Top 5 Ways to Evaluate Workforce Competition for Industrial Site Selection

In industrial site selection, traditional workforce statistics are easy to pull, explain, and interpret. For example, it’s straightforward to explain that there are 1 million people within a 40-minute radius of a certain industrial park, or that the median age of that population is 39 years old, or that there are exactly 923 welders in a county.  While these data points are important, in recent years, Site Selection Group’s industrial clients have increasingly put more emphasis on understanding the competitive dynamics, which means taking a much closer look at the demand side of the equation and seeing how it compares to the supply side.

Site Selection Group uses data to help locationally active companies better understand the full picture of workforce dynamics.  

1. Traditional Data Points—Unemployment and More

Sometimes the simplest data points are still some of the most important. As a result, to understand competitive dynamics in a market, it can be helpful to start with the basic unemployment rate from the Bureau of Labor Statistics. In some ways, it’s simple—a lower rate means more companies are competing for fewer unemployed workers. But despite being one of the most reliable measures of workforce dynamics, like all data points, it has critical assumptions that do not tell the whole story. For one, unemployment rates fundamentally take into account how many people are in the labor force, specifically looking for jobs, so it’s not just looking at the demand side, but also includes assumptions on labor supply. Further, local unemployment rates are estimated differently from the national unemployment rate, and a really thorough workforce analysis needs to take this into account. 

Fortunately, excellent government data providers like the Census Bureau and the Bureau of Labor Statistics provide additional data to further look at demand and competition in a market. For example, the Quarterly Workforce Indicators data set includes a significant amount of data related to hiring dynamics, turnover rates, and other really useful data points to look at competition. Third-party data firms like Lightcast and JobsEQ do a great job of reporting and using this type of detailed data in their modeling.  

2. Wage Changes, Not Just Current Levels

Another data point that Site Selection Group looks carefully at to better understand demand conditions is wage data. But we don’t simply look at absolute wage levels, assuming that higher wages mean more competition. Rather, we carefully look at wage changes over time. For example, a market with average wages of $25 per hour today may look like it has more competition than a market with $20 per hour. Still, if that second market has seen wages rise rapidly over the past few years, we know that market is becoming much more competitive.  The devil is in the details in these types of analyses, because different wage data sources have very different methodologies that are critical to fully understand. We’ve seen companies make big mistakes in misinterpreting wage change data. But when used correctly, looking at changes in wages over time can be a big indicator of demand conditions.  

3. Job Postings

Site Selection Group has used job postings data for years as another way to gauge competition in a market. Sources like Burning Glass, now a part of Lightcast, scrape, clean, and analyze millions of job postings to provide critical insights on who’s hiring what type of workers.  While this data is very valuable and can oftentimes be generated in almost real time, it also has some drawbacks. For example, data can be skewed on the posting’s origination point (e.g., Is Company X actually hiring workers at its manufacturing plant, but the data got coded to its corporate headquarters?). But when used correctly, it can be very powerful.

4. Verified Announcements Data

We also use announcements data to estimate future demand in a market. For example, many locationally active companies don’t want to compete with all the mega-projects announced in recent years, even if those companies won’t be hiring for years (and that future demand may not show up in job postings data). But given market dynamics, we know that many of these mega-announcements may not pan out; a supposed 10,000-employee mega factory for EVs may not ever come to fruition. As a result, when we use announcements data in our analysis, we always make sure we measure the likelihood of those mega projects actually competing with our clients for workers in the future.

5. Primary Data, Especially Good Staffing Agencies

We’ve said it many times in these blogs and on conference stages—the best workforce data is always data collected from informed sources on the ground in a target market. Over the years, Site Selection Group has learned to trust the intel and advice of plugged-in staffing agencies in key states and markets across the country. Good staffing agencies know market dynamics in their communities—who’s hiring, who’s firing, and what it actually takes to compete for a qualified workforce.   

Conclusion

In summary, there’s a lot of data available to help manufacturing companies fully understand the competitive hiring dynamics in any candidate location. But all these sources and methods are not created equal. Each measures different concepts and, as a result, Site Selection Group weighs some of these data points much more than others, as some have more predictive power than others.