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Where are the Workers for the New Economy?

Posted by Christopher Geehern on Nov 14, 2014 8:59:30 AM

(Second of two parts)

Eric Fogg, Bill Bither and Jacob Lauzier carry all the promise and challenge of the Massachusetts economy when they arrive for work each day in a nondescript office in the college town of Northampton.

BlueprintNextCentury-1The entrepreneurs are hard at work on a venture called MachineMetrics, a cloud software solution that improves the productivity of manufacturing facilities by collecting, analyzing and visualizing data from machines, parts and people. The two have already signed up high-profile regional manufacturers like Savage Arms in Westfield and Valley Steel Stamp in Greenfield as customers.

It’s an almost mystical handshake from the future of the economy to the present, from one generation to another, acknowledging the seminal role that both must play to ensure prosperity for the people of Massachusetts in the next century.

“We need to persuade software entrepreneurs looking to create the next app or something in the software industry that there is a tremendous amount of opportunity in manufacturing. We need young entrepreneurs to connect with manufacturing companies and work on new ideas,” said Fogg, who spent 16 years in precision machining and owned his own shop.

MachineMetrics is the kind of company that may ultimately determine the ability of Massachusetts to build upon an economy that  in many ways remains a paradox—an international center of technology, innovation, medical research, financial services and higher learning near Greater Boston but a more traditional, amorphous economy outside of Route 128. Fogg, Bither and innovators like them hold the unique promise of joining the “eds and meds” economy of the 617 area code with existing industries struggling to create jobs for residents in the rest of the state.

It is a promise that will be played out against a vibrant and unforgiving global economy in which investment, resources, jobs, people and capital flow at blinding speed to the most competitive environments. States, regions and nations no longer have the luxury of taking their job bases for granted – failure to nurture the business climate not only impedes the growth of existing companies, but also leads to a silent and corrosive flow of job expansions to other locations that provide employers with the best opportunities for success.

The challenges that MachineMetrics faces are emblematic of those facing the commonwealth as a whole:

  • Will the advanced manufacturing companies to which they want to sell their idea survive in the relentlessly high-cost, high-regulation environment of Massachusetts?
  • Will machinemetrics find the skilled, educated and motivated people it needs to grow and to develop new iterations of the company’s software?
  • Will young companies located in western Massachusetts and other areas outside the Cambridge/Boston innovation beltway develop the critical mass needed to extend opportunity throughout the state?
  • Will the machinemetrics platform make manufacturers so efficient that they will be able to increase business without creating new jobs?
  • Will government regulators encourage the growth of companies like machinemetrics, or will they set up bureaucratic impediments like the ones that recently convinced a neighboring software company in Amherst to move to Texas?
  • Will the government research money that built Massachusetts into a world class center of high education, medical science, biotechnology and defense technology continue to flow or slow to a trickle?

Massachusetts employers share a remarkable consensus about the answers to these fundamental questions. It is a consensus that forms the foundation of the Blueprint for the Next Century, a long-term plan for economic growth and prosperity in the commonwealth. Associated Industries of Massachusetts, the statewide employer association, is publishing the Blueprint on the occasion of its 100th anniversary in 2015.

The employers of the commonwealth respectfully propose the following initiatives to ensure the future of the Massachusetts economy:

  1. Develop the best system in the world for educating and training workers with the skills needed to allow Massachusetts companies to succeed in a rapidly changing global economy.
  2. Support business formation and expansion by creating a uniformly competitive economic structure across all industries, geographic regions and populations, rather than picking winners and losers.
  3. Establish a world-class state regulatory system that ensures the health and welfare of society in a manner that meets the highest standards of efficiency, predictability, transparency and responsiveness.
  4. Moderate the immense long-term burden that health care and energy costs place on business growth.

The Blueprint for the Next Century charts a course that will provide every citizen with the opportunity to build a life, prosper, support a family and share in the economic fortunes of Massachusetts. It is a call to action that embraces the dictum of Theodore Roosevelt, who said “We should not forget that it will be just as important to our descendants to be prosperous in their time as it is to us to be prosperous in our time.”

AIM stands for jobs, economic opportunity, fiscal predictability, business formation, innovation, education and a government that acknowledges that the private sector has the unique ability and responsibility to create the common wealth for the people of Massachusetts.

Topics: Regulation, Health Care Costs, Energy, Workforce Shortage, Blueprint for the Next Century

Workforce Shortage Threatens Economic Path of Massachusetts

Posted by Andre Mayer on Oct 13, 2014 12:03:00 PM

“The economy’s performance is much improved, and prospects are good that it will continue to improve,” Mark Zandi, Chief Economist at Moody’s Analytics, told the New England Economic Partnership’s Outlook Conference at the Federal Reserve Bank of Boston last week.

ManufacturingWorkerSmallU.S. gross domestic product is expanding at an underlying rate of 3 percent annually, he said, though held lower in 2013-14 by fiscal drag from federal budget cuts and tax increases. His forecast shows growth accelerating in 2015-16 before being reined in by rising interest rates.

Zandi rejected the concept of a “new normal” pattern of slow growth like those prevailing in Japan and Europe. The U.S., having controlled unit labor costs better than other economies and achieved virtual energy independence, is now by his analysis the most competitive location in the world. Household debt burdens are lower overall, and public debt, though elevated, is stable and sustainable as long as health care costs are under control. The current slack in the workforce will be absorbed quickly; in fact, he warned, over the next 15 or 20 years, “our biggest problem is going to be a screaming lack of labor.”

Our own region will receive less of a lift than others from the rebound in construction, and will be hurt by constraints on energy delivery and by close economic ties to near-stagnant Europe. The most serious issue confronting Massachusetts and New England, however, is the workforce shortage, which is more immediate for us because of our slow population growth.

The Massachusetts forecast presented by Alan Clayton-Matthews of Northeastern University, a member of AIM’s Board of Economic Advisors, calls for “a modest acceleration though 2016 … followed by a demographic-induced slowdown.”  By the beginning of 2017, he predicted, the state’s workforce will stop expanding and begin to erode as baby boomer retirements outweigh new entrants; and labor constraints quickly slow the state’s economic growth to below the national rate even on a per-capita basis.

This is the kind of big issue, both immediate and long-term, affecting employers’ day-to-day operations and their public policy priorities, which AIM will address in developing The Blueprint for the Next Century, a plan to create jobs, prosperity and long-term economic growth in the commonwealth. We are seeking to identify creative and compelling ideas from employers like you to improve the Massachusetts economy.

Please join AIM's John Regan for a free online discussion next Wednesday, October 15, from 2-3 p.m. to discuss the steps that business, government and other institutions must take to ensure that the next generation of Massachusetts residents will be able to build lives for themselves and their families.

Topics: Massachusetts economy, Economy, Workforce Shortage

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