Southwest Michigan faces an interesting conundrum. We have a large and diverse workforce, and some of the strongest, most sought after manufacturing skillsets in the nation, yet we still have too many jobs going unfilled and too many people that could be working who face serious barriers to maintaining gainful employment. That's a major takeaway from a media roundtable hosted by the Kinexus Group at their headquarters building in Benton Harbor Monday.
Kinexus CEO Todd Gustafson, Chief Operating Officer Jake Gustafson (no relation), and Vice President of Public Relations & Government Affairs Al Pscholka sat down to take a look at the state of the local economy, trends in the labor market and other issues at the roundtable.
Todd Gustafson says, "The economy is doing well now, but could potentially be doing better, if there was a larger workforce or a more educated workforce." He says, "We’ve seen some significant structural issues and in particular the decline in the population and we can’t even begin to address things if we don’t acknowledge that first." He adds, "Although the decline has slowed somewhat, it’s still something that we need to be concerned about. It’s not completely unique to Southwest Michigan. Demographics across the country show people moving to bigger cities, but in light of our significant industry -- manufacturing -- that needs talent in order to be able to thrive, that’s a major concern."
Pscholka calls the top issues facing the market, "The Big Three. In the workforce world those are Aging Population, Declining Population, and Declining Educational Attainment." He notes, "All three issues prevail in Berrien, Cass and Van Buren Counties. While 4-percent unemployment is great, for those who want to go back to work there are some structural issues out there that prevent us from growing as fast as we should."
Kinexus Group is in continual contact with actual employers in the field who are working with employees who face significant barriers. Pscholka points out, "We formed the Business Resource Network that we call the Link, about two years ago and started to work with employers, primarily manufacturers, and partnered with the Michigan Department of Health & Human Services, to bring in a success coach. Employers were telling us they had far too many barriers to people keeping their jobs. Transportation is far and away the number one issue, but there are other things, too, like food insecurity, affordable housing, health care, financial constraints, and even the inability to pay utilities. They are all issues that we had the success coach come in and help work with both the companies and their employees, to overcome those barriers so people can stay on the job. It has been tremendously successful, but it has also shown us so many issues we have to deal with in the labor force that have to be rectified."
The issue of declining educational attainment is readily evident in the numbers. Jake Gustafson says, "Fully 11.6-percent of the working age population in Berrien, Cass, and Van Buren Counties does not have a high school diploma or equivalent. In the 1960s and 70s a number of those in that age bracket dropped out of school and went into manufacturing, but the question is how long do they need to stay in the workforce and continue working because they can’t afford to retire. They are least likely to be set up for a decent retirement, and have to work longer than traditional retirement years, as well." He notes, "We’re more prone to that because manufacturing is still out biggest industry by a factor of two. Almost 20-percent of our overall industry is manufacturing. There are some clear and present danger signals with the schools that aren’t keeping up."
All three admitted that Benton Harbor Area Schools present a challenge, and can sway the statistical numbers for the area, and note that, "High school attainment numbers become even more significant as our population base declines or plateaus, as there is no longer a replacement worker to come behind every traditional worker that is aging out of his or her job."
Todd Gustafson suggests that, "With a strengthening labor force we have to have the talent that is sufficiently connected to the needs of employers, and there are some opportunities to improve that connection. In Berrien County in particular, if you look at the Career and Technical Education programming, it’s a unique model for the state of Michigan, in that it is de-centralized, so there’s no one entity controlling everything. Multiple districts are duplicating one another in some instances and not connected, and everybody could be better."
Jake says, "Ideally schools produce specialties rather than duplicate one another so that the system turns into a network where there is no strong central entity controlling everything. Let schools of choice allow kids to go to the places that have the strengths the student needs to learn the skill they seek. Conversely, the Lawrence Tech Center in Van Buren is outstanding, and is a great centralized model, and one of the flagship operations in the state."
When it comes to CTE training, Todd Gustafson argues, "Berrien County has a decision to make. Will we keep the status quo, and is it good enough and meeting the needs of employers, and helping kids get jobs to help them stay in the communities? Or do they want to improve the system to become a more higher functioning system that makes the economy more vibrant than it is today, because companies can find talent."
He goes on to say, "We have thirteen school districts in Berrien County, and we’ve looked at things through educational subject matter experts, to see what the rest of the state is doing and what are some of the higher functioning CTE programs, what are some of the lower-functioning ones, and what are some of the best practices? We got some good data and information on that and we’ve been sharing that and collaborated with a number of school districts where the superintendents have been at the table understanding that maybe it’s an opportunity to modernize the system." He concludes, "If you have fewer people, and the people that are here aren't getting connected to the jobs, then we’re going to be in real trouble long term."
Kinexus Group research shows that even those manufacturers who have good people face barriers that are prohibiting some employers from retaining good people, and the largest barrier continues to be transportation, and has been for decades.
Todd asks rhetorically, "How can we not solve this problem? If Marquette with 60,000 people can have a highly efficient transportation system there’s no reason why Southwest Michigan can’t have one, too. We see that in all of the data that we collect. Employers argue, 'I can find people, I just can’t get them to work all the time.'"
Furthering the argument, Gustafson says, "In the last few months we’ve seen the most momentum on the issue in a long time as we transition from the existing, inefficient transportation systems into an interim more efficient system or systems. You’ve got business and industry and the public sector starting to pay attention, particularly at the county level, so, I think the conditions are there to change some things, but it will take some political will and the recognition that this does have a drag on our economy until it gets fixed."
Pscholka cited manufacturer Pat Brandstatter’s story in Bridgman, where his Krueger Tool company was bought out by a larger company. Pscholka says, "They’re looking at Indiana and Michigan, and where they’re at, and admitting they don’t have the problem of getting people to work in Indiana, but they do have a problem getting people to work in Michigan, so where are they going to invest? It does drive business decisions, and becomes a bottom line issue for a lot of companies."
In Michigan's Great Southwest, manufacturing comprises 17.5-percent of the workforce locally, with 18,432 jobs as the largest sector. The second largest is the retail and hospitality sector, with 11,632 jobs and 11-percent of the workforce, and the fastest growing sector of the local economy is the health care and social assistance sector, sporting 10,685 jobs or 10.2-percent of the local economy.
Additionally, the Niles-Benton Harbor area is the 23rd most affordable community out of 270 MSAs in the nation. As Gustafson says, "Affordability is here, there are just those other challenges."
Southwest Michigan is a magnet for manufacturing, according to the team at Kinexus, with 2.2 times the state average for the number of manufacturers in our area. Pscholka tells us, "Our three counties are higher than Flint, Jackson and Saginaw. We have more manufacturing establishments than all of those communities. There are 11,400 manufacturing firms in Michigan, some with multiple sites, but we have one of the highest manufacturing concentrations in the state." They add, "We’re consistently 2.5 times the density in certain NAICS codes and even up to 11 times in some specialty sectors, so it’s hard to over estimate exactly how critical manufacturing is to our economy."
Another major plus in our region is the that we’re within four hours of 32-million people, and as a result have access to a lot of amenities that most small communities don’t. Gustafson says, "We have a skillset of existing employees, especially in manufacturing, that are pretty high skillsets often hard to find, and a concentration of skills like that is a major plus for us."
While the population of Michigan has increased by 1-percent since 2010, Berrien, Cass and Van Buren have seen a 2-percent decline in that same time frame. The overall median age in the region has also increased at more rapid pace than that of the state and nation.
The numbers are critical inasmuch as roughly 16,000 jobs will need to be filled in the next 10-years in the high-demand Career and Technical Education sector, including nearly 6,000 vacancies in healthcare, more than 4,500 in business, over 3,600 in manufacturing, 1,400 in other professional trades and more than 550 in IT.
In a 2018 survey for the State of Michigan's "Marshall Plan for Talent," 15 local employers in the Tri-County region identified nearly 500 jobs from only 7 job titles that would easily be products of any machine shop related programming, yet with only 349 students taking advantage of the decentralized system that will simply not address the shortage identified by just a few of the players.
Barriers need to continue to be knocked down. Over the last 30 months, the Kinexus Business Resource Network showed 606 people who were served faced 1,018 barriers fully 25-percent of which were transportation related. Housing, health and financial issues rounded out the top four barriers to keeping a good paying job, and that is why the Kinexus Group and its allied teams and partners continue to push for resolution of those issues going forward.