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BBA Digest: What CEOs Are Thinking

What CEOs Are Thinking

U.S. consumers remain uncertain about the economic environment but CEOs are feeling incredibly confident, according to the latest survey from the Conference Board.

Confidence among chief executives jumped 19 points from its last reading in July, rising above the 50-point threshold that reflects more positive than negative responses for the first time since 2018.

But, but, but: CEO confidence is not always beneficial to workers. Over the next 12 months, CEOs said they expect to cut jobs, hold down employee pay and reduce capital spending.

• 37 percent of CEOs expected to reduce their capital budgets in the year ahead, while 38 percent expected no change and 25 percent anticipated increasing spending. This may translate into few expansion projects for economic developers to work.

• 34 percent expected a net reduction in their workforce, another 34% expected no change and just 9 percent expected an expansion of the workforce above 3 percent.

• 21 percent foresaw no increase in their employees’ wages and 5 percent said they may reduce wages.

• 62 percent of CEOs expected little to no problems finding qualified workers (somewhat surprising to me), while 11 percent expected widespread talent shortages or hiring problems. 

A Virtual Tour

More and more, I'm getting emails featuring virtual tours of properties. I think it's a great idea, and thought I would share one with you. It's from Charlie Jewell, executive director of Onward New River Valley, based in Blacksburg, Va. (Beautiful country by the way.) See it here. The ONRV video features a 20.7 acre publicly owned site with an existing 14.3 acre pad that can accommodate a building up to 205,000 SF. It's located in Falling Branch Corporate Park, a 295-acre industrial park located in Christiansburg, Va. All major utilities are there: Water (750,000 gpd), waste water (4M gpd), natural gas (6 psi) and electric (20 MW substation adjacent to the site). The property has excellent visibility from I-81 (45,000+ cars/day) and is within one mile of an interchange. It's 10 mins. to Virginia Tech, a top 40 research university, and 30 mins. from ROA airport. Total population within a 60-minute commute is 560,071.

Charlie said ONRV has pivoted to a "mostly digital world for outreach."

"This is the first of a series of virtual tours we are producing/rolling out over the next six to eight months featuring sites and buildings in Virginia's New River Valley," he said.

Pretty cool stuff. Way to go, Charlie.

Fast-Forwarded Digital Adoption

If there is one thing that economic developers should try to be on top of, it's this: COVID-19 has escalated digital initiatives into digital imperatives, as companies rethink their skills needs as their business models change. It's one of the topics that my friend Erik Collins, director of Montgomery County Community & Economic Development in Dayton, Ohio, wants me to speak about during an upcoming class that he will teach at the University of Oklahoma's Economic Development Intitute.

By some estimates, the business community's response to the pandemic has fast-forwarded digital adoption by five years, resulting in what promises to be a massive skills shift.

"That's spot on at Dysinger! We're getting smarter really quickly," said Greg Dysinger, a Dayton, Ohio-based precision machining company serving the aviation and aerospace industries. Many companies are not prepared and don't know what skills they will need for digital transformation. And if they haven't figured it out, then the same holds true for educational institutions and economic development/workforce development organizations. One thing we do know is that the pandemic has prompted a spike in data breaches and ransomware attacks as the shift to remote working has played havoc with corporate security. In 2019, the Cybersecurity Workforce Study from the International Information System Security Certification Consortium estimated the US had 804,700 cybersecurity professionals but needed 500,000 more, a deficit of 62 percent.

BBA team member Barry Albrecht reminds me almost on a weekly basis the importance of cybersecurity as a growth industry and he's right.

Learning the Real World

I had a very interesting conversation this past week with the head of a high school vocational/tech program. He said he wished that more of his teachers could get internships, paid for by the school system, with local companies to learn real-world skills to pass along to their students. He said, and I agree, that many teachers know theory and are "book smart" but have little or no practical experience in what they are teaching. I wish him all the best in making this happen in his community. Cooperation between educators and the business community is absolutely essential for upskilling.

Big Projects: Pratt in NC; Amazon in Texas

Pratt & Whitney, a division of Raytheon Technologies Corp., last week announced plans to build a $650 million manufacturing plant in a Buncombe County, NC. The project will create 800 new positions through 2027 including career opportunities in engineering, technology, production and management. The new, 1-million-square foot facility will house an advanced casting foundry for the production of turbine airfoils as well as conduct machining, coating and finishing of airfoils onsite. The plant will implement manufacturing technologies and processes exemplifying industry 4.0 manufacturing principles and will complement existing turbine airfoil work that is done across Pratt & Whitney’s facilities.

Amazon on a Tear in Texas

Amazon has been on a building binge in Texas this year as it cements its dominance in the online arena during the pandemic. The latest: A 700,218-square-feet distribution center and warehouse on a 93-acre site in Waco that will employ up to 1,000 workers. It was officially announced on Friday in a ceremony attended by Texas Gov. Greg Abbott.

The Greater Waco Chamber of Commerce, the Waco-McLennan County Economic Development Corp. and the Waco Industrial Foundation worked together on the $200 million project. 

Amazon Texas projects announced in 2020 include: • A distribution center with 820,000 square feet under construction in Pflugerville, with 1,000 jobs expected. Local governments contributed $3.8 million in incentives for the $250 million project. • A fulfillment center and "last mile" delivery station in Forney, announced last month, with a combined 1.2 million square feet. • A distribution center in southern Dallas with 1 million square feet, announced in July. • An 850,000-square-foot fulfillment center in Richmond in Fort Bend County, announced this summer, that will employ 1,000 starting in 2021.

Apprenticeships: A Pratical Pathway

The challenge before us: A mass redeployment of labor from one set of skill demands to another, while minimizing harm and displacement. I had a lengthy conversation this morning with a foremost expert in apprenticeships, who told me that more and more U.S. companies are taking the lead of European companies, by offering apprenticeship programs. Still, progress has been spotty at best. Virtually everyone agrees we need to invest more in skills training, but why isn't it happening to the degree that it should? That's the $64,000 question. We have to teach actual vocational skills, not limited to the industrial trades, and "upskilling" should be a lifelong process that is offered in virtually every community in this country. But we're not even close to that point. The main pathway in the U.S. has been the traditional academic, classroom-based path from high school to college and university degrees, focused on theoretical learning and analytical skills. Graduates may be book smart, but that's about it. A practical pathway for learning applied skills while working in various fields, such as licensed professions (including health care), the trades, sales, public administration, technology, banking, is a better way to go. Apprenticeships accomplish that very thing.

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