WASHINGTON — The tightening labor market is starting to play a larger role in where companies choose to build plants, according to several industry consultants.
``Labor is significantly tighter than it was a year ago,'' said Saul Grohs, a partner in Location Advisory Services Inc., a Florham Park, N.J., site selection firm. ``It doesn't look like, based on population trends, that it will ease up a lot.''
While proximity to markets and infrastructure remain key factors in plant location, the tightening labor supply is starting to make it trickier for industry to locate a plant and makes rural areas more attractive targets, several consultants said.
``The one thing that really stands out has been the change in the labor situation,'' said Clint Hoch, president of Corplan Inc., a site selection firm in West Orange, N.J. ``We are at the point where we don't have the labor supply to support facilities.''
That is particularly true in places where the unemployment rate is dipping to 2 or 3 percent, he said.
Iowa's 2.7 percent unemployment does make it more difficult to convince larger companies to locate there, said Dan Anderson, vice president of the Iowa Area Development Group, a West Des Moines, Iowa, company that represents rural and municipal electric utilities.
``The available labor market issue has really moved up in the rankings of site selection,'' he said. ``Companies recognize that there is a tight labor market, especially if they are in the $10 [an hour] and under market.''
If a firm is considering an Iowa site but is concerned about available labor, Anderson said his group will run advertisements in local papers and hold events to attract interested employees.
The state with the most plastics industry workers, California, had an unemployment rate of 6.3 percent in September, well above the 4.9 percent national average, according to figures from Regional Financial Associates, an economics consulting firm in West Chester, Pa.
Ohio, Michigan and Illinois, the next three top-ranking states for producing plastics jobs, each had unemployment below the national average, RFA figures indicated.
Paul Getman, a senior economist at RFA who specializes in the Massachusetts economy, said job growth is slowing in that state not because jobs are available but because labor cannot be found.
``A year ago that was true at the upper end [of salaries] — now it is true across the board,'' he said.
Skilled machine operators with 12-15 years of experience are getting hard to find in many areas, which will force companies to adjust pay to include more pay for performance and make the workplace more family-friendly, said Dennis Donovan, senior managing director for Wadley Donovan Group, a Morristown, N.J., site selection firm.
That is forcing some firms to make one-time pay adjustments of as much as 10 percent, he said. Three-fourths of all metropolitan areas have unemployment of less than 5 percent, Donovan said.
``We are being very careful about talking with clients about wage level targets,'' Grohs said. ``It is no longer easy to say `I want to pay $8 an hour to get unskilled labor.' Now you've got to make sure $8 is a really competitive wage.''