When researching FDI destinations, a skilled workforce must be one of the more desirable criteria for investors. And while the US offers good market potential, some investors find that quality skills are often lacking in the local workforce.

Executives of overseas companies with operations in the US mirror this point. “One of the biggest problems in the US is a lack of skilled workforce,” says Caroll H Neubauer, chairman and chief executive of Pennsylvania-headquartered B Braun Medical, part of Germany’s B Braun Melsungen.  

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Raising standards

Guenther Scherelis, the spokesman for Volkswagen Group of America Chattanooga, says Volkswagen found that Chattanooga, Tennessee, offered ample workers, but not with skilled automotive experience. Consequently, as part of its decision to invest $1m in a US car production facility in Chattanooga in 2008, the German carmaker also imported 200 experts to educate its US employees to German standards.

A huge problem is how educational standards in the US vary across the country. In many cases employers tend to train workers with specific skills and students tend to pursue higher education because they believe a Bachelor’s or Master’s degree promises guaranteed employment and high earnings potential. Germany, on the other hand, has a strong tradition of apprenticeships and vocational schools with no ‘blue collar’ stigma attached to vocational training.

“If you hire an engineer from Hamburg or Bavaria, you get someone with the same education and certification,” says Mr Neubauer. “In the US, you never know what you will get.”

Desirable skills

Most lacking in the US are workers with science, technology, engineering and maths (STEM) skills, and these are the skills that companies want the most. In fact, an informal poll conducted by the German American Chambers of Commerce among German subsidiaries found that 82% of respondents reported difficulties in finding employees with STEM skills. Furthermore, the poll found that 93% of companies rely on in-house training to bring their employees up to speed, 43% have developed some form of partnership with a local college or university and 22% have established an in-house training facility.

Take, for example, Munich-based engineering firm Siemens, which, together with other German subsidiaries in North Carolina, has teamed up with Central Piedmont Community College to create a four-year mechantronics programme. In Alabama, Mercedes-Benz has joined forces with Tuscaloosa City Schools to form the Workforce Development Academy that enrols school graduates in a two-year apprenticeship with Mercedes and Shelton State Community College.

Volkswagen has been successful with its Chattanooga Training Academy. “We started a programme to educate specialists, especially the mid-tech workforce. Although there were some problems in the beginning, we now educate 20 to 40 people each year, and 2013 will be the first year we will graduate workers with skills that meet German standards,” says Mr Scherelis.

Bridging the gap

To help bridge the gap, a skills initiative was launched last year by Peter Ammon, German ambassador to the US, to boost co-operation in workforce training between the two countries. The initiative involves an exchange of best practices among US states, German companies in the US, and education and training facilities. Already, workshops and talks have been held in several states, including Ohio and North Carolina. More are in the pipeline.

Economic development agencies across the US also work with inward investors by setting up dedicated training centres. The Louisiana Economic Development (LED) office, for example, offers its LED FastStart programme and has set up centres for Benteler, a German steel company that recently expanded in the state, as well as Sasol, the South African oil company that has announced a $21bn investment in Louisiana.

“We are helping Sasol write its standard operating procedures and training manuals to help train its employees,” says Jeff Lynn, head of LED FastStart.