308K Jobs in March

One a word: Yeah!

The economy created 308,000 new jobs--the biggest gain in many years. Also good news is that fact that all sectors saw gains.

Let's hope it continues, and let's hope that politics has not gotten in the way of the truth on this report.

Understanding the IT-Life Science Connection

Here is one all of need to pay attention to--the connection between IT and the life
sciences is increasingly important. This is an important insight for those working on
building IT and/or bioscience clusters.

• Total IT spending (R&D and non-R&D) for the combined pharmaceutical and
biotechnology industries will grow at a CAGR of 7.01% for the U.S. and 7.51%
worldwide through 2008.

• R&D IT spending for the combined pharmaceutical and biotechnology industries
will grow at a CAGR of 7.99% for the U.S. and 9.11% worldwide through 2008.
R&D growth rates for pharmaceutical companies will be lower than years past for
several reasons: pharmaceutical companies continue to merge and consolidate
and account for capital depreciation from rapid growth over the last five years; in
light of decreasing numbers of blockbuster drugs, the industry as a whole is
moving to cut costs; with the increasing bargaining power of buyers of drugs (e.g.
Medicare) and the globalization of the market (e.g. discounted drugs from
Canada), the industry is moving to cut costs including R&D and R&D IT spending;
and pharmaceutical companies will favor R&D alliances with biotechnology
companies in lieu of rapidly growing their own in-house R&D programs.

• R&D IT spending for agricultural biotechnology companies will grow at a CAGR of
8.64% within the U.S. and 10.28% worldwide – primarily due to increased R&D
spending for the development of GMO products in countries such as India and
Australia.

• Industry drivers, such as a desire to decrease the times and costs associated with
clinical trials, will drive innovation and technology development within the IT
sector.

• Application areas such as biomarker discovery and validation, pharmaco- and
toxicogenomics, and systems biology will drive innovation and technology
development within the genomic, proteomic, and IT sectors.

Download the report here.

Corporate e-Learning Market Growing

The U.S. corporate elearning market is coming back. Overall, the corporate elearning market grew at a modest 3%, to $3.6 billion in 2002. The largest market segment - content - has been hardest hit, particularly in the IT training area, which has been hurt by a slowdown in new software investment. The fastest growing segment - services - was not as insulated from the slowdown as IDC predicted just last year. High-ticket system customization, integration, and content development deals have become harder and harder to attain. However, vendor and buyer sentiment as well as spending have begun to improve. The market is expected to rise to $10.2 billion by 2007. Click here for graphic.

HR, Finance, and Accounting Business Functions to be Outsourcing Together

Here is one to pay attention to. I ran an article earlier this week saying that corporate headquarters could be headed abroad. Here is a sign of this movement.

Companies are outsourcing business processes on an application-by-application basis, for the moment, but as they grow more used to the thought of outsourcing their back-office operations, that is likely to change.

As BPO becomes more mainstream, companies will outsource processes that traditionally have not been linked -- such as human resources, and finance and accounting, says a new report by IDC. "Over the next three to five years, we are forecasting that the outsourced transaction-processing and administration services supporting HR and F&A will become more closely aligned and will, in fact, ultimately converge," says Marc Pramuk, program manager for IDC's HR management and staffing services research. Here to read more.

Caution on IT Outsourcing

India, where many call centers -- and, more recently, financial operations -- have been moved, has significant cost advantages. However both India and China, another low-cost locale, score poorly for political and economic risk and have weak infrastructures. "There is no one-size fits all," says A.T. Kearney vice president Andrea Bierce. Here to read more.

New Milken Institute Science and Tech Index Report

Massachusetts, California and Colorado are in the best position to take advantage of the knowledge-based economy, according to the 2004 State Technology & Science Index. It finds that regional economic prosperity is based upon how successful places are in attracting and expanding science and technology assets and leveraging them for economic development.

The 2004 State Technology and Science Index encapsulates each state’s comprehensive inventory of technology and science assets that can be leveraged to promote economic development. The Index provides states with a benchmark, monitors their technology progress and can be leveraged to promote economic growth. It provides a valuable framework of measures to guide state policy makers and the public on the realities of their performance in the knowledge-based economy of today.

The index uses 75 indicators in five categories to measure how well a state will perform in today’s knowledge-based economy. The five composite categories are:

-Research and development inputs;
-Risk capital and entrepreneurial infrastructure;
-Human capital investment;
-Technology and science workforce; and
-Technology concentration and dynamism.
-Individual indicators include a wide range of measurements such as the percentage of a state’s population with Ph.D.s, research and development expenditures per capita, and venture capital investment.

Here to download the report.

North Carolina Development Kitty Running on Fumes

Just as the economy is picking up, the governor has no money left in his walking-around fund to attract businesses to North Carolina. What's more, the state's most popular economic incentive program is on track to run out of money this year, raising concerns about North Carolina's ability to recover from a three-year downturn faster than other states.

During the past three months, the Department of Commerce has announced 32 economic development projects for a total of 4,514 jobs and $378.4 million in new investment, 45 percent more than in the same period last year.

Here to read more.

Top Ten Futurist Forecasts

1. Genetically modified crops may surpass natural crops in acreage planted by 2020. Crops could be 100% genetically modified by the end of the twenty-first century, according to some optimistic experts. —Molitor, Sep-Oct 2003, p. 42

2. Two-thirds of the world's population will be chronically short of water by 2050. "Water wars" are now imminent in places like Kashmir, where Pakistan's water supply is controlled by India. —Cetron and Davies, Jan-Feb 2003, p. 40

3. How do you walk? Security people will be watching. Your unique swagger, stagger, or shuffle will speak volumes. "Gait analysis" could soon join fingerprinting and retina scans in the identification technology toolbox. —Jan-Feb 2003, p. 6

4. Voters are vanishing worldwide. Voter turnouts have dropped in established democracies, with record lows in the United Kingdom (59% in the 2001 parliamentary elections) and the United States (51% in the 2000 presidential election). Some countries, such as Australia, Singapore, and Belgium, have made voting compulsory, helping boost participation rates to above 90%. —Nov-Dec 2002, p. 6

5. Earthquakes will become deadlier. These future deadly earthquakes won't be more powerful, but they will kill more people simply because there will be more people to kill, particularly in the world's largest cities. Half the world's megacities, with multimillion populations, are located near potential magnitude 7.5 earthquakes. —Futurist Update, June 2003

6. We may be able to engineer longer lives for ourselves. Genetic engineering can double a worm’s life span. Mice are living 50% longer with the help of genetic inventions. Thanks to the human genome project, scientists are closer to identifying ways to decelerate human aging. —Magalhães, Mar-Apr 2003, p. 49

7. Polar bears extinct by the year 2100? Global warming is melting polar bears’ Arctic hunting grounds and threatens to prevent new ice from freezing. If the trend continues, polar bears could starve off in the next 100 years. —July-Aug 2003, p. 6

8. More Americans will go it alone. People in their prime family-forming years are opting out of family life. Since 1970, the proportion of 25- to 34-year olds who live alone rose from 4% to 10%. The proportion of 35- to 44-year-olds living alone rose from 3% to 9% in that time. If these trends continue, look for more solo-living in the future. —July-Aug 2003, p. 13

9. Physicians may soon have ways to help paralyzed people move their limbs by bypassing the damaged nerves that once controlled their muscles. Researchers are already able to get rats to do things by stimulating the pleasure centers in the rats' brains. —Nov-Dec 2002, p. 45

10. You may be wearing your power on your sleeve. Fabrics containing flexible solar cells may soon be possible as researchers overcome obstacles such as losing current when fabrics are bent. Solar textiles could one day be used to provide clothing for emergency workers or as solar-powered carpets for tents in refugee camps. —Sep-Oct 2003, p. 2

Here for more.

Upjohn Institute Rural Michigan Benchmarking Database

Here's a good idea!

In August of 2003, the Upjohn Institute completed a benchmark analysis of rural Michigan counties. Each of the state's 83 counties were grouped into one of four categories, based on the primary economic influences shaping their development: Urban Core Counties, Urban-influenced Rural Counties, Agriculture-focused Rural Counties, and Mixed-use Rural Counties. Plus, those counties heavily involved in tourism were examined in a separate sub-category. These regions were then compared with carefully selected groups of counties from other Great Lakes states, in order to gauge the overall economic performance of Michigan's rural counties.

Here for more.

Jobs, International Trade, and Economic Development

Here is an abstract of a new webpage at the Upjohn Institute website on jobs and trade. It's a good one.

Job loss in the U.S. labor market, particularly in manufacturing, is widely blamed on international trade and competition. Trade pacts such as NAFTA have reduced or eliminated tariffs on goods flowing into the country while making it possible for manufacturers to tap into low-cost labor across borders or even oceans.

As election season rhetoric intensifies, it may be useful to review the latest findings of a gathering of academic, nonpartisan researchers with much experience in the area of international trade and job loss. Three recently-published books from the Upjohn Institute, authored by such researchers, examine the impacts of international trade and exchange rate policies on the U.S. labor market. In addition, all three books stress the importance of job training in order to help workers (and companies) acquire the skills necessary to make the transition prompted by trade-induced job reallocation.

Here to read more.

UN World Economic Report 2004

Want the latest on world economic growth. Go here to download the Un World Economic Survey 2004 report. Useful background for your foreign investment recruitment and international trade development efforts.

St. Louis Fed Chief: Get Used to Offshoring

St. Louis Federal Reserve President William Poole said on Tuesday the shift of jobs to low-wage centers was part of a long economic trend that was here to stay, and said public policy should focus on finding new work for those it displaces.

"This is a very, very old process. This process has been going on in the course of economic development for hundreds of years," Poole told economics students at the University of Evansville in Evansville, Indiana.

He said it was an "ongoing process" where companies take advantage of the chance to buy goods and labor cheaply and then sell the output in higher-cost markets.

Ok, get used to it, but which jobs in which industries will be created in the future here in the U.S.? Help me to understand that one, Mr. Economist. Poole is probably right that people should pursue other job and career paths. I say start your own business and sell to the world. Be very careful who you work for in the future.

Here to read more.

Some Bad News on the Job Front

Milwaukee-based automotive supplier Johnson Controls Inc. is transferring sun visor production from its plants in Holland, Mich., and Glasgow, Ky., to a Mexican factory, resulting in a loss of 1,065 U.S. jobs.

The company will lay off 885 workers at its Southview component plant in Holland and 180 employees in Glasgow. Those are the only two U.S. locations where it makes visors for cars and trucks assembled in North America.

The affected workers will be a mix of salaried and hourly employees, company officials said Monday. They declined to further break down the layoff numbers.

Go here to read more.

"But For" Offshoring, Fewer IT Jobs in America

I read this article three times because I thought I was missing something. I'm not missing anything. It's simply that I don't buy the line of argument (not reasoning) employed. Read it yourself.

The offshoring of United States technology jobs will actually increase the number of American information tech jobs over the next decade, according to a new study released Tuesday by the Information Technology Association of America (ITAA). "We think this study will change the entire debate on offshoring," ITAA President Harris Miller said at a press conference at the National Press Club here. "We have long held the position that global sourcing creates more jobs and higher real wages for American workers. Now we have the data to prove it."

The ITAA study predicts that the software and services sectors will create 516,000 jobs over the next five years in an environment with global sourcing. Without global sourcing, it predicts only 490,000 new jobs in the sector. Of those 516,000 new jobs, 272,000 will go offshore with the rest remaining in the U.S., the study said. That works out to a net of about 244,000 new jobs in the U.S., according to the study's findings.

Here is my take. The ITAA study says that IT jobs will be created in America because US companies are able to offshore a bunch of jobs to other places. They are making the same argument that is generally made by companies when they ask for handouts (excuse me, incentives). If it were not for (but for) offshoring, no jobs or fewer jobs would be created in the US. I guess the analysts doing the study made the assumption that if people already buy this line of argument in economic development circles, they'll buy it related to offshoring. Well, I don't buy it. The truth is that before offshoring we would have gotten the whole shoooting match, that is all 516,000 jobs. Duh.

Once again, I know that offshoring is a reality. And I know that companies save money by offshoring work. I just don't by the crap about offshoring helping to create jobs here in the US.

Go here to read more.

Global Tax Environment Improving

The global tax policy environment is beginning to show signs of improvement, according to the OECD. OECD countries have made major progress in their efforts to eliminate harmful tax practices in their economies, modifying or abolishing more than 30 of the preferential tax regimes identified in 2000 as potentially harmful.

According to a report issued by the OECD’s Committee on Fiscal Affairs today, out of a total 47 preferential tax regimes cited in 2000, 18 regimes have been abolished or are in the process of being abolished, 14 have been amended so that any potentially harmful features have been removed, and 13 have been found on further examination not to be actually harmful.

Here to read more.

Healthcare Costs Impact Business Site Selection

A recent Expansion Management article discusses the impact of employer healthcare costs on business site selection. It says they will matter more in the future in these decision-making processes.

Here to read more.

Pittsburgh's PNC Park Gets Done on Time and Budget

Despite political and financial wranglings, Pittsburgh's new baseball field comes in on time and on budget. Here to read more.

Project Profile

Project: PNC Park.
Location: Pittsburgh, PA.
Function: New ballpark for the Pittsburgh Pirates.
Owner: City of Pittsburgh Sports & Exhibition Authority.
Manager: Dennis DaPra, VP of PNC Park Operations and Facilities Management, Pittsburgh Pirates.
Square Footage: 970,000 (seating for 38,365 patrons).
Funding: Various private, city, county, state, and federal sources.
Budget: $220 million (PNC Park portion of funding).
Timetable: 27 months.
Architectural Team/Landscape Architect: LDA (Dennis L. Astorino, AIA, president/COO, and Jeffrey P. Slusarick, RA, senior designer) and HOK S+V+E (bridging architect).
Electrical/Mechanical Engineer And Lighting Designer: M-E Engineers.
Structural Engineer: Thornton-Tomasetti.
General Contractor/Construction Manager: Dick Corporation/Barton Malow.

Will Corporate Headquarter Jobs Move Offshore?

This is a frightening question to even ask. Corporate headquarter cities in America could see some losses, according to one corporate real estate executive. Here is a summary. Go here to read more.

As more manufacturing operations move offshore, there will be a significant impact on where the headquarters for these companies are located. For many of these companies, headquarters may evolve into nothing more than a few key executives, and the legal and marketing staffs with other functions will move offshore. If the majority of manufacturing occurs offshore, the headquarters for these companies that may have traditionally been tied to plant sites will likely gravitate toward major metropolitan area business centers in the United States. Over a longer period of time, headquarters for many manufacturers area also likely to move offshore. This will occur as the huge, virtually untapped markets of China and India begin to dwarf the North American market and as management, marketing, and research and development leaders emerge from the offshore operations.

If we look at the loss in jobs estimated by A.T. Kearney and Forrester Research, they equate to approximately 54,000,000 square feet of corporate office space that will either be vacated or unneeded per year. This is roughly the equivalent of shutting down one-third of Chicago's downtown office space each year, and the loss of $1.2 billion in rent per year. Two key factors are at play here: First and foremost is the outsourcing of jobs overseas, and secondly, the increasing productivity of American workers.

There are a number of trends at play in the United States that do not bode well for the future of corporate headquarters locations here over the next 30 years. First, we have begun to outsource many of the functions that have traditionally taken place at corporate headquarters. It is specifically these types of jobs that are outsourced that have been the seeds from which many new American companies have grown and "C" level executives have been developed. Along with this trend in leadership, the world's largest emerging markets are in Asia, and these will draw manufacturing facilities, research and development, and corporate headquarters. In addition, the world's largest corporations, many of which are located in the United States, are increasingly becoming multinational in ownership and leadership and are less affected by a sense of nationalism or inertia relative to a specific country or location.

Couple the out-migration of jobs, both white- and blue-collar, with the desire for manufacturing companies to keep their headquarters close to production and R&D, and we can expect to see two trends in corporate headquarters in coming years. As more jobs are outsourced, U.S. corporate headquarters as well as R&D facilities will decrease in size. This trend has already begun. Following this trend, there will be an out-migration of corporate headquarters overseas for companies that are high-tech and heavily R&D-oriented, as the next generation of "C" level executives are likely to come from countries like India and China.

India's Wages Growing

The U.S. technology industry's demand for offshore services is apparently beginning to drive up pay rates in India, raising questions about the long-term benefits of outsourcing work to that country.

Information technology workers in India reported double-digit salary growth in 2003, according to recent research, while pay for similar work within U.S. borders has been relatively stagnant if not declining. Although India's salaries generally remain significantly lower than U.S. averages, the narrowing wage gap and other unforeseen factors are leading at least some American companies to reassess the cost savings to be had by sending work offshore.

Here to read more.

Innovate!

Here are a few clips from a recent article written for the OECD. It speaks to the importance of innovation in advancing our economy.

"Economists say that innovation fuels our economy. Research in the physical sciences and engineering have produced incredible innovations that have driven our growth: the Internet, teraflop computers, ultra-small cell phones and PDAs, myriad laser technologies and the global-positioning system - - not to mention jobs, a better quality of life and a higher standard of living. As the Organization for Economic Cooperation and Development in Paris has noted, "The underlying long-term growth rates in [the 30] OECD economies depend on maintaining and expanding the knowledge base" (original emphasis).

But innovation and technological development do not happen with the snap of a finger. They depend on scientific discoveries, which in turn depend on investment in long-term research and education. For quite some time, we have shortchanged both. Our global competitors have not."

By Burton Richter, former director of the Stanford Linear Accelerator Center, won the Nobel Prize in physics in 1976. Jerry Jasinowski is president of the National Association of Manufacturers in Washington.

Social and Political Swings in Sydney

Here is a clip from a recent Sydney, Australia newspaper article: "Perhaps the increasing aggressiveness of middle-class protest is in part a matter of the levers of social and economic power slipping out of the grasp of the baby-boom generation. It is a kind of tantrum of the ageing. Any policy approach, any analysis which disagrees with the increasingly fusty prejudices formed in the 1960s and '70s is treated as prima facie evil - that is why allegations of criminality and corruption are thrown around more and more wildly, as if nobody could ever make an honest case for development, greater population density or changes in roads and traffic arrangements."

Here to read more.

Does this sound familar? It should. We see some of the same developments here in the U.S. and elsewhere around the world. It's more important than ever to track social change in society to understand where the economy is heading.

Midwest High-Tech Development Efforts

Here is an interesting article reviewing what Midwestern states, including South Dakota, are doing to develop the next generation technology inidustries. Here to read more.

Statement by Eli Lilly President and CEO Sidney Taurel

In the words of Eli Lilly President and CEO Sidney Taurel, here is what Indiana must do to compete and grow in the future: "Indiana is in fierce competition for the businesses and jobs of the future, which will ultimately define our state's position in the global economy. To win at this high-stakes game, we must find a way to keep more of our college-educated sons and daughters close to home. We also must appeal to talented people from throughout the country and the world to come to Indiana to work.

How do we do this? Indiana must transform its economy by attracting and creating high-technology companies in fields such as the life sciences, advanced manufacturing and information technology. This requires all of us working together to create the most favorable climate possible for businesses in which the critical resource is the human mind."

Here to read more.

Oakland County, Michigan: Automation Alley Growth

Tucked away quietly in suburban industrial parks and office buildings, the high-tech business consortium known as Automation Alley is giving local firms a worldwide reputation.

Launched just over four years ago by Oakland County Executive L. Brooks Patterson, Automation Alley has grown from 40 member businesses to 500, mostly in Oakland County. In that time, the number of high-tech businesses in Oakland County has grown from 1,800 to more than 3,000, according to the county.

While the definition of high-tech has evolved since then, Automation Alley officials estimate the county’s tech work force has grown from 41,000 to more than 150,000.

Automation Alley’s annual global export trade missions have landed about $21 million in contracts for small Oakland County businesses from companies in China, Germany and Mexico. And in August, the Alley will unveil its $10 million business center in Troy.

Here to read more.

Wichita Area Forecasts Future Labor Shortage

As its baby boomers near retirement, the Wichita metropolitan area faces a looming labor shortage, with a projected 120,000 unfilled jobs by the year 2030, a new study shows.

Wichita State University's Center for Economic Development and Business Research analyzed birth and death statistics, net migration, and commuting patterns to look at the effect the aging work force will have on future jobs in the state's biggest metropolitan area.

By the year 2030, about 20 percent of the people who live in Sedgwick County will be 65 or older. That compares to 11 percent who fell into that age bracket in 2000, the study found

Here to read more.