Back-to-back announcements this spring that Daimler AG and Volvo Cars will build new manufacturing plants in the Charleston region were met with applause over the combined $1 billion investment and up to 5,360 new jobs at the vehicle factories — not to mention hundreds more from suppliers moving to this area.
There’s also been a lot of hand-wringing over where the skilled workers will come from to fill those jobs.
“Workforce is by far the biggest thing we hear from everybody,” Lonnie Carter, Santee Cooper’s president and CEO, said last week during the utility’s board of directors meeting. In addition to providing power, Santee Cooper works with other state agencies on economic development issues.
“The Charleston Metro area is feeling it,” Carter said of the labor drain. “This is going to be a bigger and bigger issue.”
Industrial site selection experts apparently agree. A report last week gives South Carolina an overall grade of “A” for its healthy manufacturing industry climate. The report also gave the state a “D” grade for its labor force.
“No factor matters more to businesses than the quality and availability of labor,” said the report from Conexus Indiana, a private initiative focusing on the nation’s manufacturing and logistics sectors. “Workers represent the largest single cost of doing business but, more importantly, they are the source of most innovation and process improvements that distinguish successful firms from those that are not successful.”
The study measured the state’s number of available workers who’ve graduated from high school and college, the first-year retention rate of adults in community colleges and technical schools, the number of associate degrees awarded each year on a per-capita basis and the share of adults enrolled in adult basic education.
Only six states received lower grades than South Carolina — Arizona and Arkansas with grades of “D-minus” and failing grades in Alabama, Louisiana, Mississippi and West Virginia.
“Because produced goods have a high degree of value dependent on each individual worker in a production line or transportation leg or hub, a uniformly high quality of workers is required,” the Conexus Indiana report states. “These workers must possess the ability to understand increasingly complex production processes that today are mostly managed by computers with specialized software.”
An educated workforce, “is the most important factor in firm location decisions,” the report states.
Lex Kerssemakers, head of Volvo Cars North America, cited the state’s ReadySC program — which trains workers in skills specific to manufacturing jobs — as one of the reasons the carmaker chose Berkeley County for its first U.S. plant. So did Volker Mornhinweg, head of Mercedes-Benz Vans, which is building a manufacturing plant in North Charleston. The state-paid training is offered as an incentive to manufacturers.
“We come back and train every single employee to fit the needs of that company,” Gov. Nikki Haley said after the Daimler announcement in May, adding that 97 percent of the people who are trained in the ReadySC program get hired. “It’s a custom process.”
James Chavez — president and CEO of the S.C. Power Team, an economic development arm of Santee Cooper and 20 electric cooperatives around the state — said last week that area high schools are producing enough workers for Charleston area manufacturing jobs, but many graduates don’t see the opportunity.
“We need to get people beyond high school so they can take these more skilled jobs,” Chavez said. “It isn’t any more complicated than that. There is so much momentum in the state, the long-term concern is how we handle labor.”
Among the problems — a lack of affordable housing and the proximity of technical schools to those needing training. Chavez said it can take some prospective workers 45 minutes to an hour to get to the closest school.
State Commerce Secretary Bobby Hitt has said concerns about finding a sizable workforce are overblown, particularly with 43 new residents arriving in the Charleston region every day, according to the Charleston Metro Chamber of Commerce. Hitt also points out that the state has been able to fill 8,000 skilled jobs at the BMW plant in Greer and another 7,500 skilled jobs at the Boeing campus in North Charleston.
“We’ll find the workforce,” Hitt told The Post and Courier earlier this year. “We have inmigration to this state, people mustering out of the military who love the environment and they stay here and make great employees. ... The tri-county area is a vital manufacturing area.”
There was plenty of good news in the Conexus Indiana report, which attempts to duplicate the type of research site selection professionals would do for industries looking to relocate.
In addition to an “A” for overall manufacturing climate, South Carolina received a top grade for its level of international trade, mostly through the Port of Charleston.
“Manufacturers want to make goods with a global market appeal,” the report states. “How well this is done is an important predictor of the health of state-level manufacturing and logistics sectors into the future.”
South Carolina leads the nation in exports of automobiles and tires, and last year shipped more than $29 billion worth of goods to foreign countries.
South Carolina also received a “B” for sector diversification — having a mix of industries rather than focusing on one type of manufacturer. In addition to cars and airplanes, the state has industries in the tire, gas turbine, chemical and carbon fiber sectors.
Reach David Wren at 937-5550 or on Twitter at @David_Wren_