Rebuilding the Future of American Logistics

April 20, 2011
With the way the economy has been sputtering along the past few years, we'll take good news any way we can get it. In the category of “it'll be nice when it happens, but why do we have to wait so long?” comes a prediction that the unemployment rate will ...

With the way the economy has been sputtering along the past few years, we'll take good news any way we can get it. In the category of “it'll be nice when it happens, but why do we have to wait so long?” comes a prediction that the unemployment rate will be down to 6%... by the end of 2015, more than four years from now. That's according to LifeWork Search, a recruiting company specializing in supply chain planning.

LifeWorkSearch polled its network recently and 51% of the respondents believe that within five years unemployment will reach a more “normal” rate. The company's network, by the way, is mostly supply chain planners, i.e., analytical types who study trends and historical data on a daily basis.

“There has been debate on what the new ‘normal' rate is,” says Jason Breault, managing director of LifeWork Search. “Economists have argued that the normal rate, which used to be considered 5%, is now actually above 6% (6.7%, according to a paper released by the Federal Reserve Bank of San Francisco). Extended unemployment benefits, mismatch of skills and needs between job seekers and potential employers, and deterioration of skills due to the length of being unemployed, are all reasons why the norm has increased.”

So there's two pieces of bad news right there: “Normal” unemployment has been nudged upward nearly 2 percentage points, from 5% to close to 7%. Plus, it'll be quite a few years before we even get back to the revised-normal unemployment rate, and who knows when it'll be before we get anywhere close to the old-normal 5% again?

But before you get too depressed, here's some good news. Breault says that his company has seen “a major uptick in hiring this past year. Companies are opening their doors again.”

He goes on to add, though, that “some companies are responding to the increase in demand for their products by expecting more out of their already exhausted workforce. Luckily we have seen many companies realize that to totally embrace the increase in demand, teams need to be expanded and investments need to be made in talent acquisition. Companies also need to be aware that their workforce is aging and will be retiring soon, more of a reason to invest now.”

So how do we get from here to there, developing a new generation of material handling and logistics professionals to inherit the jobs that come open when the Baby Boomer generation starts to retire?

As I wrote in a previous blog post, one way is to create a workforce diversity plan. Another way is for logistics companies to partner with local schools in programs designed to train young people coming right out of high school, or even younger. At this year's ProMat 2011 show, for instance, I was part of an education-oriented program that included representatives from the Greater Altoona (Pa.) Career and Technology Center, a technical training high school.

According to Kathy DePiro, an instructor at the tech center as well as a licensed logistics technician, “Technical training in high school actually starts with recruiting at the middle school level.”

One of her former students, Craig Eckenrode, was also part of the program and he explained how the school helped prepare him for his current position, working full-time in material handling for Stevens Co., a manufacturer of janitorial supplies. At the tech center, not only did he learn warehouse management skills as well as how to drive industrial vehicles, he came away well grounded in a logistics curriculum. “I learned that transportation is the Number 1 thing that keeps a company going,” he said.

Meanwhile, package delivery company UPS recently signed on to participate in the Skills for America's Future program, a national initiative that aims to connect employers with community colleges to provide 21st century skills to American workers. Several major companies, including Accenture, Gap, Pacific Gas & Electric, McDonald's and United Technology Corp., were early supporters of the program.

UPS's participation is a natural extension of other activities it is already supporting, as the company says it has trained more than 15,000 community college students through various programs in Chicago, Louisville and elsewhere. UPS provides tuition, book reimbursement, bonuses and other incentives to UPS employees who attend the Metro College Program in Louisville and the Chicagoland Regional College Program. The company plans to create a consortium of employers who will work with the community colleges to identify needed skills for the jobs of the future and hire the students once they have graduated.

According to a press release, “UPS's commitment to Skills for America's Future will involve bringing more Louisville employers into the process, promoting career opportunity for community college students, and boosting local economic growth. Its Workforce Advisory Board Initiative will encourage students at Metropolitan College in Louisville to choose identified career tracks and academic plans that currently are in high demand by employers. Specifically, new employers will have an interactive role with the educational institutions to assist in identifying academic skills their companies need.”

Skills for America's Future is an initiative of the Aspen Institute, a non-partisan partnership of businesses and community colleges.