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Any site selector will tell you that labor is among the most significant of all location investment

variables, so much so that according to a recent survey labor-related factors accounted for seven out of

the top 20 location considerations factors and included labor availability, labor quality and the cost of

labor, among others.

This should surprise no one as labor is the intellectual asset of a company. When an employer is

considering a possible relocation, expansion or consolidation of any kind, the discussion inevitably turns

to the workforce. How will companies recruit, replace, retrain? How will their current workforce be

impacted? Labor can pose a very real risk or create tangible financial, operational and strategic benefits

for companies and their stakeholders.

Companies that recognize the value of talent also appreciate the inherent benefits of employee

development. Today, a wide range of training opportunities are available for both blue and white collar

workers including everything from basic skills such as reading comprehension and oral communications

to more advanced skills such as blueprint reading, CNC and PLC operation, problem solving, leadership

and management techniques. As a result, states have responded with new and different job training

incentives to help reduce the time and defray the cost of these efforts.

KEY REASONS WHY COMPANIES RELY UPON WORKFORCE TRAINING INCENTIVES

1. Skilled employees will always be needed: The recession may have dampened debate about

expected labor shortages and the impending retirement of baby boomers, however, there is no

argument that a skilled workforce will always be in demand, particularly as competition increases in

markets around the globe.

2. There is increasing complexity in the workplace: With technological advancements, local and global

competition and a greater emphasis on the bottom line, the workplace has changed significantly,

impacting nearly every industry and pushing employers and employees to do more with less,

produce faster, streamline and multi-task.

3. Skills upgrades can help develop a richer workforce, fulfilling short and long terms needs: Training

can help employees grow intellectually and make their company more competitive.

4. The upfront costs to train and prepare the workforce are considerable: According to the American

Society for Training and Development, US companies spend an estimated $134 billion annually on

employee training. The data speaks for themselves. Training is costly, in time, money and

resources. Article contd on next page.

By Jisun Kim, Communications Director for Biggins Lacy Shapiro & Company

Article in Site Selection Magazine, 2010

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THE TRUE VALUE OF WORKFORCE TRAINING

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TRUE VALUE OF WORKFORCE TRAINING (CONTD)

HOW STATES ARE RESPONDING

All states understand that one of the keys to attracting and retaining jobs and investment is having the right

blend of skills and experience available in the workforce. More attuned states also understand that trainingprograms are an integral part of their states incentive toolbox and that effective training programs better

position their state when a new or existing employer needs to ramp up quickly.

The most sought after are training incentives that go right to the bottom line via cash grants and direct

reimbursement for eligible pre-employment and on the job training expenses.

Florida, for instance, has tailored separate training incentives around the needs of incumbent and new

employees. The Quick Response training program is structured as a grant administered through the local

community college network or area technical center. The program covers instructors salaries, the cost of

curriculum development and text books.

Floridas Incumbent Worker Training program is aimed at a somewhat different demographic employees who

must adapt to new technologies or processes on the job. Assistance takes the form of an outright grant,

though the amount is limited to $50,000.

On the other hand, Georgias highly-regarded Quick Start customized employee training was designed to

address the needs of new or expanding employers and delivers training at no cost to employers via the states

technical colleges and satellite campuses.

Louisianas new FastStart program was modeled after Georgias and combines that programs very bestfeatures with very reasonable eligibility requirements and benefits that address the needs of specifically

targeted industries such as digital media. Quick Start, FastStart and similar programs are highly favored by

companies, as they help to defray up-front project related expenses and go right to the bottom line.

North Carolina adds a wrinkle found in several other state training programs. The states Customized Job

Training program will reimburse up to 50% of employee wages for training involving elderly, economically

disadvantaged and dislocated workers.

Which is not to say that state programs designed around state income tax credits are not valued as well.

Georgias Retraining Tax Credit also targets workers who need to adapt to new technologies. The credit cannotexceed $1,250 per employee but may be used to offset as much as 50% of a companys state income tax

liability.

Article contd on next page.

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NEW YORK

215 Park Avenue South,10th Floor

New York, NY 10003

(646) 652-7555

PRINCETON

47 Hulfish Street, Suite 400

Princeton, NJ 08542

(609) 924-9775

JAY BIGGINS | Executive Managing Director

JOE LACY | Managing Director

ANDY SHAPIRO | Managing Director

EVALUATING THE EFFECTIVENESS OF JOB TRAINING INCENTIVES

As with any incentive program, workforce training programs need to be reviewed against a companys specific needs

and situation. The most effective incentives are generally those that are flexible, accessible, manageable, and backed

by a stable source of funds. Most importantly, such incentives most respond to a companys most pressing needs

(such as saving time and conserving resources) while also contributing to the public good.

Here are some tests that can help gauge the effectiveness of almost any job training incentive program:

Flexibility: Tax credits may sound great, but if a company projects that it will have insufficient state tax liability the

credits could be worth far less than it appears, or perhaps nothing at all. The most useful tax credits can be sold,

refunded or assigned to related entities that have the ability to utilize them.

Accessibility: The earlier that assistance is delivered the better. Training grants and cost reimbursement that are

supplied at the outset of a project will have the greatest potential impact on the projects financial feasibility and

work to mitigate project-related risk at a time when a company can be most vulnerable.

Manageable: Some programs make compliance and administration so arduous that employers may simply opt out.

Failure to enjoy the benefits that had been so carefully negotiated can damage the reputations of the project team

and the areas economic development organizations.

Funding: The lack of a stable and reliable source of funds for job training incentives can turn an asset into a very

obvious liability. Even where funding is limited, projects often can reserve an appropriation prior to an actual

announcement.

Serve the Public Good: As shown above, some of the most effective training programs will focus on both new and

incumbent workers in various combinations. Workforce skills upgrades are among the most fundamental locational

assets. They are portable, deployable and, most importantly, will remain available long after a project has concluded.

ABOUT BIGGINS LACY SHAPIRO & COMPANY

For more than 25 years, Biggins Lacy Shapiro & Company has provided professional expertise and creativity in the

field of Location Economics: the mix of specialized disciplines that enables companies and communities to plan and

execute successful location strategies. We create value on both the demand and supply side of the market for

corporate location decisions.

ABOUT JISUN KIM | COMMUNICATIONS DIRECTOR

Ji oversees the development and implementation of communications strategies in support of BLS

incentives projects. Prior to joining BLS, she was responsible for developing marketing strategies for The

Wall Street Journal and The New York Times, supporting advertising revenues of $100 million annually and

circulation revenues of $15+ Million annually respectively.

TRUE VALUE OF WORKFORCE TRAINING (CONTD)