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VOL. 9 | NO. 14 | Saturday, April 2, 2016

Statewide Demand Outstrips Supply of Qualified Workers


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Tennessee is surging as a major manufacturing state, bouncing back from the Great Recession by attracting billions of dollars in new investment and creating thousands of new – and often very high-paying – advanced manufacturing jobs.

But the news isn’t all good: Finding people to fill the promising new jobs, many of which start at $50,000 and increase as workers gain experience, is an uphill battle.

Keeping up with the growth of technology in the manufacturing sector is crucial and may require workers to go back to school in the future to keep up with fields such as robotics, hydraulics, mechatronics and electronics.

“Our challenge is to continually to improve our skills and our education at the same rapid rate the technology is advancing,’’ explains Randy Boyd, Tennessee Commissioner of Economic and Community Development.

“We recently released a report that shows that 50 percent of our workers have a 70 percent chance or greater of their jobs being replaced by technology.’’

Another roadblock, Boyd says, is public misunderstanding of working in manufacturing.

“Unfortunately, too many people think of manufacturing work as dirty and dangerous or something that people do when they are not successful. We have to work very hard to change that perception.’’

Skills gap

The current emphasis is getting today’s students to pursue the education that leads to manufacturing jobs.

The majority of jobs in the advanced manufacturing category require higher-level training and more technical skills than the typical factory jobs of the past – from one-year trade school certificates to two-year community college degrees and even four-year engineering degrees.

“There’s a shortage of skilled workers in many parts of our state and [of] certain skills in all parts of our state,” Boyd says.

“We have to recruit a lot more students and make sure we’re aligning the schools with the manufacturers so that we can meet their market needs.”

Christopher Peetz

“We absolutely feel the skills gap,” explains Christopher Peetz, chief operating officer of the Carlstar Group, a leading producer of specialty tires and wheels with factories in Clinton and Jackson.

“I probably spend 20-25 percent of my time identifying and trying to recruit top talent. We’ve had to work very hard at continually recruiting from adjacent industries, from experts in a specific or particular field, from competitors.”

The Carlstar Group employs about 3,400 worldwide, including 900 in Tennessee. The company relocated its global headquarters from Charlotte, North Carolina, to Franklin five years ago, in part, because of Tennessee’s positive manufacturing culture, Peetz says.

“We’ve invested over $50 million in the past five years with our new plant startups and recapitalization, expansion and new product development,” Peetz adds. “We’ll continue to invest as the business needs demand it. We really do appreciate all the state is doing for advanced manufacturing industries.”

Mark Lenz, director of the Tennessee College of Applied Technology in Nashville, says manufacturing jobs suffer from an image problem.

“There’s this outdated idea of manufacturing jobs being at companies that are terrible places to work,” Lenz says.

“We are long past Industrial Revolution types of jobs, which bring up images of back-breaking work and factories full of rats. It’s just not like that anymore.

“Advanced manufacturing jobs have to do with robotics, hydraulics and electronics,” Lenz adds “These jobs are a lot of fun. Many of them are like something out of science fiction.

“They definitely aren’t mom and dad’s or your grandparent’s factory jobs.”

Lenz says TCAT Nashville advanced manufacturing graduates have a 95 percent placement rate with employers. (TCAT Nashville is one of the 27 Colleges of Applied Technology in the state providing occupational and workforce development training to Tennessee residents.)

“I have students who graduated three years ago who are pulling in $70,000 a year with a one-year certificate,” he notes.

“What’s going on in this state right now is miraculous. I just wish more people were taking advantage of it.”

Ray Curry

United Auto Workers Region 8 Director Ray Curry, who is based in Middle Tennessee, sees advanced manufacturing as a boon for union activity in the state. That’s despite the fact that Tennessee is a right-to-work state with a history of union resistance, especially at the governmental and corporate levels.

“I actually see a great potential for growth because of advanced manufacturing,” Curry says. “We are partners in a lot of advanced manufacturing and technology jobs. We have apprenticeship programs that lead to journeyman certification.

“Tennessee is going to continue to be a big player in our regional automotive corridor,” Curry adds. “As companies expand with new products and future components, I believe you’ll see union representation increase. A number of manufacturing locations will seek out UAW as a long-term partner.

“We see these jobs as reducing long-term injuries that workers often face when they are involved in a job as repetitive as component or automobile manufacturing.

“They are seen as better and safer jobs by bargaining unions.”

25,837 new jobs

Randy Boyd

Commissioner Boyd is one of the main evangelists for the growth of advanced manufacturing in the state.

The Ledger spoke with him about the Tennessee’s progress as an advanced manufacturing mecca, and its push to train a highly skilled workforce.

The Economic and Community Development Department spends a lot of time touting Tennessee’s manufacturing power. Can you give an overview of the sector and talk about why it’s such a big deal for the state?

“You sell what you are good at. Companies from around the world that are looking to expand or set up manufacturing within the United States are looking at Tennessee. Last year we set a new record of the most new jobs in our state’s history – 25,837 and $5.5 billion in new capital projects.

“Gestamp, a company that does metal stamping to support Volkswagen, announced a $180 million expansion and the creation of 500 new jobs in Hamilton County.

“In Knoxville, we had Lifetime Products, which manufactures outdoor furniture and kayaks, invest $115 million and create 500 jobs. Schwan Cosmetics, the No. 1 eyeliner pencil company in the world, opened a $40 million U.S. headquarters in Murfreesboro and that brings 350 jobs.

“There’s just so many: Nissan announced a $160 million expansion creating 1,000 new jobs in Smyrna. Of the 25,837 jobs provided 77 percent were companies that were already here.

“We are essentially in the middle of the eastern seaboard and it’s a huge advantage. We also have great infrastructure – great rails, roads, waterways.

“We have the largest cargo hub in the North America and the second largest in the world in FedEx.

“In East Tennessee, Oak Ridge National Laboratories is a huge draw for people looking to be close to research around advanced materials.

“For example, they are doing great research in carbon fiber. A lot of companies we talk to want to be close to that kind of technology.”

Tennessee has for several years in a row been named the No. 1 state in the nation in both automotive manufacturing strength and education. Is there a danger of us getting overextended in that one sector?

“No doubt about it, auto manufacturing is a real strength of ours. We are trying to build on that strength, but at the same time we’re trying to diversify.

“Some of the same skills that are required for automobile manufacturing are the same required in aerospace and defense, so we are looking at expanding those industries aggressively.

“Another big category in which Tennessee excels is food.

“We have some of the largest food processing factories in all of North America here in Tennessee.

“We have the largest chicken nugget factory in Union City (Tyson Food) and the largest yogurt factory (General Mills) in Rutherford County. We have the largest M&M factory in Cleveland. It goes on and on.

“Last year we had five or six companies from China invest in the state, one of which is the Wonderful Group, a ceramic floor tiling company that decided to locate in Wilson County and invest $200 million.

“It’s the largest investment by a Chinese-based project in the state’s history. Del Conca in Loudon opened about a year about ago, and it’s doing extraordinarily well. (The Italian floor tile manufacturer made a $70 million investment in Loudon/Knoxville and brought 200 jobs.)

“It turns out our state is good at ceramic tile because of our natural resources and central location. I can say there are many more ceramics companies in the pipeline, all of which I feel confident will choose to be in Tennessee.”

Let’s talk about the education piece of this puzzle. What is the state is doing to train for these current and upcoming jobs?

“One of the most important is Governor Haslam’s Drive to 55 initiative, which has the goal of getting 55 percent of Tennesseans equipped with a college degree or certificate by the year 2025.

“Two things that helps us towards that goal every day is Tennessee Promise and Tennessee Reconnect Program. With Tennessee Promise, we are able to guarantee practically every high school graduate the ability to get into our technical colleges or community colleges free of charge.

“They are able to get those advanced skills they’ll need be productive in the future. With the Tennessee Reconnect program every adult can go back for free and get the certificate that they need to earn a higher wage and continue to be viable in this new technology workplace.

“We published a report recently about the economic impact of Drive to 55. If we can go from 37.3 percent (of college degrees) to our goal of 55 percent, we believe Tennesseans will make an additional $9.3 billion dollars a year in wages.

“We think the state will get $730 million dollars back in taxes. It’s not just the good or necessary thing to make sure that Tennesseans have jobs in the future; it’s also something extraordinarily rewarding. Everybody will be much better off as a result.”

Are there other states that have something similar to the Tennessee Promise or Tennessee Reconnect?

“There are other states that are imitating it, but they’re not coming close. We have an endowment, and that means we can guarantee the program in perpetuity. Other states have decided to do a one-off allocation for a single year hoping they have money for the following year. Then they will add lots of strings and conditions but without the mentorship reserve.”

How much of a difference do these programs make to companies considering locating or expanding in the state?

“A big difference. The most-asked question from prospects is, “Where are we going to get future workers? Where is that talent pipeline coming from? We can tell them that every single student in our state can get a degree or certificate free of charge.

“Nobody else can say that, and it gives companies interested in Tennessee lots of confidence in our ability to provide them with the skilled workers they’ll need in the future.

“Our incentives are very competitive, but we can’t out incentivize states like Texas or some of our other neighbors.

“If it’s just about incentives we’ll probably never win. We have to work smart and in a much more targeted way, working with the companies it makes sense for us to work with. We want partners here because they like our state and like resources such as what we’re offering with Tennessee Promise and Tennessee Reconnect.”

What are a couple of the biggest barriers when it comes to reaching your goals?

“We have to work hard to improve the perception of advanced manufacturing with our students, parents and counselors. We need to continue to get the word out to them that advanced manufacturing means great jobs.

“This is just one example, but in Franklin County you can go to TCAT, get a technical certificate or associate’s degree in mechatronics and go to work for $22-an-hour at the Nissan Decherd factory.

“You’ll be at $26 an hour by the end of the year. It’s a great job. You’ll be walking around in khakis and a polo and managing huge robots that are like something out of an action movie or Star Wars.

“It’s interesting work, it’s safe work and it’s high-paying work.

“We need to prepare students better for success after their post-secondary work. Our Education Commissioner Candice McQueen, and all our partners in K-12, are working hard to make sure that’s happening.

“We are working to make sure that no student goes to college having to take remedial math or English.

“We have failed them if they have to do that. Tennessee Promise also provides a mentor to guide students and provide them additional assistance or support.”

Is there a downside to the growth of so many advanced manufacturing jobs?

“It ties directly back to the Drive to 55 and why it’s so critical to advance our skills.

“A lot of manufacturing jobs are replaced by technology. Those technology jobs will pay more and be more productive.

“It’s just so critical to invest in education and make sure those students and adults go back and get those advanced certificates and degrees.”

Moeller Precision Tool manufacturing manager Brent Rutterbush, left, shows Ben Eby, a student with Tennessee College of Applied Technology, how to use a machine for creating different-sized punch boards for some parts that are often used in automobiles. 

(Michelle Morrow/The Ledger)

Do you have specific goals for the future?

“We want to be No. 1 in the South for high-quality jobs. We have five related goals that we need to focus on in order to reach that goal.

“We want to be No. 1 in employment.

“We want to be No. 1 per-capita income.

“We want to be No. 1 in household income.

"Importantly, we want to make sure we are all prospering together. Today, in spite of all of our success, 21 of our counties are distressed and in the bottom 10 percent of our country in poverty and income.

“We want to make sure our distressed rural counties have an opportunity to prosper and are participating in our success

“One next big step is to expand research and development. Of manufacturing companies making automobiles here only one is doing R&D – Volkswagen.

“The next generation of jobs will be those high-paying manufacturing jobs that support research and development. We’ll move up the continuum to more complicated and higher-paying jobs over the years.”

PROPERTY SALES 81 201 16,108
MORTGAGES 40 104 10,026
BUILDING PERMITS 130 336 38,272
BANKRUPTCIES 28 56 7,528