Forecasts See Move To Service Sector

April 11, 2005
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GRAND RAPIDS — The Employers’ Association (TEA) 2005 Economic Forecast touts a continued transition of the West Michigan economy from the goods-producing sector into the service sector.

“Our economy is definitely moving toward the service sector,” said TEA President David Smith.

Among the services TEA conducts for its members is employment advertising, through which it is able to track the industries that are creating new jobs. TEA also tracks the labor pool through its resume bank of applicants.

Projections from this data are again showing increases in the service sector.

“That probably isn’t a real surprise to anyone,” Smith said. “But when you look at it from a standpoint of the ads we’re seeing and the available candidates, there’s really a mismatch of people. The economy isn’t supporting the new positions.”

The TEA data shows the health-care field is creating the most jobs, and there is an immense shortage of applicants.

TEA ran nearly 150 ads for health-care positions in 2004, but had less than 10 resumes on file. At nearly a 15-to-1 ratio, no other field demonstrated even remotely the labor shortage seen in health care.

Surprisingly, the next largest concentration of ads came for general labor and manufacturing positions.

“There are still a lot of jobs open,” Smith said. “What we’ve seen with general manufacturing is that small, responsive companies are doing very well.”

Smith cited one TEA member that had seen revenue grow from $1.3 million to $5 million over the last three years with profitability now at an all-time high.

“But these are companies that are doing unique things,” Smith said. “They are leading the industry, not chasing the industry. They’re willing to take risks and they’re financially able to do it. Small companies are doing very well, and they are still advertising for manufacturing, but there aren’t enough out there to fill the jobs that are being displaced.”

Companies know they have to sell to come out of a recession, Smith said, and a growth in sales and marketing positions reflects that. However, there has not been an increase in sales and marketing people to fill those positions.

According to Smith, accounting and finance positions also are prevalent — many as a result of Sarbanes-Oxley — while purchasing and materials is also a growth employment sector.

After that, engineering and office support are the most sought after applicants, but there is no shortage of engineers and a surplus of office workers. Other hot occupations that still fail to support the number of applicants are information technology and human resources.

“Several years ago we were looking at Y2K and IT people could name their price,” Smith said. “That’s shifted some; they can still name their price, but for the first time there are more IT people than jobs.

“As for human resources, there are probably about four times as many HR people as jobs,” he said. “There are plenty of jobs but even more people. What we’re seeing is that employers are looking for HR specialists who can bring to the table a good overall business, international and operations background.”

Other hot fields outpacing the number of applicants include maintenance, manufacturing management, customer service, shipping and receiving, construction, insurance and quality control.

“The service area is driving the industry,” Smith said. “Customer service is getting to be a huge concern. Everyone can give product away, but price isn’t necessarily the driver. It’s now about getting out there, doing the job, doing it well and anticipating needs.”

Smith suggests that companies invest in customer service as a growth mechanism, investing in training programs and both internal and external service support.

“We’ve had huge interest in customer service. Companies are saying that’s what is going to be driving their future sales.”

Fields that are showing little growth include graphic arts, social work, auto repair, property management, science, architecture and environmental.

TEA data on pay trends also has documented some noteworthy internal shifts in recent years.

Entry-level employees are no longer receiving top billing in the labor pool. With an apparent surplus of young workers and the emphasis on the creative class, entry-level pay adjustments have dropped to 1 percent to 3 percent from the 5 percent to 7 percent seen only a few years ago.

Top managers are no longer demanding the more than 5 percent adjustments of that same period. But high-level adjustments remain stable at around 3 percent as companies work to retain management.

“The entry level (workers) are not going up as much,” Smith said. “There are more people at that level than there are jobs and they’re relatively easy to both get and fill. The high-level people are stable, but what we’re really seeing is (that) those midlevel technicians, supervisors and managers (who) have been ignored for a number of years are getting much larger increases.”

In recent years, midlevel employees could expect adjustments of 1 percent to 2 percent; now averages are up to 3 percent to 5 percent.

“Companies are looking to build on them. They want a base of midlevel management and technological skills, engineers and specialists.”    

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