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Abstract
This chapter came to life through two aerospace and defense industry studies completed by the authors in Ohio in 2011 and 2016. In these studies, the authors investigated in-demand industries in Ohio and the need to focus on workforce development to fully support the industries. Both the 2011 and the 2016 studies defined and highlighted details of the aerospace and defense industry, while assessing the current and future growth of the Industry. Building on their previous two studies, in this chapter the authors represent the aerospace and defense industry in Ohio with distinct clusters that best define the industry: Aerospace Manufacturing, Research and Development (R&D), Federal and Military, and Aviation.
The aerospace and defense industry in Southwest Ohio
Executive summary
This chapter came to life through two aerospace and defense industry studies completed by the authors in Ohio in 2011 and 2016. In these studies, the authors investigated in-demand industries in Ohio and the need to focus on workforce development to fully support the industries. Both the 2011 and the 2016 studies defined and highlighted details of the aerospace and defense industry, while assessing the current and future growth of the Industry. Building on their previous two studies, in this chapter the authors represent the aerospace and defense industry in Ohio with distinct clusters that best define the industry: Aerospace Manufacturing, Research and Development (R&D), Federal and Military, and Aviation.
The chapter delves into the details of each distinct cluster, specifically focusing on workforce supply and demand. In addition, the aging workforce and demographic shifts are examined.
Data suggests that the higher education system in Ohio is not necessarily underproducing STEM graduates in the context of the patterns that support the defined clusters analyzed in this report. The analysis found Ohio’s percent of degree holders has experienced small, steady increases over the past six years. The rate of increase has been just above the US average, but Ohio still lags behind the nation in the percent of the population holding bachelor’s degrees and graduate or professional degrees. Overall, the State’s growth rate across demographics was comparable with the overall population growth over the same period, a 1 percent growth. This modest growth is directly tied to the largest industry sectors in the region. It may also be attributable to the economic development model employed in the region. Tying economic growth to the growth of the regional military installation will lead to growth rates which are relative to the installation’s growth.
There are workforce challenges in the aerospace and defense industry which cannot be ignored. While Ohio’s colleges and universities are generally keeping pace with the required STEM workforce in R&D, Aerospace Manufacturing demands are outpacing training and education, which is further stressed by the replacement rates—retirements and other workforce churn. Nationally, more than 53 percent of the industry workforce supporting Aerospace Manufacturing are over 45 years old with a median average age of 44.5. At the same time, only 26 percent of the workforce is under the age of 35, meaning that retirements will continue to drive higher workforce demand.
Aerospace Manufacturing directly supports more than 20,000 jobs in Ohio, ranking it eighth in the country. Ohio’s growth is relatively flat in this Industry cluster in Ohio. Aerospace Manufacturing in Northeast Ohio is projected to decline, while Southwest Ohio is predicted to grow. The Aerospace Manufacturing workforce requires some of the highest-skilled manufacturing workers. Almost 20 percent of its workforce are engineers.
Ohio ranks 15th in the country in the number of R&D jobs, with a projected growth of 25 percent in the next decade. This cluster is the only one of those analyzed with significant projected growth. Economic growth can be realized through dedicated efforts to leverage this research for commercial applications. Analysis of R&D expenditure data suggests Ohio has a disproportionate emphasis on companies and individuals contracted to conduct this R&D compared to the top 10 states in R&D expenditures. More analysis is needed to understand why this is occurring in Ohio and who owns the intellectual property being produced because of this structure. Ohio ranks 14th in the US for the number of civilian and military jobs. Like most of the other states employing large numbers of civilian and military workers, Ohio’s federal jobs are projected to decrease. This aligns with the decrease of federal budgets and expenditures.
To best address the workforce demand within the aerospace and defense industry in Southwest Ohio, the authors recommend building a robust ecosystem with participation across the region. The ecosystem requires a broad audience with maximum participation from all parts of the ecosystem. Strong leadership is required and can come from any of the stakeholders. The ecosystem will be successful if there is a strategic plan that is regularly monitored and measured.
This chapter could serve as a step-by-step model for any region of the country that desires to focus on the workforce and economic development of an in-demand industry.
Introduction
The aerospace and defense industry is critical to national defense and therefore a very unique industry in the world market. It is also a very large industry with many complexities. The aerospace and defense industry serves both the commercial and the defense markets with a vast array of products. The Industry also includes some very large employers, like Boeing and Lockheed Martin as well as thousands of small companies. The industry is smaller than it once was, but is still quite large and has strategic importance in the US.
The end of the cold war meant decreased spending in Aerospace and Defense, which led to diversification of the Industry. There were many new commercial applications discovered for aerospace and defense products. This also led to the Department of Defense spending a much smaller percentage of their budget on research and development. When the cold war ended, the US went through a recession which led to the Industry cutting workforce and consolidating operations. Examples of these consolidations include Northrup and Grumman and Lockheed and Martin. Because of the recession and a reduction in spending, Aerospace and Defense companies started to focus sales on foreign governments. This new strategy worked until the Asian economic crisis in the late 1990s. This crisis resulted in another hit to the market bottom-line which led to more reductions for companies across the Industry. After 9/11, the Industry was again impacted, but this time by a large infusion of new dollars that were part of an investment into a new conflict in the Middle East. The aerospace and defense industry is forecasted to continue to grow.
Because of the complexity of the aerospace and defense industry and the vast nature of the market, the Industry is the world’s leading producer of technology and supports one of the largest high-skill and high-wage workforce in the country. In 2015, the US aerospace and defense industry supported almost 2.4 million jobs (AIA, Dec 2016). The primary share of jobs within the aerospace and defense industry are in manufacturing (917,000 jobs) and then Information and Professional Services (465,000) (AIA, Dec 2016). Growth areas within the Industry are foreign sales, and research and development. An evolving demand and continued growth within the aerospace and defense industry as well as an aging workforce make the next ten years within the Industry a challenge. In this chapter, the authors will focus on workforce demand and how a region can build a robust ecosystem to react to needs within an Industry.
Defining the industry
To thoroughly examine workforce supply and demand within the aerospace and defense industry, the authors chose to scope their work in terms of a region within Ohio, specifically, the Southwest region. To represent the existing demand within the aerospace and defense industry, the authors divided the Industry into four key areas:
- Aerospace Manufacturing
- Research and Development (including Information Technology related to Aerospace)
- Federal and Military
- Aviation
Aerospace manufacturing
Although aircraft are not manufactured in Ohio, many Aerospace Manufacturing suppliers are in Ohio. For instance, GE Aviation manufactures jet engines and other components in Southwest Ohio. In 2014, Boeing reported that it had 375 suppliers and vendors in Ohio, accounting for $11.4 billion in purchases that supported up to 385,000 jobs in Ohio (Boeing, 2016).
Aerospace Manufacturing is an important component of Ohio’s economy. Ohio supports direct Aerospace Manufacturing jobs. However, this cluster does not define all of Aerospace Manufacturing since occupations such as metalworking, sensors, and composites may serve automotive, medical, and other kinds of manufacturing in addition to the aerospace industry. The direct Aerospace Manufacturing jobs are defined with the industry codes in Figure 3.1.
Figure 3.1 Aerospace manufacturing occupations.
Research and development
The Aerospace R&D cluster includes more than just the research companies but also includes testing, engineering services, and software and computer design, including the following occupational codes (Figure 3.2).
Figure 3.2 Research and development occupations.
Federal/military
Federal jobs are a substantial part of Ohio’s Aerospace Industry. Wright-Patterson Air Force Base (WPAFB) in Dayton, Ohio is the largest single-site employer in the state, employing more than 27,000 civilians and military. Ohio is also home to a robust National Guard and to Defense Finance and Accounting Service and Defense Logistics Agency. NASA Glenn in Cleveland is an important part of Ohio’s Aerospace Industry and is a large federal employer (Figure 3.3).
Figure 3.3 Federal/military occupations.
Aviation
While Aviation is directly linked to Aerospace, from a workforce development perspective, it is a demand that follows the market, not business need. As consumers spend more on commercial flights and as businesses become more nationally and internationally connected the demand for pilots and other support staff will naturally grow. As this happens, commercial airlines will look for a pool of qualified pilots. That search typically starts with Department of Defense pilots and for this reason, the growth in commercial pilots is worth benchmarking (Figure 3.4).
Figure 3.4 Aviation occupations.
National workforce trends
The aging workforce in the US has been a popular topic among economists and the government for decades. There is good reason for this concern and for discussion of this topic. The aging baby boomers, recession of the late 2000s as well as a rising life expectancy have changed the face of our current and future workforce (Bureau of Labor Statistics, 2017). Internationally, the number of older people is expected to exceed the number of children for the first time by 2047. Although the retirement age seems to be increasing, there is still a need to replace this generation with a new workforce as they make the retirement decision. The companies that figure out how best to use this aging workforce to their betterment, for example in training and mentoring of the new workforce, will be the most successful companies in the world. This generation has extensive knowledge and skills that can continue to contribute to companies across the country. At the same time, strategic workforce planning is critical as the baby boomers leave the workforce.
Nationally, more than half of the workforce in the industries supporting Aerospace Manufacturing are over 45 years old with only a quarter below the age of 35. This composition is slightly better for the R&D industry with 43 percent over the age of 45 and 32 percent below the age of 35. This is a metric to watch as the workforce between 35 and 44 years old are critical for the long-term growth and stability of the industry. Industry experience has been a common theme in Aerospace and Defense workforce shortage studies. The higher education system can develop strategies to increase competition rates in desired degrees; however, industry must take responsibility for developing their workforce to meet future experience demands (Figure 3.5).
Figure 3.5 National workforce population age statistics.
In addition to an aging workforce, there are other demographic changes occurring in the workforce that must be part of an organizational strategic workforce plan. The gender balance in the United States has been tipped towards women for the last few years and is going to continue in this direction. In the year 2050, there will be 150 women for every 100 men in the US In addition, there has been a continual increase in African American and Hispanic populations. A successful organization will figure out how to recruit, hire and retain a diverse workforce (Figure 3.6).
Figure 3.6 Diversity in the workforce.
Current state of the industry
With the clusters defined, a deeper dive has provided some unexpected projections. In this chapter, the authors use a modeling tool which considers demand based on federal data sources that project supply and demand using algorithms applied to historical trends, the supply of workers completing higher education programs that meet those demands, and churn. Included in this data is the Labor Market Information data that Ohio Means Jobs uses to identify the most in-demand jobs. By layering on top of this data set the supply data and the churn data, a more detailed picture develops. The bottom line in many of the tables in this chapter is that Ohio is not necessarily underproducing STEM graduates in the context of the staffing patterns that support the defined industry clusters outlined.
STEM talent analysis
To validate this conclusion, National Science Foundation data was studied to understand if this was a projection unique to the staffing patterns evaluated or true of the broader STEM workforce (Figure 3.7).
Figure 3.7 Changes in science and engineer degrees, 1990–2011.
The data indicate that the number of Science and Engineering degrees conferred in Ohio increased by 30 percent over ten years; however, the percentage of Science and Engineering degrees compared to all higher education degrees conferred has remained relatively flat, consistent and below the national trend. At the same time, occupations requiring those degrees have seen increases, but were also consistent and below the national trend (Figure 3.8).
Figure 3.8 Changes in engineers and computer specialists, 2003–2012.
This data suggests that the state is seeing an increase in STEM degrees which are meeting the increasing workforce demand and is likely generating a surplus of Science and Engineering degrees conferred. It is important to note that prior to the recession, Ohio employed more engineers than the national average, but the loss of large tech companies, like Delphi and NCR, greatly impacted the overall engineering occupations. Data show the state once again reached 2003 ratios in 2012, but as Ohio recovered from the losses, the national average continued to climb, resulting in a larger gap with the state lagging behind the national average. This loss of jobs led to a large shift in the available engineers seeking jobs which may have impacted some of the shifts in data which suggest degrees conferred are sufficient to meet business demand. The bottom line: STEM degrees may have increased in numbers but not as a percentage of total degrees. Ohio’s growth in those areas has lagged the national trends; therefore, more work is needed to advance a STEM workforce that is not just meeting Ohio business demand, but could help meet national business demand or drive economic growth through the return of an innovative workforce focused on market trends and consumer demand. As the staffing patterns in the clusters identified in this report are compared to the supply, it will be important to keep in mind the overall STEM workforce supply.
Concerning the Aerospace Manufacturing, R&D, Federal/Military and Aviation clusters, the talent supply appears to be more than sufficient to meet the workforce demand. Many factors are coming into play: (1) concerted efforts by a robust network of STEM initiatives are making headway and addressing the STEM talent supply gap, (2) there are major gaps in skilled jobs that do not require higher education and are thus harder to measure supply statistics (e.g., Team Assemblers), (3) the only cluster with growth projected to meet or exceed national growth rates is the R&D cluster, the other clusters are flat or declining, (4) completion rates are up, but retention of students in the state of Ohio is declining and that brain drain is impacting the shortages that have been reported by businesses, and (5) this data is based on historical trends and is from secondary data sources only, it’s possible there are STEM-related workforce shortages that could exist due to niche sectors not accurately portrayed by the available data. Regarding factors three and four listed earlier, a recommendation section has been produced that highlights the need for Network strategies.
Talent retention
One item that is often discussed when reviewing degrees conferred is the retention of the talent. The “Brain Drain” is a concern, especially when considering in-demand STEM degrees. A review of America Community Survey data from the US Census Bureau can provide some insight on degree holders in the State of Ohio and within each JobsOhio region. Ohio’s percent of degree holders has experienced small, steady increases over the past six years according to the census five-year trend data. The rate of increase has been just above the US average, but Ohio still lags the nation in the percent of the population holding bachelor’s degrees and graduate or professional degrees. The State’s growth rate in these demographics was comparable with the overall population growth over the same period, a 1 percent growth. The national growth rate, however, was 6 percent while the growth in degree holders was less than 1 percent (Figure 3.9).
Figure 3.9 Percent of Degree Holders in Ohio and the US, 25+ years old, 2009–2014.
When considering the challenges reported by industry to find qualified workers, a closer look was warranted. When considering the JobsOhio regions, a positive trend was also evident. The Central region leads the state in the percentage of degree holders, followed closely by the Southwest region. Each region experienced a positive trend in degree holders (Figure 3.10).
Figure 3.10 Percent of degree holders by JobsOhio regions, 25+ years old, 2009–2014.
This trend continues when analyzing just 24- to 35-year-olds in each JobsOhio region. This age group is often considered the most critical retention demographic. Connecting graduates to employment in Ohio is critical to retaining the needed talent. Except for a minor dip in the West region in 2013, each region experienced modest growth during each year analyzed. In addition, for each region except for the Northeast region, the overall population of 25- to 34-year-olds decreased. This suggests that the major migration out of each region other than the Northeast does not consist of predominantly bachelor’s degree holders (Figure 3.11).
Figure 3.11 Percent of bachelor’s degree holders by JobsOhio regions, 25–34 years old, 2009–2014.
This data leads to questions that could be further explored in each region. More research must be done to determine if the reported talent gap by businesses experiencing hiring difficulties is due to a mismatch in degrees conferred compared to industry need or if there is a disconnect between jobseekers and businesses seeking talent.
The rate of change in each region could serve as a metric to identify pockets of growth or areas that are improving because of initiatives to retain young talent (Figure 3.12).
Figure 3.12 Rate of change of education attainment by region, 25+ year olds, 2009–2014.
Aerospace manufacturing
Aerospace Manufacturing directly supports more than 20,000 jobs in Ohio, ranking it eighth in the country. However, growth predictions for Aerospace Manufacturing in Ohio for the next decade are relative flat.
The location quotient (occupation percent of local employment/occupation percent of national employment) permits a comparison of the relative importance of the occupation in the regional employment mix relative to the country (Figure 3.13).
Figure 3.13 Top states for aerospace manufacturing jobs.
Although Ohio’s growth is relatively flat in Aerospace Manufacturing, Ohio’s metropolitan statistical areas (MSAs) vary. For the most part, Aerospace Manufacturing in Northeast Ohio is projected to decline, while Southwest Ohio is predicted to grow. The vibrancy and growth of the Aerospace Manufacturing industry earned the Southwest Ohio Aerospace Region (SOAR), a manufacturing designation from the Economic Development Administration’s Investing in Manufacturing Communities Partnership (IMCP) initiative. Together, the Dayton and Cincinnati metro area support more than 14,000 jobs, representing two-thirds of Ohio’s Aerospace Manufacturing industry (Figure 3.14).
Figure 3.14 Ohio aerospace manufacturing jobs by MSA.
The Aerospace Manufacturing workforce requires some of the highest-skilled manufacturing workers. Almost 20 percent of its workforce are engineers—aerospace, industrial, mechanical, electrical, and others. Also required are machinists and other highly-skilled production workers, technicians, software publishers, and managers at various levels.
The following table shows the top jobs in the industry, making up just over 50 percent of all jobs in Aerospace Manufacturing. Since the growth of the statewide Aerospace Manufacturing industry is relatively flat, the occupational demands are not dramatic. Although logisticians show up to 15 percent growth, the number remains relatively small—64 positions over 10 years (Figure 3.15).
Figure 3.15 Top jobs in the aerospace manufacturing industry in Ohio.
However, looking at the overall occupational demand for those positions across all industries shows a much different picture. Ohio’s aging workforce, replacements due to retirement and other churn will impact many occupations, particularly within the manufacturing industry. Regardless of whether manufacturing for the auto or aerospace industry, the higher skilled positions are required in all manufacturing, increasing the demand for those skills (Figure 3.16).
Figure 3.16 Gap analysis of top aerospace manufacturing jobs across all industries.
While many of the production occupations do not necessarily require postsecondary training, they do require on-the-job training. Manufacturers across Ohio have expressed difficulty attracting a skilled workforce. These projections suggest that demand will only increase and could potentially have negative effects on Ohio’s Aerospace Manufacturing.
Research and development
Ohio’s R&D has strong growth opportunity in the aerospace and defense industry. With many research universities across the State, the Air Force Research Laboratory (AFRL), NASA Glenn, and a large concentration of R&D companies doing Small Business Innovation Research (SBIR) to support federal agencies, Ohio has a strong R&D foundation, which is projected to grow even stronger during the next decade. Although the R&D concentration is lower than the national average, Ohio ranks 15th in the number of R&D jobs, with a projected growth of 25 percent in the next decade.
Organizations such as Brookings have reported that more than 90 percent of a community’s job growth is organic. Less than 10 percent will come from recruiting businesses from other communities. With this being the case, investing in the recruitment of major aerospace manufacturers and even an aircraft manufacturer could be viewed as a flawed strategy. This becomes clearer once one considers the possibility for organic growth to occur from a healthy, growing research and development sector. Investing in the spin out of new ventures from innovations in aerospace is the state’s best chance at turning the aerospace manufacturing industry around and into strong growth numbers. This strategy is a long-term strategy as the job numbers would likely follow a logarithmic or exponential curve, meaning initial investments will typically not result in headline-worthy job numbers, but over time would produce greater results than incentive programs for business relocation (Figure 3.17).
Figure 3.17 Top states for research and development jobs.
Like Aerospace Manufacturing, the Aerospace R&D industry is also more heavily concentrated in Southwest Ohio, especially in the Dayton metropolitan area, which houses AFRL and a strong concentration of small businesses. The Columbus region has the highest number of R&D jobs, followed by Cincinnati (Figure 3.18).
Figure 3.18 Ohio R&D jobs by MSA.
The workforce in Aerospace R&D is dominated by technical professionals. Other than the support occupations, most jobs require postsecondary education in a STEM field. The following jobs account for more than 50 percent of the industry, and almost all of them are expected to grow during the next decade (Figure 3.19).
Figure 3.19 Top jobs in the R&D industry in Ohio.
With the growth in the R&D industry across occupations, Ohio will have increasing workforce demands in these STEM fields. Currently, regional completions in STEM fields are keeping pace with the workforce demand. The following table shows the R&D occupations across all industries (Figure 3.20).
Figure 3.20 Gap analysis of top R&D jobs across all industries.
Research expenditures
Understanding the workforce demand in the R&D cluster is only one critical factor to determining the health and potential growth in the state. Commercialization and entrepreneurship success cannot be measured using traditional metrics, like jobs.
Ohio agencies have consistently led the state in R&D expenditures, and this trend is expected to continue. As some R&D powerhouse states like California have seen a decrease in expenditures, Ohio’s have continued to increase (Figure 3.21).
Figure 3.21 Change in R&D expenditures by state.
If this trend continues, Ohio has the potential to close the gap with California. As this process occurs, however, strategies must be put into place to leverage the innovations resulting from these expenditures. R&D must be converted to commercial application if the state wishes to convert these investments into real economic growth. This could be a bigger challenge for Ohio than any of the states listed due to the source of these expenditures. Ohio has a disproportional emphasis on companies and individuals contracted to conduct this R&D compared to the top 10 states (Figure 3.22).
Figure 3.22 Top 10 states in R&D expenditures by source.
In line with R&D expenditures, and with federal organizations like Air Force Research Laboratory and NASA Glenn investing heavily in R&D, an important metric to monitor is Federal obligations. Ohio performs well in this category (in the top 15 states) and could be positioned to improve its federal contract wins (Figure 3.23).
Figure 3.23 Federal R&D obligations by state.
Federal/military sector
Ohio ranks 14th in the US for the number of civilian and military jobs. Like most of the other states employing large numbers of civilian and military workers, Ohio’s federal jobs are projected to decrease. This aligns with the decrease of federal budgets and expenditures (Figure 3.24).
Figure 3.24 Top states for federal/military jobs.
Understanding occupational demand for federal jobs in Ohio is challenging, since 40 percent of the staffing pattern is made up of military positions which are not disclosed in labor market data. However, of the remaining 60 percent (civilian positions), most of the in-demand positions are declining (Figure 3.25).
Figure 3.25 Top jobs in the federal/military industry in Ohio.
The federal civilian occupations are also in-demand in other industries, so a view of occupational demand across all industries is a better view of where workforce shortages may exist. The following table also shows gaps in degree completions related to the specific occupation (Figure 3.26).
Figure 3.26 Gap analysis of top Ohio federal/military jobs across all industries.
Aviation
As the aviation industry is considered a support industry that is driven by consumer demand, it’s an industry that should be monitored. It is an industry that impacts the workforce of other industries, but it is not a driver industry for the state’s aerospace and aviation networks (Figures 3.27 and 3.28).
Figure 3.27 Top states for aviation jobs.
Figure 3.28 Top jobs in the aviation industry in Ohio.
Unmanned aircraft systems
The Unmanned Aircraft Systems (UAS) industry segment is still undefined. The primary organization used to benchmark data regarding this segment is the Association for Unmanned Vehicle Systems International (2013). AUVSI released an economic impact report in March 2013 entitled “The Economic Impact of Unmanned Aircraft Systems Integration in the United States.” In this report, they applied an aircraft manufacturing staffing pattern to attempt to quantify the impact of UAS integration into the National Air Space (NAS) and used current aerospace activity and infrastructure to project job growth. Using this staffing pattern, they project job growth because of UAS usage for public safety and precision agriculture. One major concern with the use of this staffing pattern is that the UAS that will likely be produced will be significantly smaller than commercial aircraft and will be heavily reliant on sensors and other electronic components unique to the systems. This means greater attention on information technology and light weight polymers would be a good strategy verses expecting existing aircraft engine and parts manufacturers to expand their networks naturally. Ohio performs well using this staffing pattern because of the state’s aircraft business; however, it’s unlikely the scale and complexity of the engines produced in Ohio would be applicable.
One of the more insightful statements supplied in the report is that “states that create favorable regulatory and business environments for the industry and the technology will likely siphon jobs away from states that do not.” While the data supplied in the report places Ohio among the top 15 states poised to grow because of UAS integration into the NAS, these are merely projections based on models and the state can rise or fall based on their strategies to capture shares of the manufacturing market. Many of these jobs the UAS will perform may be new jobs that were impossible to accomplish without an unmanned system or these jobs could lead to the loss of jobs the UAS purpose would replace. Workforce strategies should be developed to train the workforce already in public safety and precision agriculture to adapt to this disruptive technology (Figures 3.29 and 3.30).
Figure 3.29 Projected jobs created by UAS industry 2015–2017.
Figure 3.30 Projected jobs created by UAS industry 2015–2025.
Building a workforce development ecosystem
The chapter thus far outlined an in-demand industry for a region of the country. In addition, the chapter specifically details how a region of the country could analyze an industry and study the demand and supply of its workforce. This type of analysis is the critical first step and ongoing need in building a robust ecosystem to support an industry. An ecosystem in a region includes many different entities. To build a robust ecosystem in support of an industry, it is important to have all stakeholders around the table. For example, the aerospace and defense industry ecosystem would include the following stakeholders:
- Federal government
- State government
- Higher Education
- Primary & Secondary Education
- Industry
- Non-profits
- Professional Organizations
The Ecosystem should appoint a leader and develop a strategic focus and vision to be most effective. The goal is to work together in a collaborative way, for the betterment of all in the industry across the region. This initiative is more achievable with collaborative agencies sitting at the table and with incentives layered into the ecosystem through the Federal or State government. A healthy workforce ecosystem can have three states: meeting current industry demand (Steady State), anticipating future industry demand (Predictive State), or strategically driving industry growth (Driver State). Each state has common elements: investors, producers, consumers, and maintainers; however, the groups that comprise each element can be different for each state.
The lowest energy state is the Steady State focused on meeting the current demand, although this still requires healthy collaborations. In the Steady State, investments from government agencies and industry are directed by the source of investment to meet the greatest, current gap in workforce supply. Education and local unemployment providers serve as producers to direct the workforce into training programs that will meet the demand. Industry works as consumers, hiring and recruiting talent and ensuring on-the-job training is available to retain the talent. Non-profits serve as maintainers, ensuring the investors and producers are responding to changes in the ecosystem as changes naturally occur. This model ties overall economic development growth to the same growth rate as the existing industry. This can be effective if the existing industry is projected to grow.
The community should always maintain a healthy Steady State, but also develop a strategic vision. This can take two forms: anticipating future industry growth or driving growth. Both states require a robust network of implementers and funding sources with the flexibility to respond to opportunities. Both states represent risk to investors but with the participation of the correct collaborators and the availability of funding with some risk tolerance, these states can have the highest return on investment. The most important consumers are existing businesses, but the source of these consumers is different between the Predictive State and the Driver State.
In a Predictive State, the network is anticipating future growth. A strong economic development arm, producers, is needed with the ability to understand national and global industry trends, strong industry partnerships, and the ability to convene both producers and consumers for proactive activity. Critical to this system is engagement of the growing industries, the consumers. They may not be the industries with the strongest representation or the most capital to invest. In this state, the growing industries are not the investors; rather, they are those companies and entrepreneurs connected to the larger network (local, state, national of global networks) of future growth areas. If a critical mass of entrepreneurs can be organized, venture capital becomes the most important currency in this ecosystem, supplemented by the established industries which would benefit the most by the future growth. To ensure government investment, which is inherently risk adverse, is used with the largest impact, the workforce which would be the most impacted by a shift in industry focus should be identified and training programs should be developed by the providers in anticipation of the entrepreneurs’ demand, either through direct jobs or indirect jobs. It’s important this workforce investment does not occur too early in the process, training workers for jobs which are not yet available will lead to migration out of the community. The most important consumers in the Predictive State are start-ups and the maintainers are those non-profits providing entrepreneurial services.
The Driver State is the ecosystem state with the most energy required, longest timeframe, and highest risk. This model became popular amongst economic development groups employing industry cluster strategies. To be successful the following is required: flexible capital, information and data-driven strategies, a realistic vision of the time required to reshape the industry sectors, a high tolerance of risk, selective participation of stakeholders, responsive higher education, and industry expertise to aid in strategic planning. Huntsville, Alabama is a good example of this ecosystem being successful. The region committed to biotechnology growth and STEM education decades before they witnessed the benefits of those efforts. The Huntsville MSA was named the fastest growing tech hub of 2017 in a study published by ZipRecruiter with a tech job growth rate of 309 percent. In this ecosystem network, public-private partnerships were critical for long-term growth. This long-term growth has taken more than 60 years to realize. The Driver State is a marathon, not a sprint. The strategic plan starts with elementary school programming. In Hunstville, for example, second graders learn to code, and this focus on future skills continues throughout the education system, growing a workforce that will be capable of shaping the targeted industries. Producers in this state become the entire education continuum. Consumers include not just driver industries, but also infrastructure designed to shape the quality of life needed to retain talent. The maintainers are the most important members of this ecosystem. These are regional organizations which have cultivated the networks with the most influence in the community, but also have circles of influence outside the community. This could be the local government, military installations, collaboratives, or strong industry pillars.
For Southwest Ohio, the aerospace and defense industry may be an attractive target for the Driver State model. Like Huntsville, the federal installation R&D has the potential to produce the technology of the next century, but it must be harnessed today. Many attempts have been made to tap into the intellectual capital in AFRL represented by thousands of unlicensed patents. Continued efforts to break into this nearly pristine space are needed, and perhaps the best option for the region is to focus on a Predictive State, growing the entrepreneur space, in anticipation of a successful Driver State strategy.
To do this, leveraging the growth in the R&D sector will require a shift in business practices, using network models that enable exponential growth. For a network model to be successful, all nodes within the network must both give and receive value. From the organizations conducting research all the way to the customer who will buy a commercial product, all participants in the commercialization process must create value.
With respect to the potential loss of STEM graduates produced in Ohio, but not hired in Ohio, the best strategy to retain those workers is to connect them to nodes in a network for them that will be valuable before they graduate. In a recent report, a large IT company reported 80 percent of its US workforce was white. This stark data point speaks more about networks than it does to inclusion. Companies will hire from programs they’re familiar with and students they know are up for the task. As a summarizing view, Figure 3.31 illustrates the elements of steady state, predictive state, and driver state that could serve as anchors for innovation and local business development.
Figure 3.31 Graphics of steady state, predictive state, and driver state.
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