Private Sector Gets Job Skills; Public Gets Bill

Private Sector Gets Job Skills; Public Gets Bill

Travis Dove for The New York Times

Caterpillar trainees in North Carolina. The company says it is investing $426 million in its new factory in Winston-Salem.

By MOTOKO RICH

Published: January 7, 2012

Grading the Digital School

KERNERSVILLE, N.C. — Some of Caterpillar’s newest factory workers are training inside a former carpet warehouse here in the heart of tobacco country. In classrooms, they click through online tutorials and study blueprints emblazoned with the company’s logo. And on a mock factory floor, they learn to use wrenches, hoses and power tools that they will need to build axles for large mining trucks.

The primary beneficiary is undoubtedly Caterpillar, a maker of industrial equipment with rising profits that has a new plant about 10 miles away in Winston-Salem.

Yet North Carolina is picking up much of the cost. It is paying about $1 million to help nearly 400 workers acquire these skills, and a community college has committed to develop a custom curriculum that Caterpillar has valued at about $4.3 million.

Caterpillar is one of dozens of companies, many with growing profits and large cash reserves, that have come to expect such largess from states in return for creating jobs. The labor market is finally starting to show some signs of improvement, with the government reporting on Friday that employers created 200,000 jobs in December.

Although the sums spent on training are usually small compared with the tax breaks and other credits doled out by states, some critics question the tactic.

“The question is, why shouldn’t the company pay for this training?” asked Ross Eisenbrey, the vice president of the liberal Economic Policy Institute. “It’s for their benefit.”

Critics suggest the programs may not even be in the best interest of workers if the resulting jobs pay low wages or simply disappear after a few years, leaving employees with narrow skills that do not help them land new positions. In North Carolina, for example, people are still smarting from the departure of a Dell factory that put nearly 1,000 people out of work just five years after the state spent close to $2 million on training.

Various studies have long questioned whether states get their money’s worth from incentives for companies that build facilities or expand existing ones. In a report last month, Good Jobs First, a nonprofit research organization that tracks such spending, found that states often attract companies that create few jobs, pay low wages or scrimp on health insurance.

But customized job training for a specific employer still holds favor with public officials, who often argue it may be an effective use of taxpayer dollars, especially when so many workers have been displaced. Targeted programs can be preferable to the more general training paid for by the federal government, programs that have been used by hundreds of thousands of Americans yet have left many participants still out of work.

“On the whole spectrum of things that are done to attract businesses, this is one of the best investments and highest return for the invested dollar that our state and many other states do,” said J. Keith Crisco, North Carolina’s secretary of commerce.

Caterpillar, which is investing $426 million in the new factory, is one of several companies supported by North Carolina, where the unemployment rate hovers around 10 percent and thousands of textile, furniture and other manufacturing workers have lost their jobs in recent years. The training support is part of a $51 million package of incentives from the state to lure Caterpillar to Winston-Salem.

The state is also paying to train workers for a new Honda Aircraft factory in Greensboro, an expanding Siemens plant in Charlotte and an existing call center in Winston-Salem for US Airways, which relocated 200 jobs from Manila last year.

According to the state, North Carolina spent about $9.4 million to train workers as part of projects that created nearly 4,500 jobs in the 12 months through June 30. (The total cost per job rises sharply beyond the $2,000 in training because of voluminous tax breaks and other incentives.)

Business executives argue that government-subsidized training is a fair payoff given what the companies bring to the table.

“At the end of the day we’re creating more jobs for the state of North Carolina,” said Mark Pringle, director of operations at a Siemens gas and steam turbine plant in Charlotte that has received close to $1.2 million worth of training from the state for about 700 new workers. “There’s no doubt it’s a competitive process,” he added.

The weak economic recovery has prompted states to be more aggressive in the race to snag precious jobs. Louisiana started a training assistance program four years ago to help companies expand and relocate there, and has ramped up financing despite cuts in the state budget over all. In Wisconsin, Representative Louis Molepske Jr. is proposing legislation to allocate state funds for customized training programs.

Especially with such high unemployment, “politicians of both parties tend to like job training,” said Gordon Lafer, professor of political science and labor education at the University of Oregon. “Because it’s cheap, doesn’t require taking sides and because you can say you’re for workers and business at the same time.”

Workers who have spent months, or even years, hunting for jobs view a training spot as a stroke of good fortune.

Dante Durant, a 42-year-old former Dell employee, had been searching for more than two years when he attended a Caterpillar job fair at Forsyth Technical Community College in June. He arrived at 9 a.m. and was number 1,808 in line. Although he was five weeks into another customized training program for a smaller manufacturer in Greensboro, he submitted an application to the Caterpillar Web site.

A few days later he was invited to take a series of tests administered by staff at Forsyth Tech.

He was one of the first 13 people offered a job, and finished training here in Kernersville in October. Besides screening applicants, Forsyth Tech instructors are teaching a large portion of the classes, and state dollars paid for laptop computers, tools and the warehouse space.

The training “was definitely precise,” said Mr. Durant, who was paid during the training and started at the factory recently. “Once we came out of there, everybody was prepared to go to work.”

Caterpillar officials, who expect to create 392 full-time jobs with an average annual salary of $40,000 in Winston-Salem, say they are committed to the community and will invest in training, too. The company does not disclose how much it spends on training, but it runs an online “Caterpillar University” for its workers. It also offers college tuition assistance to employees.

Nonetheless, the state-financed training is a perk. Rusty Davis, operations manager of the Winston-Salem plant, said that in his previous assignment at a Caterpillar plant in Torreón, Mexico, the company trained its own recruits. “We had to devote a certain section of our facility to training,” he said. “We could have been doing more products there and making more money.”

When programs focus on the specific needs of one company, workers may be vulnerable if the firm has layoffs or closes shop.

Many of the workers displaced by the closing last year of the Dell plant, next door to the new Caterpillar factory, have yet to find work, though some are showing up at Caterpillar.

North Carolina officials say the skills these workers learned in training are not wasted.

Mr. Durant, who worked at Dell for three years on the factory floor, secured a spot in another training program last summer to learn how to operate computerized machining tools.

There were no job guarantees, and he spent $100 a week in gas commuting to a community college. When the Caterpillar job came up, he left the program.

Still, some of the skills he picked up have come in handy. “All my training, even the training I got from Dell, helped me with my jobs,” said Mr. Durant.

For now, he is grateful to be working, even though he is earning less than he did at Dell. “It feels good,” he said as he helped two colleagues affix steel plates to a wheel carrier. “I wake up and know I am going to work.”

But Mr. Durant, who dropped out of college more than 20 years ago, is determined his 2-year-old son will get a college degree.

“I don’t want him to go through what I have had to go through,” he said.