Objective: To highlight the impact of a regional- and state-wide workforce development effort that realized success by bringing together experts from the advanced manufacturing and logistics cluster to inform and develop a multi-pronged campaign to strengthen the industry’s talent pipeline.
Major Participants: Conexus Indiana, Central Indiana Corporate Partnership, Lilly Endowment, various regional workforce development agencies, high schools and industry partners.
Background: Indiana ranks first in the nation in manufacturing employment per capita (17 percent), and when you add to that the logistics and supply chain industries, one in five Indiana residents are employed in the making and moving economy. Indiana’s advanced manufacturing and logistics (AML) cluster is among its strongest, yet a shortage of skilled labor threatened its long-term viability. There are thousands of job openings in the AML cluster, with wages up to 40 percent higher than the statewide average. However, in order to succeed in the tech-heavy AML industries, workers need to have strong math, science and analytical skills. In Indiana, 57 percent of all the state’s jobs require middle-skills such as these, but only 45 percent of the workforce has those skills. AML industries are particularly affected as Baby Boomers begin to retire; a lack of skilled labor and rising manufacturing costs risk pushing the state’s well-paying AML jobs overseas. Without a trained and ready workforce, manufacturing firms will be unable to provide high-quality goods at a cost that is competitive in the global marketplace, and it will hinder the growth of Indiana’s local businesses.
How it Works: In 2007, the Central Indiana Corporate Partnership (CICP), the region’s cluster-based economic development organization, conducted a study to identify Indiana’s strongest industry clusters. The top three were AML, Life Sciences/Health Care and Technology. As a result, three initiatives sprang up to respond to the challenges faced by the clusters: Conexus Indiana, BioCrossroads and TechPoint, respectively. All initiatives were informed and driven by the largest companies in those clusters, and continue to steer the efforts of the initiatives today in order to ensure programs are responsive to industry needs.
Conexus Indiana, in particular, is focused on making Indiana the best place for AML companies (current and prospective) to do business. Routinely, industry explains its challenge finding qualified workers. Conexus Indiana responded by developing a number of strategies:
Results for Local Economy: Since Conexus Indiana formed, the state has markedly improved its rating on the national Manufacturing and Logistics Report Card. In 2009, Indiana had a D+ score, which it has since improved to a C. An industry survey finds that average revenues of AML companies have climbed each year since 2011, and 20 percent of Indiana’s existing manufacturing base was planning to expand or open a new manufacturing facility in the state between 2014-2015, up from just 8 percent in 2013-2014. Of the survey respondents, 6 percent of companies reported plans to “onshore” some of their manufacturing during 2014-2015; all of those companies said access to skilled labor was “important” or “very important” to their decision to onshore.
The success of the Tech Hire program cannot be understated: the program is being offered to more than 2,000 students statewide, of which 80 percent have earned credit in manufacturing and more than 1,000 students have earned industry credentials. These students are going on to find meaningful career employment: A survey of industry employers finds that new hire salaries average $20.06 per hour, or the equivalent of almost $42,000 per year.
Remaining Challenges: Despite Conexus Indiana’s progress, the annual industry survey still finds that Indiana’s manufacturing companies face workforce challenges: 65 percent of manufacturers report moderate to serious shortages of skilled workers, and expected labor scarcity in the next three to five years worries almost 70 percent of survey respondents. Moreover, companies cite basic employability skills, such as attendance, timeliness and work ethic, as a concern. While Conexus Indiana is making a difference, manufacturing companies still face serious challenges.
One of the primary challenges for Conexus Indiana’s programs, though, remains spreading awareness about the opportunities in the industry in order to increase enrollment of students. In school districts where industry is actively engaged and the school’s administrator and teachers are aligned, enrollment is less challenging; but this is not the case in every district statewide. In addition, finding highly-qualified, proactive instructors to teach this curriculum has been somewhat difficult, because individuals with that skill set can make higher wages in the industry than in teaching. This challenge will be compounded with an expected wave of retirements in upcoming years.
Lastly, the Conexus Indiana program has largely focused on high school students, where there is a structure already in place to deliver the curriculum. In order to address Indiana’s AML workforce needs at scale, there will need to be programs delivered to post-graduates. What that model looks like is still to be determined.
Lessons Learned: As more school districts challenge the assumption that all students should attend a four-year college, there is an opportunity to think about the role and value of vocational education. In this case, Conexus Indiana tapped into one of its strongest economic clusters, AML, but other cities and states can take a similar approach by investing in the workforce needed by their own growth clusters.
No matter which cluster a city or state focuses on, it is important that industry be a driving force behind the initiatives. For the Conexus Indiana model to succeed, industry needed to be actively and heavily engaged from the outset—as it continues to be today. Through the industry partnership, for instance, Conexus Indiana learned it was more important for students to understand the function of equipment, various materials, and design processes than to learn how to operate specific equipment. This saved potentially hundreds of thousands of dollars that would have been invested in advanced manufacturing equipment at the high school level, when simple computer software would suffice.
Most importantly, according to participants: don’t reinvent the wheel. In order to best utilize resources and provide high-quality programs, all partners should be in communication. Know what programs are already available and identify which are most successful, and then invest in the resources necessary to bring those programs to scale. It is a challenge to understand all that’s happening at the local, regional, state and even federal levels, but doing so will ensure a streamlined effort with longer-term success.
Learn more about Conexus Indiana on their website and read more about cluster-based economic development strategies in ICIC’s recent paper, Accelerating Cluster Growth: A Playbook for City Leaders.