Dean Barber

There’s Something Happening Here

In Corporate Site Selection and Economic Development on November 2, 2014 at 6:15 am

It was nut cutting time. I had to make a decision.

I was to speak the next day at the National Association of Industry Specific Training Directors (NAISTD) at the Cheyenne Mountain Resort in beautiful Colorado Springs, Colo.

These are the good folks who administer the various programs that states offer companies to train both incumbent and new workers. These training programs are typically offered in relation to a capital investment project – either a company expands an existing plant or is establishing new operations.

As an enticement or an incentive, most states offer companies some level of training assistance, especially if there is job creation involved. To people like me, a site selection consultant who helps companies find optimal places from which to operate, these training programs can be of vital importance and a factor to be weighed in the site selection process.

Should I Mention the Chimp?

And I presumed that it is because of my role as the all-knowing, guru-like consultant that I was asked to speak. But I was torn on my subject matter. Should I talk about how important a skilled workforce was for my corporate clients in determining where to set up shop? Well, heck, these were veteran folks working side by side with their state economic development counterparts. They would already know that.

Should I tell them how we use GIS and computational analysis in site selection, after the preliminary phase of having a chimpanzee throw a dart at a map? No, probably not. Too much inside baseball.

I was to be the final speaker on the second day of the three-day conference. I had the benefit of listening to most of the training directors talk about the various training programs that their states offered to companies. In essence, it was a bench marking exercise for them to compare notes and learn from each other.

After hearing their presentations, I came away appreciating the beauty to straightforwardness and simplicity. To be frank, some of the criteria of the programs I heard sounded a bit too complicated.

Like SEC Football

I also found it interesting that of the 18 states represented and presenting at the conference, nine were from the old Confederacy. But from my experience, that is not too surprising.

Generally speaking, and there are exceptions to what I am about to propound, economic development in the Southeast (and you should throw Texas and Oklahoma in the mix, too) is more aggressive and more deal oriented than other parts of the country. I liken it to SEC football – hard and fast.

And not surprisingly, the training programs that caught my eye are those offered in South Carolina, Alabama, Louisiana and Mississippi. Those states commit the dollars and the resources to make training work and don’t require that a company jump through too many hoops in order to access their programs.

South Carolina’s apprenticeship program is of particular interest, to which I will probably write about at some future time. I know that it caught the attention of my friend Ed Castile, director of Alabama Industrial Development Training and this year’s president of NAISTD.

While I listened to these state directors explain their training programs, I thought about what they might want to hear from me. While they may want my feedback about their programs, they were going to get it from other consultants/observers on the third and final day of the conference.

Down to Two Topics

I was weighing two topics about which to speak – both thought provoking and somewhat controversial, as there is disagreement on each. One was this idea of a so-called skills gap, which has become a mantra from industry and to which there is some basis of fact but not a lot.

Indeed, I am of the belief that this is an overblown crisis, and one largely of the making of industry itself. But I ultimately decided that is for another day and another time. (And another blog.)

Instead, I chose to speak about the future of work and how advances in digital technology is both creating and destroying paths by which people will be able to work. In short, there will be winners and losers in a new machine age, where bits and bytes bump into atoms, and weird stuff results.

In order to keep my audience awake, my PowerPoint presentation was replete with interesting if not ridiculous images making the point that “there’s something happening here. What it is ain’t exactly clear.”

A Not So New Disease

In a 1930 essay entitled “Economic Possibilities for our Grandchildren,” John Maynard Keynes wrote of a “new disease” that by which “technological unemployment … due to our discovery of means of economising the use of labour outrunning the pace at which we can find new uses for labour.”

Fast forward to today in which a PlayStation, Xbox or a smartphone is more powerful than a computer that our military would have employed just a generation ago, and you get the idea of the swiftness and the scope of how digital technologies have and are changing our lives.

Computers are ever getting faster and better and have become a game changer in ways that I think we are only now starting to fathom.

Still, a majority of economists continue to argue, as they always have, that by raising productivity, any automation which eliminates the use of labor will increase incomes, which in turn will generate demand for new products and services, which in turn will create new jobs for displaced workers.

Some of that has to happen no doubt, but I cannot but help to think that all is far from well in the world of work. Note that we have been seeing essentially flat wages in rich countries like the United States, Germany and Britain for decades now. Recent research would suggest that this is largely due to the fact that more companies are increasingly substituting capital for labor through automation.

As a result owners of capital have captured ever more of the world’s income since the 1980s, while the share going to labor has fallen.

Also, consider that the proportion of American adults participating in the labor force recently hit its lowest level since 1978. While some of this could be attributed to the aging of the population, former Treasury Secretary Larry Summers believes the trend is also partly due to “capital that effectively substitutes for labor.”

Smarter, Faster Means Fewer Needed

In this digital age that I think we are just now entering, the machines are not just smarter, they also have access to far more data. The combination of big data and smart machines will take over some occupations wholesale and will allow companies to do more with fewer people.

A 2013 paper by Carl Benedikt Frey and Michael Osborne at the University of Oxford contends that jobs are at high risk of being automated in 47 percent of occupational categories. So if this is indeed happening, what does it or should it mean to our training directors and the rest of us? Good question and one that I have been struggling with.

In their book, “The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies,” Erik Brynjolfsson and Andrew McAfee, two MIT professors, write this:

“Technological progress is going to leave behind some people, perhaps even a lot of people, as it races ahead. As we’ll demonstrate, there’s never been a better time to be a worker with special skills or the right education, because these people can use technology to create and capture value.

“However, there’s never been a worse time to be a worker with only ‘ordinary’ skills and abilities to offer, because computers, robots, and other digital technologies are acquiring these skills and abilities at an extraordinary rate.”

My rather lame advice: join (and train for) the special skills club.

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.

If you liked what you saw here, invite me to speak at your next meeting.

© Unauthorized use is prohibited. Excerpts and links may be used with permission.

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  1. Good article today…Ed Castile was a friend when he worked with the state of Tennessee. I doubt he would remember me as the guy from McNairy County but please give him my best.

    Charlie

  2. Thanks Dean,

    In my consulting visits, the skilled labor shortage is a frequent complaint. As you state, that is a direct result of companies not training for their own future. During my early career, we were in the middle of the boondocks, hours away from any trade-schools or universities. The company created its own apprenticeship program for machine set-up, maintenance technicians and toolmakers. As a result we were able to sustain our growth and spun off a few companies in the process.

    Bob

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