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Labor Cost Vs. Quality

As originally appeared in Ginovus In-Site, August 2015.

 

There is no doubt that labor costs remain a major factor in site selection decisions.  Labor costs have a significant impact on profitability of corporations today.However, lower labor costs overseas continue to drive some jobs out of the United States as employers are positioning themselves with a careful eye on the bottom line.  Managing labor costs is critical to a company being financially viable.  The deployment of overtime in lieu of hiring additional workers is helping companies manage their labor costs more effectively.  Increased production with decreased numbers of workers has created a dilemma in site selection criteria when companies consider expansion or relocation.  Is the cost of labor more important than the quality of the labor?
 
It’s been clear over the last few years that the quality of the labor force is becoming increasingly important in the site selection decision.  In a recent Area Development article, Larry Gigerich, Managing Director for Ginovus, is quoted commenting on what he sees trending in the quandary over cost vs. quality.

“There’s also greater recognition that the quality of labor is increasingly important, and because with the economic recovery the availability of good people is getting tighter, companies are willing to pay more and are willing to be not quite as cost-sensitive.”

Larry Gigerich, Managing Director for Ginovus,
as quoted in Area Development Q4 2014



What defines quality labor?

The main criteria defining a quality workforce includes:

  • An educated and sustainable group of people that have the training and experience necessary to meet the demands of a specific industry.
  • A group of workers who have a range of skills for corporate functions and projects.
  • A pool of workers with proven ability to create and develop processes and products.
  • Workers who share a goal for consistent improvement in productivity.

Whether relocation or expansion is the reason for a new facility site search, companies are taking a good hard look at the quality of the labor available in an area and weighing the factor at least as important as the bottom line cost as part of the overall corporate strategy.  For technology and highly skilled positions, this analysis takes on even greater importance.  Achieving higher production rates with quality labor is becoming essential to the profitability of companies in the United States today.

The importance of labor, both in cost and quality is of highest concern for companies now and in the future and the global economy will be dependent on this key factor for growth and sustainability.

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