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Defining Clusters of Related Industries

on Friday, 21 November 2014 15:43.

(NBER Working papers, August 2014):  To compete in the global world market, regions must continue to evolve and better understand how best practices support their regional industries, including defining the benchmarks of a successful industry cluster. In a recent academic article from Harvard researchers, Mercedes Delgado, Michael Porter, and Scott Stern unveiled a new algorithm tool that generates and assesses sets of cluster definitions. The new algorithm will be integrated into the U.S. Cluster Mapping Project to help researchers and policymakers cultivate more successful regional clusters. In this report the authors propose a new set of benchmark cluster definitions that incorporates measures of inter-industry linkages based on co-location patterns, input-output links, and similarities in labor occupations. Using a multiple step process, the new clustering algorithm provides composite scores that assess the quality of each set of cluster definitions.

Click here to review the full paper series.


Strengthening Regional Relationships to Support Manufacturing

on Thursday, 20 November 2014 15:39.

Center for Regional Economic Competitiveness (CREC):  This report examines ten ongoing regional initiatives that support manufacturers. Drawing on a diverse group of individual case studies, the report identifies the key partners and their roles, the resources they accessed, the impact of the effort, and the prospects for the future. In particular, the case studies often note the many roles that the National Institute for Standards and Technology's Manufacturing Extension Partnership (NIST MEP) centers are playing in the success of these efforts. The report is intended to stimulate thinking among economic development leaders about what they can do to support their own region's manufacturing sector. Interest in manufacturing has grown since the recession of 2007-2009, and the sector has played an outsized role in the resurgence of the U.S. economy. The manufacturing sector accounts for one out of every eight dollars generated in the United States. The manufacturers that survived the recession emerged stronger, leaner, more competitive, and more innovative.

The report focuses on case studies that speak to a variety of issues, and these individual cases represent a diversity of challenges, partnerships, regional contexts, and goals:

• San Francisco: SFMade's support for San Francisco's urban manufacturers.

• Chicago Region: The Illinois Manufacturing Excellence Center's (IMEC) efforts to connect manufacturers to resources throughout the Chicago region.

• Kansas City Region: Kansas City, Kansas, pilot energy efficiency program.

• Southwestern Pennsylvania Region: Southwest Pennsylvania's "New App for Making it in America" initiative.

• New York: FuzeHub: Making connections for manufacturers in New York State's regions

• South Texas Region: South Texas' North American Advanced Manufacturing Research and Education Initiative (NAAMREI).

• East Tennessee Region: The Advanced Manufacturing and Prototyping Center of East Tennessee (AMP!).

• New Mexico: The New Mexico's Small Business Assistance Program (NMSBA).

• Northwest Wisconsin Region: Northwest Wisconsin's ExporTech initiative.

• Southwest Virginia Region: Southwest Virginia Manufacturing Technology Center's E3 (Economy-Energy-Environment) initiative.

Common Themes and Trends

The case studies presented in this report are intended to stimulate thinking about how regional partnerships can support manufacturing. The case studies touch on several common themes about the different key issues and how this affects the initiative's partners. They also speak to the various roles that MEP centers may play in different regional initiatives. In addition, the case studies offer examples of how regions have started their manufacturing initiatives, attracted resources, and sustained those efforts over time.

One Size Does Not Fit All

The case studies show that there is no one way to support regional manufacturers. Ultimately, these initiatives are context dependent. Their structure and outcomes reflect the different challenges that regions face, the partners' motivation and capacity, and the region's available resources and assets.

Partnerships are Issue Dependent

The focus of a regional manufacturing initiative dictates the composition of the partnerships required to move them forward. A coalition of the willing is necessary to advance manufacturing support efforts, but it alone is not sufficient. Rather, initiative leaders must engage the right partners—not just willing partners. Partners play different and, sometimes multiple, roles; successful initiatives blend the right expertise, networks, resources, and constituencies.

MEP Centers Play Different Roles but are Always a Resource

Regional initiatives require multiple partners to play a variety of roles—leaders, experts, facilitators, investors and advocates. The case studies demonstrate how MEP centers can fit into a variety of roles. In many focused manufacturing initiatives, MEP centers can provide leadership by organizing activities, securing funding, and recruiting partners. Frequently, however, MEP centers may not be the designated lead, even when they are fulfilling important roles in the effort. The roles that MEP centers most commonly play are those of experts and facilitators. The ability of MEP centers to solve specific problems for individual firms makes them a tremendous source of expertise. MEP centers are also highly adept at filling the connector and facilitator role.

Successful Efforts Find Ways to Build and Maintain Momentum

Manufacturing initiatives can gain early momentum by completing smaller tasks or so-called "low hanging fruit." These smaller projects often involve easy, short-term activities or pilot projects. They do not require significant resources and can help demonstrate proof-of-concept, generate additional interest among current and potential partners, and lead to larger next steps. By demonstrating success with these smaller efforts, regions may position themselves for bigger opportunities.

Resources are Important, but Lack of Resources Should Not Prevent Action

Funding typically dictates the initiative's scale and scope, and it is an important consideration. However, a lack of funding should not prohibit action. Regions can launch many initiatives, such as establishing a regional referral network, that require little or no money. Similarly, smaller pilot projects can help spur interest or demonstrate proof-of-concept. Even if pilot efforts have limited impact, they may lay the foundation for more expansive future efforts. Throughout, we find that successful regions engage in an active, ongoing, and comprehensive pursuit of funding that looks beyond just federal and state sources. Through an ongoing effort, partners can find the right project funding, not just the first funding opportunity that arises.

Sustainability Must be a Forethought, Not an Afterthought

Many of the manufacturing initiatives described in this report address major, long-term challenges. Responding to these challenges requires sustained attention and commitment. Too often, regional initiatives quickly lose momentum after the expiration of an initial grant. Successful regional initiatives make longer-term sustainability part of the initial design.

Click here to view the entire study.


Employment and Skills Strategies in the US

on Wednesday, 19 November 2014 15:18.

How to stimulate growth and support job creation are two critical challenges that countries confront following the global financial crisis. The Local Economic and Employment Development (LEED) Programme of the OECD has developed international cross-comparative reviews on local job creation policies to examine the contribution of local labour market policy to boosting quality employment. Each country review examines the capacity of employment services and training providers to contribute to a long-term strategy which strengthens the resiliency of the local economy, increases skills levels and job quality. This report looks at the range of institutions and bodies involved in workforce and skills development in two states – California and Michigan. In-depth fieldwork focused on two local Workforce Investment Boards in each state: the Sacramento Employment and Training Agency (SETA); the Northern Rural and Training and Employment Consortium (NoRTEC); the Southeast Michigan Community Alliance (SEMCA); and the Great Lakes Bay Michigan Works. The report concludes with a number of recommendations and actions to promote job creation at the federal, state and local levels.

Click here to view the report.


Shrinking The Skills Gap: Why Manufacturing Day Matters

on Tuesday, 21 October 2014 13:13.

Madison, WI (, October 3, 2014):  Today we celebrate Manufacturing (MFG) Day, during which hundreds of manufacturers throughout the U.S. and Canada are hosting open houses, plant tours and career workshops, in order to raise awareness about the excellent career opportunities in manufacturing. MFG Day began in 2012 in an effort to draw attention to a major problem threatening the industry, and the overall economy — the skilled labor shortage. There are almost half a million skilled positions unfilled in manufacturing, a situation that will only worsen as baby boomers exit the industry, while fewer numbers of young people elect to enter it. We must change the perception of manufacturing as a desirable career — that's why MFG Day matters.

MFG Day provides opportunities for students, parents, educators, and the media to see today's technologically advanced manufacturing facilities. And to observe firsthand the advanced skills and knowledge base of the modern manufacturing workforce. It gives manufacturers the chance to dispel misconceptions of manufacturing as dark and dirty environments where low wages are commonplace, which is far from reality. In fact, the average annual salary for a U.S. manufacturing worker is $77,505, greater than the U.S. median of $51,371.

MFG Day is just one solution to the skills gap problem. That's why we'd like to know, "what are you doing to address the skills gap?" We also want to share how a few Kronos customers are working toward closing the gap by creating programs that connect with and provide opportunity for the future workforce:

Aker Philadelphia Shipyard, a leading manufacturer of vessels operating out of the U.S.

Offering a formal apprenticeship program

"We have a formalized three year apprenticeship program designed to produce highly skilled production workers who can perform successfully in a high performance work organization, compete in a world market, and participate in the future success of our organization. Approximately 90 percent of this time is spent with skilled workers in the apprentices' craft, allowing the apprentice to master the proficiencies of his/her craft through scheduled job rotations. We recognize that classroom learning also plays a large role in developing skills; therefore, the remainder of program time is spent in a classroom environment and independent learning." — Michel Boeckx, chief technology officer, Aker Philadelphia Shipyard

Appvion, Inc., a leading manufacturer specializing in paper production

Working with local, trade educational institutions

"With such a large generational shift, U.S. manufacturing has the task of replacing a huge skilled workforce and we recognize this. While technology and automation has improved, we feel it is essential that we maintain the skill trades if the U.S. is to remain globally competitive in manufacturing. To address this, at Appvion, we are continuing to work with local trade schools and colleges to increase the opportunity of providing the employees of tomorrow with a solid foundation in manufacturing." — Jason Carson, HR manager, Appvion, Inc.

Joy Global Inc., a worldwide leader in high-productivity mining solutions

Partnering with vocational schools and compensating well

"Finding talent can prove to be very difficult. We have partnered with vocational schools -both high and post-high school technical training schools/colleges - to provide the institutions with in depth explanations of what our requirements are so they endeavor to train the students to achieve the high level of skills that we are looking for. Retaining the talent is usually not too much of a problem as we are one of the top paying manufacturers in the region." — Chris Wright, global Kronos business process manager, Joy Global

Magnetek, a manufacturer of digital power and motion control systems

Working with local colleges and developing interns into employees

"We partner with Waukesha Technical College and other local colleges, in particular University of Wisconsin-Milwaukee, Milwaukee School of Engineering, and Marquette University. Since they are located close to our campus, interns can continue working 10 -15 hours weekly during the school year and we encourage them to return in the summer and once they graduate, work in full time positions depending on availability.

The real key to finding and retaining young talent is to provide meaningful work and training to develop the right employees so they are confident and feel that the company has interest in his/her advancement and skills. By providing mentorship, desirable skills are transferred. Talent will only help us recruit if the company culture is a strong differentiator and because ours is, we have a very successful employee referral program." — LindaPintor, vice president of HR, Mangetek

Pioneer Metal Finishing, a manufacturer of metal finishing services with locations across the U.S. and Mexico

Investing in your own organizational development team

"Pioneer Metal feels the pain that most manufacturers are experiencing related to finding the talent necessary for today and the future. For us, our gap exists around finding strong leaders with the skills necessary to successfully lead, engage, and develop large teams of people. To address this, we invested very early in our own organizational development team. This gives us the capability to foster raw talent into strong leaders.

Pioneer Metal also feels that getting in front of young adults at an early age is important. We partner with a few key manufacturing alliance partners whose focus is on getting in front of students in high school and talking about careers in manufacturing. We have done several presentations with the alliance and have been a part of educational fairs to address the misperception of a career in manufacturing and show the growth and opportunities that are out there." — Brad Nycz, director of HR, Pioneer Metal


US Cracks Down On Companies Moving Overseas

on Friday, 03 October 2014 11:16.

New York, NY (Associated Press, September 24, 2014):  A handful of big companies pursuing overseas mergers to lower their tax bills came under pressure Tuesday after the U.S. unveiled rules to discourage them.

The Treasury Department announced new regulations on Monday aimed at making these so-called inversion deals less lucrative. In a typical deal, an American company buys a foreign firm based in a country with a lower tax rate, then moves its headquarters overseas.

Drug companies in Ireland and the U.K. have been popular targets. The pharmaceutical company AbbVie, based in Chicago, reached an agreement to buy Dublin-based Shire in July for $54 billion. Shares of both companies sank in Tuesday trading. AbbVie Inc. lost 2 percent in New York trading, while Shire sank 2 percent in London.

"The repercussions of these rules could end up reaching far more businesses than the headlines might suggest ..." said Jan Wald, an analyst at Benchmark Co., a financial advisory firm. In a note to clients, Wald listed a number of changes made by the new restrictions, including "the way that loans to foreign entities with U.S. participation are treated under U.S. tax law."

Among other companies getting hit in Tuesday trading, Minneapolis-based Medtronic Inc., which plans to buy Dublin-based Covidien Plc., fell 4 percent. Covidien lost 3 percent. The British drugmaker AstraZeneca, still considered a likely takeover candidate after it successfully rebuffed overtures from Pfizer Inc. earlier this year, slumped 3 percent.

The new regulations attempt to stop a range of complicated transactions companies use to lower their U.S. tax bill. One measure tries to stop "hopscotch" loans, in which companies turn their foreign earnings into U.S. loans. Another rule change tightens the application of a law that says the U.S. company's shareholders must own less than 80 percent of the new, combined company.

About 50 U.S. companies have carried out inversions over the past decade, according to the nonpartisan Congressional Research Service. Many more had been considering it.


Hershey Wins Dow Jones Sustainability Award

on Thursday, 18 September 2014 11:48.

New York, NY (The Associated Press, September 12, 2014):  The Hershey Company today announced that it has been selected to both the Dow Jones Sustainability World and North America Index.

Hershey is one of only 13 companies from the Food, Beverage, and Tobacco Industry in the World Index and ranked in the 93rd percentile overall. This is the third year in a row Hershey has been included in the North America Index and the second year Hershey has been named to the World Index.

Hershey's selection to the prestigious World Index reflects the company's substantial progress in its global Corporate Social Responsibility efforts. Over the course of the last few years, Hershey has made significant strides in its environmental sustainability and sustainable sourcing efforts, completing many of its long-range goals and phased commitments ahead of schedule.

The company's environmental achievements, outlined in Hershey's third CSR report, include the following notable improvements:

  • Seventy-two percent water reduction
  • Thirty-eight percent waste reduction
  • Twenty-three percent greenhouse gas emissions reduction
  • Corporate-wide recycling rate of 87 percent
  • A total of 12 Zero Waste to Landfill facilities – including seven manufacturing facilities. Ninety-seven percent of Hershey's U.S. production takes place at ZWL facilities.

In sustainable sourcing, Hershey's Cocoalink program was found to have "significantly improved the livelihoods" of Ghanaian cocoa farmers. Approximately 45,000 Ghanaian cocoa farmers are enrolled in the mobile technology program, and farmers in Cocoalink communities increased their yields by 45.6 percent in three years. After the success of the Cocoalink in Ghana, Hershey has plans to expand the program to cocoa-growing regions in Côte d'Ivoire.

Hershey also committed to purchasing 100 percent traceable and sustainably sourced palm oil late last year after announcing it had achieved 100 percent mass balanced RSPO certified palm oil one year ahead of schedule.

"Hershey's inclusion in the North America and World Index builds on our positive momentum since announcing in May that we have completed sixty percent of our long-range CSR goals. It is clear validation that our accomplishments in a wide range of CSR areas, from environmental sustainability to ethical sourcing, are recognized within the sustainability community," said Terry O'Day, Senior Vice President Chief Supply Chain Officer. "We are pleased that we continue to push ourselves to deliver improvements across a broad range of meaningful sustainability objectives."

Hershey's heritage of engaging with consumers and communities began with the company's founding more than 120 years ago and is rooted in a tradition of ethical business practices, remarkable employees and giving back to its communities. Hershey integrates CSR into its business strategies through its social mission for Shared Goodness, helping children and their communities around the world achieve a better life and bright future.

The Dow Jones Sustainability Indexes are determined by SAM (Sustainable Asset Management), in partnership with the S&P and Dow Jones Indices. They are the first global sustainability benchmarks that track the financial performance and sustainable business practices of the world's leading companies using economic, environmental and social criteria.

The Dow Jones Sustainability World Index was launched in September 1999 and tracks the performance of the top 10 percent of the 2,500 largest companies in the S&P Global Broad Market Index that lead the field in terms of sustainability. DJSI North America launched in September 2005 and represents the top 20 percent of the 600 largest companies in the North America Dow Jones Global Total Stock Market.


Skill Gap Bumps Up Against Vocational Taboo

on Tuesday, 16 September 2014 11:45.

Chattanooga, TN (Wall Street Journal, September 12, 2014):  The Obama administration and governors from Michigan to North Carolina have a solution for some of the U.S. manufacturing sector's woes: German-style apprenticeship programs.

But their success is proving to be unusually one-sided, mostly drawing firms based in Germany and other non-U.S. countries. In North Carolina, "Apprenticeship 2000," a program combining classroom work and on-the-job training, has drawn numerous German companies but so far only two U.S. firms, Ameritech Die & Mold Inc. and Timken Co.

In Michigan, where Republican Gov. Rick Snyder promised last year to "Americanize" the German model in his state, almost three-fourths of the participants are firms based overseas, mostly in Germany.

Both the White House and governors are trying to fight a so-called skills gap among U.S. workers that many businesses blame for the slow labor-market recovery. Although plenty of Americans are looking for work, employers often lament a lack of qualified workers—particularly young people.

Germany, in contrast, has a long record of finding a stronger fit between employees' skills and employers' demands. The success is reflected in a youth unemployment below 8%, the lowest of any advanced country and about half of the U.S. level. The apprenticeship system is credited as a leading driver of what many European economists call the German labor-market "miracle."


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Education and Skills for the New Economy

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Where Have All the Missing Workers Gone?

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Founded in 1999 as the successor organization to the Lancaster County Private Industry Council, the Lancaster County Workforce Investment Board has a mandate through the federal Workforce Investment Act of 1998 to be the lead organization in Lancaster County for workforce planning, to cooperate with State officials in providing business with locally-validated labor market information, and to arrange for a service delivery system that meets the workforce needs of business and the public alike.



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