Dean Barber

Archive for December, 2013|Monthly archive page

Walking the Walk: How Vo-Tech Ed Saved a Town

In Economic Development, Places on December 15, 2013 at 6:45 am

GADSDEN, Ala. — Not long ago, an industrial “prospect” walked into the Alabama Technology Network Center on the campus at Gadsden State Community College.

This community in northeast Alabama had made the short list of finalist communities for a site search, but the manufacturing executive was still not so sure if his company’s workforce needs could be met here.

Upon entering the building, he immediately saw students programming robots through large windows at the first room to his right, “Hmmm, now that’s interesting,” he said.

At the very next room, still in the entrance foyer, the industry exec peered into another window to see a process control lab. He did a double take and walked inside. “These are the very same process controls that we use in our plants,” he said.

Bingo.

“All of a sudden, he wasn’t concerned any more as to our ability to meet his workforce needs,” said Mike McCain, executive director of the Gadsden-Etowah County Industrial Development Authority.

And this all took place just moments before the industry exec was to go into a meeting with local educators who had wanted to prove to him that the human resources were hand. At that point, he had all the proof he needed.

A Pipeline to Success

I do like the rather old-fashioned phrase of “human resources.” Some people may find the term a bit sterile, but I think it is aptly descriptive. And that is because people are a great resource for just about any business enterprise in any industry, especially so in today’s globalized, competitive environment.

In short, people can be your ace. In terms of site selection and/or location analysis, my primary consulting service to corporate clients, I not only look for an existing talent base – people who are more than capable of doing the work — but also a pipeline for future talent to sustain business operations.

I witnessed that future pipeline at work just across town from Gadsden State at the Etowah County Career Technical Center. There, more than 400 high school students from the county school system are enrolled to learn practical, technical, and useful skills  for when they are in the job market.

“My job is to provide opportunities,” said Mark Stancil, director of the center.

These Kids Are BEST

And let me tell you, I saw a motivated bunch of very bright kids, which gave me hope as to the future of our country.

In one classroom, I met a group of boys and girls who had built a six-axis robot in 42 days so that they could compete in a national competition. It was their first stab at entering the contest, sponsored by BEST Robotics Inc., a nonprofit organization with a mission of exciting students about engineering, science and technology.

Each fall, more than 850 middle and high schools and more than 18,000 students participate in the BEST competition. On a hallway wall facing the robotics classroom door is the proof in the pudding – eight plaques proclaiming “Best Rookie Team,” “First Place, Most Robust Robot,” “First Place, Team Exhibit, Design, and Construction Award,” “Second Place, Most Elegant Robot,” and on and on.

Inside the electronics technology classroom, I met equally motivated teachers and volunteers, industry people who wanted to give their time to these young people to show them the way.

Elbert Engle, the retired president of XYZ Control Inc., a company that specializes in automotive assembly design, spends much of his time at the center as a volunteer mentoring the students on technology.

“I love working with these young people,” he said. “We just hired a young draftsmen out of here and he has been with us for three or four weeks now and he’s about as good as anybody I have ever had.”

You’re Asking Them to What?

Apparently, they start them young here. Gadsden City Schools’ System has an Enrichment Program in which it holds a yearly “Invention Convention” in which it challenges, get this, third, fourth and fifth graders to invent and build some new device and then apply for a patent for their creations. Yes, you read that right.

Their work is then subsequently judged by members of The Chamber of Gadsden and Etowah County.  This coming spring will be the third year of the program, said Chamber President Heather New.

I don’t know about you, but when I was that age, about the only thing I could create, certainly no novel invention, was a somewhat effective spit-ball blowgun. Mind you, it was strictly used in self-defense.

Walking the Walk

But back to Gadsden and Etowah County. What I found most heartening here was just how closely the city and county school systems were working in close harmony with Gadsden State in being responsive to private sector employers. Both systems have private sector advisory boards comprised of local employers.

Most places talk the talk about such matters. But here I was seeing real evidence that they were walking the walk.

Gadsden, with its long tradition of precision metals manufacturing, has a history of pushing the envelope (and its students in the process) on how to better meet industry needs.

The city school system recently initiated a program that will allow certain high school students to take college-level engineering courses at Gadsden State. The dual-enrollment permits select high school students to take an introductory engineering course and a computer-assisted drafting course.

“It really sets those students up well to migrate easily into a lot of technical programs over there at Gadsden State as well as if they decide to go to a four year institution,” said David Asbury, director of technology with the city school system.

He Gets It

I had the pleasure of having lunch at Gadsden State with President William Blow; Tim Green, Dean of Technical Programs; and Gregg Bennett, director of the Alabama Technology Network Center on the GSCC campus.

I met them in the same room at ATN where our aforementioned manufacturing executive was supposed to get his convincing lesson. Also, by the time I met with these gentlemen, I didn’t need a whole lot of convincing by what I had seen already.

“There is an unusual level of cooperation between the city and the county and the college, which make the work here not so hard to do” said Dr. Blow.

“We profess to be a community college as we want to connect and be a part of the community. I think it is safe to say that we are as comprehensive in our offerings in tech ed as any community college in Alabama.

“We want to do everything we can to promote economic development in our community. … I never like to promise more than we can deliver because you have to live with that, but I can promise this – we can deliver a whole lot. If an industry tells us what it needs, we will do our dead level best to deliver. ”

Ladies and gentlemen, this is music to my ears — an academician who gets it.

The Origins and the Challenge

I was in Gadsden last week to consult with the Etowah County Commission regarding my site certification work. But I had been there many times before. When I first visited Gadsden in the late 1980s, I was a business reporter for The Birmingham News, and two of the city’s biggest employers – Goodyear and Gulf States Steel – were making noise of closing. Gadsden was at the brink.

Today, Goodyear remains and is expanding while Gulf States is gone. But the community, which could have gone in a very bad direction, is doing very well in terms of its manufacturing base. Many companies have come here since those dark days.

I believe the primary reason for Gadsden being “saved” was the development of what was called the Bevill Center for Advanced Manufacturing, subsequently to become the ATN center.

The genesis of that was in 1984 when then GSCC President Robert Howard came up with the idea of starting a center that would staffed by industrial technologists with factory experience as well as strong academic credentials.

The mission would be to provide applied engineering assistance and training in advanced manufacturing technologies to local existing industries and facilitate in the attraction of new industries. Howard’s concept was that this needed to be a joint venture between Gadsden State Community College, the city of Gadsden, and the University of Alabama.

Mike McCain was the assistant director and chief of staff at the Alabama Development Office in 1984. And the mayor of Gadsden sent him a copy of the proposal and asked, “What do you think about this?”

“I spent all night long reading it and said, ‘You got to do this. This is going to save Gadsden,’” said McCain.

The very next year, 1985, McCain would be recruited to Gadsden to start the Gadsden-Etowah Industrial Development Authority.

The Bevill Center at GCSS would start operations in 1987 and would subsequently become one of five centers in Alabama with the inauguration of a Centers of Technical Excellence program in 1993.

Its namesake, the late Tom Bevill, a Democratic 15-term U.S. congressman from Alabama, told the Gadsden Times this at the time:

“We’re not gambling here, we know it works, we know it can be done.”

And so it was, to the benefit of students and industry alike. And it’s clear that this legacy of vocational education and technical training remains in force today in this community where manufacturing remains king.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm based in Plano, Texas. If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help. All requests for information are considered confidential.

© Unauthorized use of this blog is strictly prohibited. Excerpts and links may be used, but only if expressed permission has been granted.

Waiting for the Rising Tide

In Economic Development on December 8, 2013 at 5:56 am

About five years ago, I was visiting a small, rather isolated town in the Deep South, and was somewhat surprised to learn that one of their primary goals was to land a fast food restaurant.

Never mind that such an enterprise would be paying close to minimum wage. This was something that was desired because it would generate at least a modicum of commerce (and sales tax) in a community that was pretty dead.

A few years prior to that, I remember being in a major city in the Deep South that was providing property tax abatements to fast food franchises that would build and open at new locations. Leave it to say, I thought that was a rather curious move.

As a former economic developer and now a consultant focusing on corporate site selection and ED work, I hearken to a quote from President John F. Kennedy.

“No American is ever made better off by pulling a fellow American down, and every American is made better off whenever any one of us is made better off. A rising tide raises all boats.”

To me, that notion of a rising tide raising all boats is the perfect metaphor for economic development. And yet so often, I find that economic developers will stress the lower-wage aspect of their communities. But is that really your best measure for how you want to compete for capital investment?

The Good and the Bad

Make no mistake about it, the U.S. job market is improving. We added 203,000 jobs in November, and the unemployment rate fell to a five year low. That’s the good news. But I would be remiss if I did not tell you the bad news, which has been the real mega-trend. And that is that much of America’s middle-class jobs have been replaced by low-wage jobs coming out of this Great Recession.

Economists have been debating why this is so. Some argue that technological innovations are making easily automated jobs less common. These jobs tend to be low to medium-skill, high-paying occupations, such as working on a factory assembly line.  (I have been speaking on this subject for some time now in a presentation that I call “Machines Rising.”)

The result has been growth in occupations that are hard to automate — either menial and low-paying or high-skilled and high-paying. It is the middle then that gets hollowed out, while both the low and top ends grow.

Mid-wage occupations, paying between $13.83 and $21.13 per hour, made up about 60 percent of the job losses during the recession, but only 27 percent of the jobs gained during the recovery. By contrast, low-wage occupations paying less than $13.83 per hour have dominated the recovery, with 58 percent of the job gains since 2010.

A Resurgent Labor Movement?

With this backdrop in mind, it is not surprising that we are seeing a resurgent labor movement, maybe still in its infancy, for a living wage for America’s fast-food and retail workers, who are fed up with poverty wages and lack of basic benefits.

Currently, the average line worker in a fast-food restaurant makes $8.94 an hour, which is more than the federal minimum wage of $7.25 an hour, but not enough to live on, especially given that few of these workers are able to get full-time hours.

On average, workers claim, a fast food employee brings home $10,000 a year, well below the poverty threshold of $11,484. About 26 percent of the people who work in fast food restaurants are parents with children. So they are not the stereotypical high school students flipping burgers any more.

Bloomberg did an interesting story last year in which it reported that a long-time worker at a McDonald’s in Chicago would need about a million hours of work — or more than a century on the clock — to earn the $8.75 million that the company CEO had made in a single year.

So if you are an economic developer, hoping to help your existing industry base expand or recruit new companies to your community, why should this issue of the working poor be a concern to you?

Aside from the moral argument, there is some evidence that a low minimum wage depresses salaries overall and actually makes a local economy more sluggish. What’s more, low-wage fast food workers are far more likely to need help from government programs like food stamps and subsidized housing.

Low wages at the nation’s 10 largest fast-food companies cost taxpayers $3.8 billion per year, because workers have to rely on government assistance to get by, according to a recent study by the National Employment Law Project.

The Walmart Effect

Now let’s talk about Walmart. I shop at Walmart. Please know that I do not hate Walmart, but neither do I see the company as a panacea for prosperity. But I have known of communities that have bent over backwards to get a Walmart.

Walmart’s 2.1 million workers make it the world’s largest private employer, with 1.4 million workers in the U.S. alone, more than the population of Maine. Walmart bested Exxon Mobil as the company with the greatest revenues last year at $443.9 billion worldwide, more than the GDP of Austria. 

But does this a goliath of a company necessarily have a beneficial effect on a community? Or is it like a bombshell going off?

A 2008 study published in the Journal of Economics looked at 3,000 Walmart store openings nationally. The study found, on average, that a store opening resulted in a county-level net decline of 150 jobs, as it forced other businesses to downsize or shutter.

The average Walmart associate earns $8.87 an hour, according to the employment survey site Glassdoor, while the average hourly wage for a retail sales worker in the U.S. in 2010 was $10.09, reports the Bureau of Labor Statistics.

Like their counterparts in the fast food industry, many Walmart workers receive government assistance, like Medicaid and food stamps. A May report from the staff of congressional Democrats found that a single 300-person Walmart store in Wisconsin likely costs taxpayers more than $900,000 a year, or more than $3,000 per employee, and could cost up to $1.7 million a year. Last month, Walmart drew criticism when one of its Ohio stores set up a Thanksgiving food drive for its own workers. 

Clearly, no politician wants to ever utter the “R” word — “redistribution” as it conjures up images of worthy “makers” handing over hard-earned income to undeserving “takers.” Never mind that as low-wage work proliferates, these so-called takers are working as hard if not harder than anyone else.

This is a tough, tough issue and the solutions are far more difficult than the identifying of the problem. But I submit this growing divide that we are seeing among the haves and have nots in this country (The amount of income going to the top 10 percent is the highest in about 100 years and the top 1 percent of U.S. earners collected nearly 20 percent of household income last year.) can pose a threat not only to future economic growth but to our foundational democratic institutions as well.

Pretty serious stuff.

The Pope is No Dope

I’m not a Catholic, but I like this new pope. Pope Francis appears to be quite comfortable in his own skin by saying things that make other people rather uncomfortable.

“Just as the commandment ‘Thou shalt not kill’ sets a clear limit in order to safeguard the value of human life, today we also have to say ‘thou shalt not’ to an economy of exclusion and inequality. Such an economy kills,” the 76-year-old pontiff recently wrote.

I don’t think the pope is condemning wealth per se. Rather, I do think he is condemning the idolatry of wealth and the indifference that it can lead toward the plight of the poor.

“In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world,” Pope Francis wrote.

“This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system.”

You have got to hand it to him, the man is not shy about calling it like he sees it.

Win Some, Lose Some

Finally, we are going to end this blog on a different note because of what I wrote in my last blog and breaking news. In my last blog, I talked about how announced projects can take a nosedive. It happened again this past week in Louisiana.

Royal Dutch Shell has abandoned plans to build a massive $12.5 billion plant in Ascension Parish, near Baton Rouge. The decision comes just two months after Shell selected a site for the plant, which would have would have turned natural gas into liquid fuels and created 740 jobs..

The company said the cost of the plant and the expected profit it could generate made the plant “not a viable option.” Now you would have thought they would have known that back in September when they announced the project to great fanfare.

This is further proof that even some of the biggest companies don’t always think things through, and that the best laid plans of mice and men often go awry.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm based in Plano, Texas. If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help. All requests for information are considered confidential.

© Unauthorized use of this blog is strictly prohibited. Excerpts and links may be used, but only if expressed permission has been granted.