Across the country, manufacturing has a strong presence in terms of its impact on states’ economies, with it playing a bigger role in some states than others. Then there’s Texas. With a manufacturing workforce of over 869,400 individuals, whose work across various industries contributes almost $192 billion annually to the state’s economy, it is the regional ‘crown jewel’ of United States’ manufacturing. And that jewel is expected to soon glimmer even brighter.
In a conversation with Steve Engelhardt of Industry Today, Tony Bennett, president of the Texas Association of Manufacturers, talks about why the state’s manufacturing scene is so successful, the blossoming business opportunities for the sector that lie ahead, and the challenges that his organization and the state as a whole are working to overcome to enable a smooth transition into the future.
“The goal has always been to create the kind of business environment that folks can really thrive in,” says Bennett. And they’ve been able to do just that. With a massive workforce whose average compensation is around $75,000 a year, it can be looked at as the true “land of opportunity” for manufacturers in the U.S. and around the world.
If the present manufacturing scene looks good, the future is going to look great, according to Bennett. When asked about where he sees the future of Texas manufacturing heading, Bennett held no reservations in his optimism, saying, “I think what we’re about to see here in Texas is the biggest manufacturing renaissance since the discovery of oil.”
That’s a big statement, to be sure. But the recent shale gas boom has the state’s energy and chemical industries surging to new heights and will continue to do so over the next decade. Bennett says the surplus of energy will allow companies to use natural gas as a raw material to make plastics, as well as use freed up oil and natural gas liquids to fuel manufacturing plants that need cheap energy.
Another significant contributing factor is the impending expansion of the Panama Canal that will usher some of the world’s largest ships into the state’s many ports. Texas is the number one exporter in the country and almost 93 percent of exports within the state comes from the manufacturing sector. With bigger, faster, and stronger ships that will now be gliding into the various ports located along the coast of southern Texas, that number of exports is expected to jump even higher.
Bennett says that these factors combined with Texas’ highly esteemed business environment and workforce have paved the way for “announcements in manufacturing over the next five to 10 years that will total over $50 billion in investments.”
Shoring Up the Skills Gap
Future prospects appear to have Texas set up to continue its manufacturing engine steamrolling ahead. The topic of job creation is also set to benefit from it as well, although it brings some potential issues with it as well.
Bennett says that for every manufacturing job that is created in Texas, an additional four or more jobs in the service sector open up and need to be filled. This is a good problem, he says, but notes that the looming mass Baby Boomer retirement that is set to occur over the next decade will leave plenty of openings to be filled. In fact, as of now, the U.S. Bureau of Labor Statistics reports that for every three skilled workers who retire, only one person steps up to fill the gap. With respect to Texas, it means that there are plenty of jobs opening up now or in the near future, but the lack of available candidates to take these positions could lead to a depleted and inexperienced workforce.
The question that remains, and one that many other states around the country are determining the answer to as well, is whether or not they’ll have a younger, trained workforce ready when the time comes to step in take over the reins.
Bennett says that a big step was taken in the process when the Texas House of Representatives created, for the first time ever in the state, a subcommittee on manufacturing that serves as part of the state’s overarching economic development committee. He says since the subcommittee’s inception, he and other individuals in the manufacturing sector have made a lot of progress in pushing legislation centered on improving workforce readiness and drawing up the programs to be put in place that serve to do so.
“Workforce readiness is something that is paramount to us, and it’s been our banner cause in terms of how we have been developing and promoting manufacturing legislative initiatives throughout the state tackling the issue,” he says. Bennett says the most important factor lies at the high school level, where his organization and other Texas manufacturers are pushing for a much more flexible curriculum to be made available to students. “We need to be able to get these kids, at a young age, to be able to understand what kind of workforce skills are necessary in the modern manufacturing economy,” he says, adding, “we don’t want to take away from anything else in their course work, but wish to add additional options that relate to manufacturing for students to enroll in that would allow them to be properly qualified when the time comes to enter the workforce.”
For example, students in Texas can now take additional courses with a focus on fields like engineering, welding or electronics that count toward one of many international industrial certificates that are required to work at manufacturing giants like General Electric, BMW, or Siemens.
“We want it to be so that the students can progress through their standard high school education, but still be able to gain tangible experience in manufacturing-relate courses at the same time.”
Bennett points to an example of a young man from San Antonio, as how he envisions the way things should go. The individual testified before a Senate committee in 2013, explaining workforce readiness and the steps he took to ensure it wouldn’t be an issue for him. While in high school, he was able to gain waivers that allowed him to take additional classes geared toward an industrial occupational certificate. In addition, he was taking college credit-based classes as part of his regular high school curriculum.
By the time he graduated from high school, he had accumulated credits in three separate areas; his high school diploma, college credits through advanced placement, and an internationally-recognized industrial occupational certificate. Upon graduation, the certificate he earned allowed him to go to work for Lockheed Martin, who in turn repaid his hard work and dedication by providing some funds to enable him to continue his education into college.
The end result? He graduated with a degree in engineering and now serves as one at Lockheed Martin. “That’s the scenario we want from every kid in Texas,” Bennett says.
Legislation that Leads
Bennett says they’re certainly on their way, given the progress made with the recent passage of House Bill 5. The bill zeroes in on high school students and assists them in identifying the career path to take when they enter into college. Five major degree options (Business and Industry, STEM, Humanities and Fine Arts, Mutli-Disciplinary Studies, and Public Services) are outlined and explained for students. The students then work with their parents and high school counselors to determine the route they want to go and are required by senior year to have a college and career readiness plan set in place.
He says this not only helps educate young individuals about what the modern manufacturing scene is all about, a perception manufacturers are working hard to change, but also lowers the general dropout rate by providing a path toward tangible opportunities and good-paying jobs after high school.
The issue of workforce development and the impending skills gap issue that spawns from deficient practice of it is something that the U.S., and by extension the rest of the world, is going through. But with Texas, whose manufacturing future is almost blindingly bright, they are implementing innovative and enduring policies to ensure that this won’t be a problem for their manufacturing industry when push comes to shove.
“Texas is growing by leaps and bounds,” Bennett says, “and we have every intention of ensuring we have the foundations ready to support this growth as we move into what is quite an exciting time for those of us in the manufacturing industry.”
About the Texas Association of Manufacturers
The Texas Association of Manufacturers (TAM) represents over 450 large and small companies from every manufacturing sector, employing more than 869,400 Texans with an average compensation of $75,400 a year (the highest in the private sector). Texas manufacturers contributed $192 billion to the Texas economy in 2011 and one-third of all corporate taxes collected by state and local governments. Manufactured goods account for 93 percent of all Texas exports and Texas has held the distinction as the #1 exporting state in the U.S. for seven consecutive years.