‘Come here, we will give you a great deal on real estate!’ ‘No, come here and you’ll get a tax break!’ ‘No, come here instead and we have a grab bag of subsidies so awesome it will be like you are operating for free!’That’s what it must sound like to a lot of companies in the process of expansion who decide to see what kind of support they can get from their potential new-homes. Towns, cities, states, provinces, countries – everyone wants to grow their industrial bases and so are willing to invest a lot into pulling in blue-chip businesses. Question is, once you are lured them in, then what?
If you are New Orleans and you lure in GE Capital, apparently the answer is that you work very hard to develop a home-grown labor force that will benefit the company and the city. That’s the conclusion of this article from Forbes that follows up on the entrance of the company into a city which has always been known as more of a tourist mecca than a tech hub. Something has gone right with the partnership though, and there may be lessons in it for other regions, and for other companies as well.
Let’s go back to the GE Capital’s 2012 announcement that it was going to set up shop in New Orleans. The new GE Capital Technology Centre was to produce 300 new jobs paying between $60,000 and $100,00 plus benefits, and the state estimated that it would lead to another 301 indirect positions (I’m not sure how they could be exactly that precise, but okay). The reasons cited for choosing New Orleans out of hundreds of other contenders ranged from ‘a rapidly growing technology sector’ to ‘quality of life’ to ‘a competitive incentive package from LED’. That last reason was undoubtedly a key one. At the time of the GE Capital announcement, the state was spending heavily to attract technology, with some success. Although the final tally on how much it cost to bring in GE is not clear, it included $10.7 million up front, plus $500,000 a year for a decade.
But once you bring in the business, how exactly do you staff it? Even companies in technology hubs such as Silicon Valley find it difficult to attract the kind of workers they need, and harder still to keep them around. New Orleans, fun as it might be, did not have has a ton of new graduates, or experienced workers to grab those 300 jobs or whatever. That meant, according to the Forbes article, staffing up with people from other states. That makes you wonder if you can actually call the whole thing creating Louisiana jobs, which one would think was the point.
But GE Capital and New Orleans have apparently gotten something right in that they have figured out to create the workers they need from the existing population. There may not be a Stanford or MIT or University of Waterloo in New Orleans, but there is the University of New Orleans, and it does have a computer science department. Led by an energetic chair, that department worked with the company to craft the kind of workers that the company needs. The company, in turn, provided students part-time and summer employment. The end result is graduates with jobs who do not have to leave home, as well as custom-crafted employees for the company. If it works – and it does seem a bit too good to be true – it will work out rather nicely, in that those hometown employees are likely to be less a retention problem than regular tech employees, a big deal when you consider the price of recruitment and training.
So are there lessons for other regions from the GE Capital experience? Well, clearly it helps if you start with a pile of money that you can dole out, but to be fair that is not necessarily a harbinger of success in itself. What seems to have worked in this case is the partnership with a educational institution and a commitment to establish a pipeline that would take a while to actually produce workers. It is an apprenticeship program, by any other name.
Companies tend to be wary about establishing apprenticeships, and New Orleans probably had an ‘advantage’ in that was economically disadvantaged, which made the company less cautious about training apprentices who might be snapped up by other companies soon after graduation. But let’s remember the winning combination: city support and apprenticeships could go a long way towards solving problems for a lot of players.