in May, the fewest in a year and the third straight month of weak job growth.

With the backdrop of Europe teetering on the edge of recession, at home, American companies are unsure of what Congress will do, if anything, about taxes and spending in coming months. And this uncertainly will mean that most companies will simply sit on their hands.

From the standpoint of business, this goes beyond the fundamentals, but becomes a crisis in confidence. Corporate America sees Washington as a broken and removed place, incapable of making the hard decisions that must be made. For some, the ultimate blame for the dysfunction lies with the White House. For others, it is highly-partisan, do-nothing Congress at fault.

I think it is becoming increasingly clear that if the presidential election boils down to a referendum on the economy, President Obama may very well be vulnerable. That is not partisan politics talking, but merely an observation from this writer on how this election may be decided. If the voters take the viewpoint of a baseball manager, they just might yank their starting pitcher from the mound in favor of a reliever.

The yes-we-can expectations in 2008, particularly with the independents who so often decide such elections, may have run the course of no he didn’t in 2012. Whether that is a fair assessment or not depends on your point of view. Certainly the Republican Party has veered far to the right from where it once was, despite the fact that Mitt Romney is no deep-down right winger.

I’ll not attempt to persuade or dissuade you on the left, right or middle on presidential politics because A) you can make up your own mind regardless of anything I say and B) I still might be in the undecided camp. I can say that whichever candidate is elected, neither pose a danger to the fate of the republic. Indeed, both men are moderate in temperament and have a depth of analytical intelligence, despite their sometimes sordid attempts to placate their bases.

But essentially it comes down to this: President Obama has to explain to voters what’s gone right these past four years if he is to get another four years in office. And he must contrast his views to that of Romney.

But if it comes down to a referendum on the economy, Romney, the technocrat, likely wins. If it is a referendum on contrasting ideas, Obama, the professor, likely wins. It would appear that Wall Street money, which backed Obama in the last election, will favor Romney.

And as odd as it might seem, what plays out in Europe and how that affects our economy may determine who the next president may be. Those are things that are largely outside the hands of both men. Like us, they can only sit back and watch.

And pray. That is something that the good folks do in Southeast Oklahoma. Maybe they should try that in Germany.

Dean Barber is the principal/owner of Barber Business Advisors, LLC., a site selection and economic development consulting firm based in Plano, Texas. He can be reached at 972-767-9518 or at dbarber@barberadvisors.com Please visit our website at www.barberadvisors.com

I Saw the Light

Ah yes, springtime in Deutschland.  There has been an early harvest of white asparagus and we all know how the Germans love their spargel. They have turned their vaunted vegetable – “white gold” as some call it — into a cult product, far superior to common English green asparagus.

And this year’s bounty harvest is the result of more sunny days. Now who would have thought of Germany as a sunny place? In more ways than one, sunny is not my idea of Germany. Domination, yes. Sunny, no.

But for the very same reason that Germans were able to purchase their vaunted “vegetable of kings” earlier this year, German solar power plants were able to set a world record in late May, producing 22 gigawatts of electricity per hour and meeting nearly 50 percent of the nation’s mid-day needs.

That amount of energy is equivalent to 20 nuclear power stations at full capacity. As the famed nuclear physicist Gomer Pyle would say, “Shazam.”

Not so long ago, I will admit that I wasn’t giving solar power its due. Back in September, I wrote about the spectacular failure of Solyndra and how the federal government made a large bet on a losing horse. See Sept. 18, 2011 blog, “Solar, It’s Been Good to Know You” — https://deanbarber.wordpress.com/2011/09/18/solar-it%e2%80%99s-been-good-to-know-you/

To me, solar power was something to be explored, to keep an eye on, but nothing to bet the farm on. In short, I did not take it that seriously. But keep in mind, dear reader, that I once was lost, but now I’m found, was blind but now I see.

My epiphany came just this past week in researching and writing about how our military is engaging in long-term purchase power agreements with private developers who are in the process of building ground-based solar farms on military installations across the country.

As you are all quite anxious to learn and impress others with your cutting-edge knowledge, here is the link to the story that appeared in Site Selection magazine —http://www.siteselection.com/theEnergyReport/2012/may/solar.cfm

That story, in a nutshell, says that our military is pretty gung-ho about solar energy to the degree that the Army, Air Force and Navy have each committed to implementing 1 gigawatt of renewables by 2025 at the latest.

Indeed, our military has a history of taking on new technologies which eventually find their way into the commercial market. You can now go to your local sporting goods store and buy night vision devices that permit you to break all sorts of hunting laws if you so choose.

But I digress. The question before us is why would our military choose to invest in solar technology?

Well, for a number of reasons. First, the technology, which continues to improve, is pretty much already proven. Germany, which has nearly as much installed solar power generation capacity as the rest of the world combined, shows us that it works, albeit there have been government price supports to the tune of $5 billion a year to make it work.

Closer to home, the Department of Defense has also been utilizing solar for years now. A solar farm at Nellis Air Force Base spans over 140 acres and is the largest solar photovoltaic system in North America. Built in 2007, it generates 14 megawatts and saves the base about $1 million a year.

What’s more, the price of photovoltaic panels keeps falling, partly because of technological advances but also because of the wascally Chinese, as Elmer Fudd would call them, who will gladly flood your country with lower-cost solar panels that are essentially made in sweat shops.

A preliminary decision by the U.S. Commerce Department last month indicates there will likely be tariffs of as much as 25 percent on imports of Chinese solar cells. The agency said Chinese made panels were being sold for less than the cost of production in an attempt to drive out domestic competition.

If that is the truly the goal, it appears to be working.  At least four U.S. solar manufacturers filed for bankruptcy in the past year even as federal subsidies helped build an $8.4 billion U.S. solar market. It is interesting to note that the Chinese have filed their own complaint with the World Trade Organization, claiming that renewable-energy subsidies in five U.S. states violate free-trade rules. Stay tuned as we might be seeing a trade war in the making.

Still, the long-term trend of the falling prices for PV panels continues and should mean that in the not so distant future, solar can and will achieve what experts call “grid parity,” meaning that the generated cost of electricity from solar will eventually rival that of coal and natural gas and without any subsidies.

Business research group GlobalData says that some solar PV projects could reach grid parity in the United States by 2014, while most regions in the country are expected to reach grid parity in alignment with average electricity prices in the residential sector by 2017.

So if we’re not there yet, we’re getting very close, and again, without any government subsidies. If the experts are right and if and when this happens, solar energy will finally come of age and get its due respect.

But here is why the military is so important. Solar industry executives get a bit touchy when you suggest, as I did, that these recent long-term power purchase agreements with the DoD installations gives their industry “credibility.”

They would argue that they already have credibility with proven and reliable technology. But push them a little more, and they will agree that these large military contracts of late will serve an important role in the growth of their industry.

“Military contracts represent a relatively small percentage of our overall business today, but if you look at what the military has planned for use of renewables as part of their electric consumption plan – to that end, I think we are going to see a very strong demand from the military which will sustain the growth of our industry,” said Raju Yenamandra, vice president of sales and business development at Solar World, the largest U.S. solar panel manufacturer.

Keep in mind that the Department of Defense spends nearly $4 billion a year to provide power to  300,000 buildings or 2.2 billion square feet of space on more than 500 installations. The goal to be “net zero,” consuming only as much energy as they generate. In the coming years, that will mean billions of dollars spent on solar.

So again, why is that important? One is pure economics, saving money. These long-term purchase agreements with private developers that are building ground-based solar installations on military bases are designed to save the DoD money. Twenty year agreements have already been signed, but new rules permit the term to be extended to 30 years.

Essentially the government puts up no money. The developers build the solar farms and even pay the DoD rent to use the land on military reservations. In turn, the military branch signs up to buy the generated power over a long term, thereby saving money. According to the solar industry, the numbers have to work before the government bites, but the fact remains that these contracts are being negotiated.

But besides the financials,  there are also issues of national security to be considered. The Center for Naval Analysis’ Military Advisory Board has called for “immediate, swift and aggressive action” over the next decade to reduce U.S. oil consumption 30 percent in the next 10 years, stating that U.S. dependence on oil constitutes a significant threat to our country.

Let’s face it, we are importing much of this dirty oil from countries that really don’t like us or have our best interests at heart. Because of our dependence on their oil, they can and have put the screws to us.

Wouldn’t it be grand if we didn’t give them any money? Boone Pickens thinks so, and for that reason he is pushing a plentiful and cheap resource of our own, natural gas. But that’s another story for another time. As I have written in the past, I am very bullish about our future with natural gas, but I’m also becoming a fan of solar. I have seen the light.

Creating military bases as “energy islands” make sense should this country ever fall under some sort of terroristic attack, but it also serves a function by ensuring reliable and continuous energy use for command and control purposes. You don’t want to lose power in the middle of a military operation that you are essentially directing from a U.S. military base. That could prove disastrous.

Being able to operate off the more vulnerable and fragile public grid gives the DoD added security measure that could ultimately save lives.

For Jonathan Gensler, the move to solar has become very personal. A West Point graduate, he served as a captain in a tank platoon in Iraq, where two close friends were killed by roadside bombs.

Gensler, who now works as a project developer at the solar financier and integrator Borrego Solar, said the Army’s heavy dependence on foreign oil was essentially aiding and abetting the enemy.

I think he might be onto something. You cannot tell me that some petro-dollars haven’t made their way to terrorist organizations that want do a jihad number of us. And more alternative energy resources in the field of operations will mean fewer vulnerable fuel-laden convoys on the roads as military outposts are now typically powered by diesel generators.

“Taking fuel trucks off the road will saves lives,” Gensler said.

That is also the view of Maj. General Anthony Jackson, who spoke at a Pew Charitable Trusts forum at Stanford University last year.

“I know the cost of oil. I know it up close and personal. If you have never seen the mixture of blood and sand, it’s a harsh purple on the desert floor,” Jackson said.

“There is an urgent need for our nation to lead the world in renewables and conservation and getting a grip on the strategic vice that one three letter word has around our neck. For every 50 trucks we put on the road, someone is killed or loses a limb.”

If we can somehow break our dependence on foreign, dirty oil, that has to be in the long-term best interest of our country. Boone Pickens believes that. And now Army officers are saying the same thing.

If solar can help us break that dependence, be only a small part of solving the puzzle, and thereby reach grid parity with subsidies no longer being needed, well, I say let’s have at it. Let’s make this thing work.

Dean Barber is the principal/owner of Barber Business Advisors, LLC., a site selection and economic development consulting firm based in Plano, Texas. He can be reached at 972-767-9518 or at dbarber@barberadvisors.com Please visit our website at www.barberadvisors.com