New Jersey manufacturing companies realize numerous advantages in having a Garden State address. Home to more than 11,000 manufacturing firms, most of them are small, with an average of 34 employees, the state and its manufacturing companies have embarked on training and educational initiatives to narrow the skills gap between available jobs and labor. However, numerous other factors have encouraged manufacturers to locate or stay in New Jersey.
“There are quite a few good reasons for locating a manufacturing or STEM company here,” notes John W. Kennedy, CEO of the New Jersey Manufacturing Extension Program (NJMEP). “It starts with our location and educational opportunities. The Wall Street Journal reported last year that New Jersey has the highest concentration of scientists in the country. You can’t have a good business without good people,” Kennedy says.
There is a synergy between the state’s location and the nature of manufacturing companies operating here. Many New Jersey manufacturing companies produce components used by other manufacturers, making the state an attractive supply chain state. “We’re within a day’s ride of about 50 percent of the country’s population,” Kennedy says. “Our ports, airports and road systems are some of the many good reasons to locate here.”
An Economic Driver with a Multiplier Effect
The birthplace of the Industrial Revolution, New Jersey now relies on high-tech solutions and niche markets to maintain a competitive edge. The state’s principal manufacturing industries – food preparation and packaging, chemicals and pharmaceuticals, machinery, fabricated metal, and computers and electronics – now rely significantly on advanced manufacturing, which combines digital technologies and mechanics to increase efficiency and precision. And, while company executives say they continue to wrestle with an over-abundance of government regulations and high taxes, manufacturing remains a significant part of the New Jersey economy, producing $44.52 billion annually and employing 240,500 people, according to NJMEP’s 2018 annual report.
The 11,000 manufacturing companies here account for 7.2 percent of state GDP. Advanced manufacturing companies, which account for 82 percent of manufacturing GDP in the state, contributed nearly $31 billion to real GDP and pay more than $13.4 billion in wages or roughly 6.5 percent of total New Jersey wages.
Manufacturing has a greater impact on economic growth than many industries.
“Manufacturers purchase materials to make their products. Many of the parts of the supply chain are in New Jersey. This creates a multiplier effect not only in sales, but in jobs that are part of the manufacturing environment. This is often overlooked when we think about manufacturing,” Falstrom Co. President and CEO Clifford F. Lindholm, III, says. His Passaic-based contract manufacturing company has 117 employees fabricating enclosures and electronic assemblies for the US Navy and Coast Guard as well as precision machined parts used by commercial jet engine manufacturers and companies supporting the heating, oil and gas industries.
“It’s not just the factories, but the businesses and employees in the supply chain that support them that are critical,” Lindholm says. “For $1 of contract, I may go out and buy 90 cents of materials and services from suppliers. That’s the ripple effect. It’s unlike services – you pay a fee to a lawyer and it goes directly to the lawyer. Plus, many Falstrom Co. suppliers are right here in New Jersey.”
Closing the Skills Gap
The creation of manufacturing talent networks in conjunction with the growth of programs available at vo-tech schools and institutions of higher learning is helping to overcome the gap between skilled jobs in demand and labor. Relying heavily on manufacturers to shape training and degree programs, educators are helping the industry here overcome the image of manufacturing jobs as low-paying and unskilled. In fact, average annual compensation for workers at New Jersey manufacturing companies tops $90,500 and the state’s vocational schools are turning away more students than they can accept. The state’s colleges and universities also are a contributing factor in drawing manufacturers here.
“Manufacturers rely heavily upon colleges and universities with expertise in the STEM disciplines,” NJIT President Joel S. Bloom says. NJIT’s Newark School of Engineering celebrates the 100th Anniversary of its first undergraduate degree programs in chemical, mechanical and electrical engineering this year. “We are a pipeline for their workforce needs, including both engineers and professionals who have a background in manufacturing, fabrication, maintenance, process control, instrumentation, and service that enables them to focus on the practical applications of engineered products and processes,” Bloom says. NJIT supports manufacturers in numerous ways, including its New Jersey Innovation Institute. The institute serves as a portal and platform for applying NJIT’s intellectual and technological resources, including facilities like our Makerspace (a state-of-the-art advanced manufacturing facility that opened in 2017), to challenges identified by industry partners. “Additionally, we have New Jersey’s oldest and largest tech and life science incubator – VentureLink, formerly the Enterprise Development Center (EDC),” Bloom says.
Educators and manufacturers lauded Governor Phil Murphy’s decision to include $10 million to support the New Jersey Apprenticeship Network (NJAN) in the state’s fiscal 2019 budget. In addition to establishing an Office of Apprenticeships in the state’s Department of Labor and Workforce Development as a single contact for both employers and potential apprentices, the network will focus on high-growth sectors such as advanced manufacturing. The NJAN will create formal linkages to the K-12 and higher education systems to help more people achieve advanced degrees while reinvigorating New Jersey Pathways Leading Apprentices to a College Education (NJ PLACE). A statewide program offered by the Department of Labor and Workforce Development, NJ PLACE helps people apply their apprenticeship education from participating programs toward a degree at a participating New Jersey college.
NJMEP’s Advanced Manufacturing Talent Network offers an alternative to college through its apprenticeship program for people seeking good-paying jobs in manufacturing.
“The apprenticeship approach helps eliminate the debt concern of going to college and provides a solid career path for them,” says Michael Marchetti, program manager of the Advanced Manufacturing Talent Network. “Our program is focused on apprenticeships that are nationally registered; they are good whether you work in Hoboken and/or San Diego. These are broader apprenticeships and the manufacturer can alter our program up to 25 percent. It enables a manufacturer to keep that employee much longer.”
The talent network team spent a lot of time last year engaging with these companies and getting their information on workforce challenges.
“One of the things we’re really excited about this year is the opportunity to be involved in a focused program on apprenticeships,” NJMEP’s COO Robert Stramara says. “We have applied to the state’s Department of Labor & Workforce Development to take the lead with companies and employees for potential apprenticeships.” The talent network team is putting together apprenticeship programs for industrial manufacturing production assistants and technical sales personnel as well as a certified logistics apprenticeship. “We also provide technical support to them. This is a matter of addressing the skills gap,” Stramara says.
Taking Multi-Agency Steps to Support Manufacturers
NJMEP’s Kennedy notes the State Legislature is taking steps to recognize the importance of manufacturing in New Jersey’s future.
“The creation of a legislative bi-partisan Manufacturing Caucus has been a real positive,” Kennedy says. “A policy team was created with many entities, including the New Jersey Economic Development Authority (NJEDA), Department of Environmental Protection and the Department of Labor. That’s the first time in my 30-plus years in the industry here that I remember a group like that addressing manufacturing.”
Additionally, the New Jersey Business & Industry Association is a vital Caucus partner and has long advocated for its creation.
With an emphasis on workforce development, the Legislature established the Manufacturing Caucus to redraft state policies to take advantage of an expected renaissance in the industry – one where new technology and not cheap overseas labor is the key to success. The Caucus has held meetings around the state to hear what manufacturers have to say about topics from state regulations to tariffs.
“We’ve got the support of the Manufacturing Caucus, and just the fact that state legislators have chosen to participate is important. They have a fair number of manufacturing-focused bills pending,” Marchetti says.
Falstrom Co.’s Lindholm notes that the NJEDA is working on a Policy Academy that will focus on training. New Jersey is one of four states to participate in a policy academy to identify best practices, partnerships and policies to strengthen the manufacturing industry in their communities.
“Any effort to assist with helping employers stay competitive through training is valuable,” he says. “We need to continually focus on keeping the state affordable for businesses and their employees.”
The efforts by the state, the training and educational opportunities, and the other factors that make New Jersey a good place for manufacturers to call home should help change the public’s perception of the importance of manufacturing to the state – and perception is important.
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