Regional Cooperation Focused on Key Industry Sectors Can Help States Recover and Rebound

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1 THE SOUTHERN GROWTH POLICIES BOARD: Regional Cooperation Focused on Key Industry Sectors Can Help States Recover and Rebound By Les Range, Special Assistant to the Executive Director, Mississippi Department of Employment Security This year, the Southern Growth Policies Board celebrates its 40th Anniversary, as well as the 25th Anniversary of the publication of its ground-breaking report, Halfway Home and a Long Way to Go. This commentary is part of a series that celebrates this milestone as we reflect on our region s progress and look ahead to the challenges and opportunities of the future. Les Range currently serves as Special Assistant to the Executive Director at the Mississippi Department of Employment Security, having previously served as deputy executive director, chief operating officer and executive director. Range has management experience with state government agencies, regional and local economic and community development organizations, colleges and universities, and as a business owner. He is a member of Southern Growth s Council for a New Economy Workforce. We ve all heard that the Great Recession is over. Yet millions of people remain unemployed. Despite high unemployment, large numbers of small businesses, manufacturers, and other employers say they are unable to find the skilled workers they need. What can states do to recover and rebound? One workforce development strategy worth an in-depth look is regional cooperation that focuses on key industry sectors. It s an approach we re using in Mississippi and that s gaining traction across the country. Mississippi, like many Southern states, was experiencing decent growth prior to the recession. Mississippi actually outpaced the nation in employment percentage growth when comparing the seasonally adjusted employment series from January 2006 to November 2007: Mississippi had employment growth of 2.7 percent while the U.S. experienced growth of 2.1 percent. Then the recession hit and led to a loss of 62,300 jobs, or a 5.4 percent decrease in employment from December 2007 to September 2011 for Mississippi. Similar to other states, Mississippi now has high unemployment, dwindling federal workforce funding and the need for a better-prepared workforce. Unemployment insurance only provides limited stability for workers who have lost jobs that may never return. Workforce training is the key to getting laid off workers the skills they need to be hired for the jobs that businesses have available now. This reality requires serious examination of what it takes to make workforce training most effective. Here s the case for industry sector-focused regional cooperation. Labor markets work at a regional level. Focusing on industry sectors that are most important to a regional labor market provides the foundation for successful relationships with businesses. Organizing workforce development by industry sector means that those businesses have a good reason to provide leadership because it will meet their needs. Not only that, but focusing workforce development is crucial for gaining a sufficient understanding of workforce and skill development needs and adapting successfully as the needs change. Working with a regional industry sector, rather than the mile wide/inch deep approach of trying to work with all businesses, provides the basis for the high-trust, long-

2 term relationships with the businesses that are most important to a regional economy. The regional approach also makes it possible to provide solutions to meet the needs of an industry sector s businesses, the region s job seekers, and its workers. The idea is to encourage cooperation rather than competition in order to maintain the economic viability of regions as a whole. Failing to conceptualize economic competitiveness from a regional perspective will lead to the demise of local areas. By promoting cooperation among local economies, a region can buffer the impact of economic, demographic, and political forces that would further separate the region into winners and losers. From a policy perspective, goals need to be regionally oriented so that everybody can win. From a programmatic perspective, when business and workforce stakeholders buy into the regionally oriented goals, public resources can be aligned effectively, programs can be organized efficiently, and gaps in service can be filled. The result is more bang for the buck better use of scarce resources and better outcomes. In terms of service delivery, technology is increasingly a game changer in making it possible to meet local needs while organizing initiatives regionally. Technology allows services to be delivered anytime and anywhere to anyone. The state can provide a pool of resources from which regional populations can draw. Regional sector initiatives that receive support from a regionally focused state sector strategy can leverage limited funding, engage industry partners at the workforce development table, and result in the targeted training that employers say they need. Southern Growth Policies Board has long supported this approach. For instance, in 2008, Southern Growth Policies Board and the National Network of Sector Partners co-authored Supporting Sector Strategies in the South, a white paper that builds upon experiences of Mississippi and other Southern states. 1 Also in 2008, Mississippi was one of six states chosen by the National Governors Association (NGA) to participate in its Policy Academy on State Sector Strategies. NGA defines sector strategies as regional approaches that focus on the workforce needs of key industries in a regional labor market. 2 The Mississippi Policy Academy Team initially consisted of a representative from the Governor s Office, high-level officials from several key state agencies, along with representatives from a regional development organization, a community based group, several employer associations, and key stakeholder groups. I served as the team leader. The lynchpin in Mississippi s approach to regional cooperation has been to use data to drive information and to make decisions. Using labor market data to make decisions ensures that an independent approach occurs and that personal preferences and interests are removed from the process, resulting in logical and balanced decisions. Data driven decision-making has another benefit: It provides the basis for decisions that address regional labor market needs, although decision-making is made within traditional jurisdictional boundaries. In any case, traditional jurisdictional boundaries should not be used to draw labor market boundaries. At best, jurisdictional boundaries must be aligned in a way that resources can be channeled to regionally oriented goals. These two points are important because jurisdictional boundaries contain public resources, while labor markets delineate economic activities. Thus, changing traditional jurisdictional boundaries to align with regional labor market boundaries is the easiest way to pursue regionalism. The Workforce Investment Act is an example where the law requires a good deal of local control on planning workforce initiatives. Being local is not the same as being regional. However, we have been successful in bringing a regional approach to the use of WIA resources. Each Local Workforce Investment Area identified emerging regional industry sectors. The state team agreed to concentrate on two or three industries in each region, SGPB 40th Anniversary Commentary Series: Regional Cooperation Focused Page 2

3 understanding there would be some overlap of industries across regions. To that end, three industries became the focus for Mississippi sector strategy initiatives: health care, energy, and manufacturing. According to one economist presenting to the Federal Reserve Bank of Atlanta s Labor, Education and Health Care Advisory Council, those three sectors plus construction make up approximately 25 percent of total U.S. employment. 3 A similar pattern exists in Mississippi, where the four sectors represent approximately 28 percent of total employment. Clearly Mississippi is on the right path to focus its workforce training and development on these sectors. The state sector strategies team augmented its analysis of labor market data with stakeholder roundtable meetings to engage and educate constituents of the program. Success of sector strategies depends on knowing the workforce skills needs of related industries and crafting solutions that supply businesses with trained workers. The robust community college system in Mississippi makes it possible for educators to play a major role in partnering with workforce development, community and faith-based organizations, and economic development to meet industry training needs. Key to providing training for state businesses is the Workforce Enhancement Training (WET) Fund, which directs nearly $20 million annually to the state s community colleges for workforce training programs. As a result of the team s efforts, the State Workforce Investment Board has identified regional sector initiatives as a key policy priority. Over the years, several federal initiatives have encouraged regional workforce development. While we didn t call it regional sector strategies at the time, there were several initiatives underway that helped lay the groundwork for our current state sector strategy approach. One effort grew out of the U. S. Department of Labor (USDOL) Workforce Innovations in Regional Economic Development (WIRED) initiative. Another was the result of several community colleges forming a consortium to meet the workforce training needs of industry in their region an effort that has been awarded several grants by USDOL. The federal WIRED initiative focused on the role of talent development in regional economies. It encouraged businesses, community colleges, foundations, and workforce and economic development organizations to cooperate and collaborate across regional city, county and state boundaries. Momentum WIRED was a partnership between Mississippi Department of Employment Security (MDES), three community colleges in the Mississippi Twin Districts Workforce Investment Area, local industry leaders, and other partner organizations. Momentum WIRED s goals were to create a replicable business model for transforming the region; to link all stages of workforce development basic education, post-secondary education, and skills training; to provide accessible training to workers seeking skills upgrades; and to develop strategies to engage those not in the workforce. 4 The Momentum WIRED project identified advanced manufacturing in general, and metal working trades in particular, as the main sector relevant for 18 counties in the southeastern region of Mississippi. At the time, employment in this sector accounted for approximately 37 percent of the total employment in the region and had experienced a 28 percent growth since This sector was also expected to experience more employment growth in the identified WIRED regions than in any other part of the state. This projection presented the state with a serious challenge in terms of workforce availability and high-performance workforce. Chairman of the Steering Committee for Momentum WIRED, Charles B. Holder, a visionary southeast Mississippi business leader, set in motion the idea behind what eventually became Momentum WIRED s greatest success, Advanced Metalworking Centers for Excellence. His industry insight, as well as feedback from focus groups, indicated there were many misconceptions about the metalworking industry including that jobs in the industry were not in demand or high-paying. Because Momentum WIRED was a business-led program, the businesses offering high-demand, high-paying jobs in the high-skilled metalworking industries defined their needs. 5 This employer-driven process outlined the SGPB 40th Anniversary Commentary Series: Regional Cooperation Focused Page 3

4 criteria necessary for the centers of excellence to meet industry needs. The successes of Momentum WIRED fall into several categories. First, there is the legacy of establishing the Advanced Metalworking Centers of Excellence. It was imperative for business partners that training lead to Advanced Welding Society (AWS) or National Institute for Metal Working Skills (NIMS) certification. Second, was the goal to increase the capacity to provide just-in-time training. Instructors at the partner community colleges were required to become AWS and NIMS certified as a condition of employment. Next, are the accomplishments of the Momentum WIRED program and participants. WIRED set training goals for educators and participants as well as certification goals for the three-year program. The community colleges expected to train 35 instructors, and exceeded that with 49 instructors receiving accreditation. WIRED s objective was to train 690 individual participants; however, community colleges report 1,085 individuals completed training. Over the initial threeyear period, the program expected to award 1,720 credentials, but far exceeded that number by awarding 3,885. Another goal of Momentum WIRED included engaging at least three area high schools in updating curriculum for technical trades. To date, nine high schools have updated their curricula, ensuring businesses have a better prepared pool of talent for future jobs. The Mississippi Corridor Consortium (MCC) is our next example. MCC was developed by four north Mississippi community colleges to meet the needs of workforce development for two large economic development projects. 6 The consortium has trained area residents for advanced manufacturing jobs in high-paying, high-growth industries, including auto manufacturing and aerospace technology. For instance, in 2009 the MCC received $7.4 million in grants and trained 32,000 people. The consortium uses two mobile welding trailers and established technology labs at each college. The real success has been for the employers and the job seekers; 79 percent of unemployed workers who were trained got jobs and 85 percent of the people trained have retained their jobs. 7 Overall, employment of participants has brought combined earnings of at least $1 million to the region. 8 Additionally, Toyota, American Eurocopter, and other major contributors to the region s economic vitality have met their hiring and skill development needs. Mississippi has established a firm foundation for successes in regional sector strategy initiatives that can help state workforce policy as we recover and rebound from the recession. As examples, the achievements of Momentum WIRED and the Mississippi Corridor Consortium demonstrate we can eliminate local silos, identify regional high-growth industry sectors and bring key stakeholders to the table for the greater economic good. Another promising effort is underway in the Mississippi Delta. We also understand that our workforce needs a path that leads them to a credential. We need to focus our efforts on helping people get a post-secondary credential with labor market value. They need something beyond a high school diploma. Regional sector strategies allow us to use regional labor market information to help plan for the training that businesses need and that workers deserve. Our work is far from complete. As the world economy rebounds, Mississippi is well positioned to benefit by continuing to forge relationships between business, public, and private organizations to provide workforce development training for its citizens to prepare them for tomorrow s jobs. That success is in large part due to Mississippi s ability to identify emerging sectors and engage those businesses at the workforce development table to identify their training needs. SGPB 40th Anniversary Commentary Series: Regional Cooperation Focused Page 4

5 Footnotes 1) 2) 3) 4) 5) 6) 7) 8) Available at Sector and Cluster Strategies: A policy brief by the Center for State Innovation, November Employment, Unemployment, and the Economy: Short-term stress, long-term challenges, Altig, Dave; Presentation prepared for the Federal Reserve Bank of Atlanta Labor, Education, and Health Care Advisory Council; Atlanta, GA, October 24, MDES Works with Department of Labor Discretionary Grants, 2008 Annual Report Mississippi Department of Employment Security, p.5. Ibid. Mississippi Community Colleges Prepared to Train Toyota Workers, Mississippi Development Authority Press Release, July 1, Information provided by James Williams, from Itawamba Community College, a member of the Mississippi Corridor Consortium. Building Economic Security for Mississippi Families (2010), available at MSF.PDF SGPB 40th Anniversary Commentary Series: Regional Cooperation Focused Page 5