Boeing`s Departure from Long Beach... Now What?

Report
Boeing’s Departure from Long Beach…
Now What?
John Hawkins, Senior Consultant
[email protected]
When a major employer decides to
pack up and leave…
• How will that impact the local economy?
• Which industries and occupations will suffer?
• What will that do to the education pipeline?
• Where will all the displaced workers go?
• What steps can you take to help prevent this
from happening in the first place?
Examining the Impact of Boeing’s Long
Beach Plant Closure and How Workforce
Practitioners Can Respond Using Data
Who is EMSI?
(Economic Modeling Specialists, Intl.)
• Founded in 2000 by two economists /
professors from the University of Idaho
• Economic and fiscal impact studies
• Regional economic models, unparalleled LMI
Boeing’s Long Beach Location
• Southwest
L.A. County
A Long (Beach) History
• The 1.1-million sq. ft. plant has been a fixture
of the Long Beach economy since 1941 (7+
decades)
• Douglas Aircraft Company (later McDonnell
Douglas) supplied the US Air Force with
aircraft during World War II
• McDonnell Douglas & Boeing merged in 1997
and began producing the C-17 Globemaster III
C-17 Globemaster III
Analysis Region
• 25-mile ZIP code radius from the C-17 plant
• Includes ZIP codes from L.A. and Orange counties
Aircraft Manufacturing (NAICS 336411)
Impact to the Local Economy
(using an Input/Output Model)
• Boeing’s C-17 plant closure is expected to yield
1,410 displaced jobs - many are hourly positions
for aircraft mechanics, engineering techs, and
misc. production workers
• For every laid-off worker, 2.68 jobs in other
industries will also disappear (job multiplier of 3.68)
• Equates to a loss of 3,781 more jobs for a total
regional job loss of 5,191 (3,781 + 1,410)
Impact to the Local Economy
(using an Input/Output Model)
• The average earnings for each job lost is $80,435
(average earnings for the region are at $63,700)
• Regional earnings will be reduced by $417
million ($190 million just from the 1,410 layoffs)
• Aside from manufacturing, most job losses will
occur in service industries
Impact to Industries
Manufacturing
-1,985
Health Care and Social Assistance
-434
Retail Trade
-346
Professional, Scientific, and Technical Services
-324
Accommodation and Food Services
-293
Administrative and Support and Waste Management and Remediation…
-256
Other Services (except Public Administration)
-253
Finance and Insurance
-202
Wholesale Trade
-188
Management of Companies and Enterprises
-179
Real Estate and Rental and Leasing
-144
Transportation and Warehousing
-137
Government
-109
Construction
-109
Educational Services (Private)
-86
Information
-65
Arts, Entertainment, and Recreation
-64
Utilities
-7
Mining, Quarrying, and Oil and Gas Extraction
-7
Agriculture, Forestry, Fishing and Hunting
-4
-2500
-2000
-1500
-1000
-500
0
Impact to Occupations
Production
-647
Office and Administrative Support
-642
Sales and Related
-506
Architecture and Engineering
-486
Business and Financial Operations
-428
Management
-401
Food Preparation and Serving Related
-267
Computer and Mathematical
-238
Installation, Maintenance, and Repair
-201
Personal Care and Service
-180
Healthcare Practitioners and Technical
-169
Building and Grounds Cleaning and Maintenance
-153
Arts, Design, Entertainment, Sports, and Media
-129
Construction and Extraction
-109
Healthcare Support
-96
Education, Training, and Library
-86
Protective Service
-56
Community and Social Service
-41
Legal
-36
Life, Physical, and Social Science
-29
Farming, Fishing, and Forestry
-4
-700
-600
-500
-400
-300
-200
-100
0
Note for the Local Economy
• Boeing will be moving 1,000 customer
support jobs from Washington state to Long
Beach
• These support positions include aerospace
engineers and other high-skilled workers
• It is likely that some of the workers laid off
from the C-17 plant will have job
opportunities in customer support
Impact to Regional Higher Education
(using a Gap Analysis)
• Losing a major employer impacts educators and
students
– Long Beach area community colleges and
other institutions that offer technical training
geared toward aviation occupations
– Students nearing completion of current
training will have to compete with laid-off
workers
Aircraft Maintenance (CIP 47.0607)
Aircraft Powerplant Technology (CIP 47.0608)
Impact to Regional Higher Education
(using a Gap Analysis)
• Of the 6 institutions contributing completers for
these two programs, Crimson Technical College
in Inglewood, CA graduated more than half (244)
in 2013
• Crimson is solely an aviation education provider
– its only graduates in 2013 (per IPEDS) were in
these two maintenance programs
Aerospace Engineering (CIP 47.0608)
Impact to Regional Higher Education
(using a Gap Analysis)
• Regional institutions training Aerospace
Engineers include USC, UCLA, Long Beach State,
and the California Institute of Technology
• The existing undersupply of Aerospace Engineers
could also help newly laid-off engineers find new
opportunities quickly
Helping Displaced Workers Transition
(using a Compatible Occupations)
• 49% of the estimated job losses from the C-17
plant closure will be among men and women 45
years of age or older
• If these workers aren’t rehired by Boeing for
customer service roles or don’t quickly find other
jobs in their field, they will be facing late-career
transitions
Demographic Breakdown of Impact
0
-39
-100
-145
-200
-139
-122
-113
-38
-96
-173
-300
-356
-400
-421
-463
-500
-559
-600
-552
-543
-587
-700
-800
-900
-845
Male 45- Male 25- Male 35- Female Male 55- Female
54
34
44
45-54
64
25-34
Female
35-44
Female Male 22- Female Male 65- Male 19- Female
55-64
24
22-24
99
21
19-21
Female
65-99
Female Male 1414-18
18
Helping Displaced Workers Transition
(using a Compatible Occupations)
• Finding career opportunities that make sense
based on their knowledge and skills greatly helps
this transition process
• Using a Compatibility Index (based on O*NET
codes) we’ve put together a few examples
Career Transition: Aircraft Assembler (512011) to Auto Body Repairer (49-3021)
• Compatibility score = 96/100 (96%)
Career Transition: Aircraft Assembler (512011) to Auto Body Repairer (49-3021)
Outlook for Auto Body Repairers
More Compatible Occupations for Aircraft
Assemblers
•
•
•
•
Rail Car Repairers (96% compatible)
Machinists (96% compatible)
Solar Photovoltaic Installers (95% compatible)
Mechanical Door Repairers (95% compatible)
• All have a median wage at or above Aircraft
Assemblers and anticipate growth over the next
5 years
Career Transition: Aircraft Mechanic (49-3011)
to Industrial Machinery Mechanic (49-9041)
• Compatibility score = 94/100 (94%)
Career Transition: Aircraft Mechanic (49-3011)
to Industrial Machinery Mechanic (49-9041)
Outlook for Industrial Machine Mechanics
More Compatible Occupations for Aircraft
Mechanics
• Mobile Heavy Equipment Mechanics, Except Engines
(96% compatible)
• Gas Plant Operators (94% compatible)
• Manufacturing Production Technicians (94% compatible)
• Electrical and Electronics Repairers, Powerhouse,
Substation, and Relay(95% compatible)
• All have a median wage at or above Aircraft Assemblers
and anticipate growth over the next 5 years
Steps to Prevent Closures or Relocations
• It is good to be prepared to take action after and
employer closes it doors – but taking steps
beforehand to help prevent a key employer from
closing or relocating has many benefits
– Better use of scarce local resources (funds)
– Less economic lag time in the region
– High business retention = better business
attraction
Step 1: Understanding Your Industries
• This is where Target Industry or Sector Strategy
analysis can be very valuable
• Key data metrics for detailed industries (6-digit
NAICS) help to unpack the true regional drivers
– Growth trends
– Concentration (location quotient)
– Import/Export analysis (finding base industries)
Prevention: Understanding Growth
Trends
Prevention: Understanding
Concentration (LQ)
Step 2: Discover Which Industries are
Underperforming
• Some target/driving industries might be large,
highly concentrated, and growing – but are they
performing to their full potential?
• Underperforming industries are a flight risk for
your region so it is vital to identify them, work
with them, and keep tabs on how they do over
time
• This practice can be initiated using Shift-Share
Analysis
Shift-Share Analysis
• Unpacks local job growth into component parts
a. Local growth due to national growth in the
same industry (industry mix effect)
b. Local growth due to overall growth of the
national economy (national growth effect)
c. Local growth due to regional competitive
advantage (regional competitiveness effect)
Prevention: Identifying
Underperforming Industries
(Shift-Share Analysis)
Step 3: Communicating Impacts
• It is critical that local workforce and economic
development practitioners communicate with
key decision-makers and policymakers to ensure
they understand the potential ripple effects of
their actions (or the lack there of)
– Will that policy or law impact how your key
employer conducts business?
– Would a small incentive outweigh the
potential cost of your key employer leaving?
A Few Case Studies
• The Portage County Business Council in Wisconsin used EMSI’s
economic impact figures to help convince legislators that the damage of
losing Skyward, Inc., a local software company, would be too great. The
result: Skyward stayed and is expanding in the region
• The Fond du Lac Economic Development Corporation, also in
Winconsin, used EMSI economic impact numbers to convince city,
county, and state officials to make a more aggressive bid to keep
Mercury Marine, a prominent outboard boat motor producer. The
company stayed in Fond du Lac thanks to the concerted business
retention effort
• The East Kentucky Concentrated Employment Program (EKCEP) used
EMSI data to help win a DOL grant and assist hundreds of laid-off coal
mine workers with workforce transition assistance.
John Hawkins
Senior Consultant
[email protected]

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