One of the biggest challenges facing economic development today is staffing growing companies with the talent and skilled workers they need. During this month’s Professional Learning Lab webinar we heard Rajeev Thakur, Managing Director of Consulting for Newmark Grubb Knight Frank, relate the lessons learned from four site location case studies.
The first case study for a yet undisclosed insurance client wanted to lower their operating costs in order to fulfill a commitment made to Wall Street by relocating work to a lower cost location out of New York City. The lesson learned on this project was that even though an area my have a large labor pool with the skill sets desired, they may not be willing to transfer from one business sector, in this case healthcare, to another such as insurance.
The second case study was for Ceradyne, Inc., a company that produces ceramic armor systems for the military and others. Their challenge was an inefficient supply chain, with production in Kentucky, shipment of product to California, and then East Coast distribution. The lessoned learned here was that even thought the California operation could be located to a lower wage area in Kentucky, the productivity of the long-established workforce in California more than made up for the higher wages and the extra transportation cost of shipping to the east coast.
The third case study was Rakuten, a Japanese company similar to Amazon that had acquired Buy.com. They were located in the Bay area of California in San Mateo, close to the airport. They employed 100 software engineers and wondered if talent was available in the area between San Francisco and Palo Alto. The lesson learned was to fully understand the specific labor needs of the company and the characteristics of the type of software engineers – recent young tech graduates prefer the dynamic, ambiguous uncertainty of the small start-up firm; Millennials are more focused on working for large, well-known companies like Google or Facebook; and the older, more experienced software engineers tend to prefer the B2B companies.
The last site location case study that Rajeev shared was Computershare, an Australian company that processes dividend payments and has grown in the U.S. through acquisition, resulting in multiple corporate cultures in multiple cities. The company wished to consolidate in one location and establish their culture with several hundred employees. After careful analysis the final two cities were Nashville, TN and Louisville, KY. Louisville was selected because it offered the company an opportunity to have a significant impact on the community by locating in a downtown area, creating a demand for housing and an urban lifestyle opportunity. Also important, Computershare could be a major player in the community and able to garner the attention that this provides. Easy access to leadership of the community was given as one of the factors that influenced the decision.
The Q&A that followed each case study webinar included questions about incentives, skill transfer, data sources for the inventory of skills, and targeting for attraction using a skills inventory.
In summary, Rajeev shared with us his thoughts about the lessons learned from these four case studies that will help us think creatively about how to adapt to the new reality of the talent shortages, some of the issues to consider, and recommendations for overcoming these hurdles.