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New York Early Alert and Layoff Aversion Report New Tools to Take on the Recession: A New York Early Alert System to Avert Layoffs.

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Presentation on theme: "New York Early Alert and Layoff Aversion Report New Tools to Take on the Recession: A New York Early Alert System to Avert Layoffs."— Presentation transcript:

1 New York Early Alert and Layoff Aversion Report New Tools to Take on the Recession: A New York Early Alert System to Avert Layoffs

2 A Presentation of the Steel Valley Authority Sponsored by the New York Department of Labor SEWN Strategic Early Warning Network Strategic Early Warning Network

3 Early Alert NYATEP Conference Workforce New York 2008 Creating Opportunities – Aligning Resources Niagara Falls October 30, 2008

4 Quick overview, SVA and the SEWN Network WORKING TOGETHER TO SAVE JOBS WHAT IS THE STRATEGIC EARLY WARNING NETWORK? The Steel Valley Authority is a unique development agency founded in 1986 to retain and revitalize the regions economic base and preserve jobs. In 1993, the State of Pennsylvania charged the Steel Valley Authority with developing a Strategic Early Warning Network to help save area companies and jobs. Since then, the Steel Valley Authority has helped scores of companies and saved thousands of jobs. Our Strategic Early Warning Network provides a wide variety of professional and consulting services at no charge. We work with all interested parties: workers, management and owners. Our only objective is to save jobs in Pennsylvania. Experience shows us that a companys problems are easier to address before they reach the crisis stage. It is also easier and less costly to save an existing local company than to create a new business or attract one from outside the region. With 48 hours of your call, the Steel Valley Authoritys staff will contact your companys management, owners or employees to set up site visits and plant tours. We will assess the situation and help to define your companys critical problems. Then, working with all parties concerned, well inventory all available resources and help develop solutions.

5 Saving Jobs and Manufacturers is Possible Newton Falls is a village of 400 in Saint Lawrence County in the Adirondack Park. The village was named for James Newton, who built a sawmill in 1894 which became the Newton Falls Paper Mill. The mill closed in 2000, taking with it more than 100 jobs. According to the NYT, most of the 75 houses in this hamlet soon fell into disrepair, their frames thrashed by weather and hardship. Some families moved and small firms closed.

6 Saving Jobs and Manufacturers is Possible The mill was reopened in late 2007 as Newton Falls Fine Paper. Through the efforts of former mill workers and town residents, a Canadian company was found to buy the Mill, and will spend $20 million to upgrade. New Falls Fine Paper will bring back 120 workers.

7 Saving Jobs and Companies As if in a fairy tale, the shuttered mill has come back to life, thanks to a healthy dose of luck, a longtime paper executives willingness to take a chance, and the unbending commitment of two men to the place where they had labored for two decades. For eight months now, the mill has churned out an average of 200 tons of coated paper a day, or 2,000 feet per minute, 54 percent more than it did before it went dark. It runs 24 hours a day, every day… Among the workers who returned are Andy Leroux and Levi Durham Jr., longtime friends and residents.

8 Saving Jobs and Companies While the mill was closed, Mr. Leroux and Mr. Durham lubricated machines, dusted crevices and corners, shoveled snow and occasionally called former co-workers to ask whether they would be willing to return were the mill to make paper again. They also gave tours to prospective buyers. Those who seemed interested in reviving the plant found it heated in the winter. Those who wanted to tear it apart and sell the machines overseas did not. We had to do what we had to do to get our mill going again, shrugged Mr. Leroux, 44, a third-generation mill worker. Many credit them with saving the mill and, along with it, Newton Falls.

9 On the Economy and Economic Development

10 Whats Happening in the Economy? NEW YORK TIMES New York Report Friday, September 19, 2008 Downturn Drives Up New Yorks Jobless Rates The unemployment rates for New York City and State shot up in August as the rapidly spiraling economic downturn left more people without jobs, the states Department of Labor said on Thursday. The citys unemployment rate rose to 5.8 percent from 5 percent in July the largest monthly increase in more than 30 years as about 5,200 private-sector jobs were eliminated, the department reported. Many of the layoffs came in the tumbling financial sector, which is one of the citys biggest employers and the provider of nearly one-fourth of its annual wages and salaries.

11 New York State lost 250,000 jobs, or 25% of its manufacturing jobs, in the last decade. By 2007, manufacturing dropped to 550,000 jobs.* As of May, 2008, the NY-DOLs Division of Research and Statistics reported continued broad-based manufacturing job lossesa loss of 17,600 jobs since the prior year. The June 2008 Empire State Manufacturing Survey, conducted by the Federal Reserve, reported a further slide in its manufacturing index. *Data from Fiscal Policy Institute New York States Manufacturing Jobs?

12 Why Manufacturing Still Matters Despite these problems, New Yorks hard industries contributed $63 billion in value-added to the state economy in 2005 and were: Tied with the finance and insurance super-sector for the fifth largest source of private jobs in the state. Tied with health care as the fifth largest source of value added.

13 A companys problems are easier to address before they reach the crisis stage. It is also easier and less costly to save an existing local firm than to create a new business or attract one from outside. Within 48 hours of a call, Retention Staff contact company managers, owners and labor reps to visit the firm, to assess the situation, define critical problems. Then working with all parties, they inventory all resources and help develop solutions. Why Early Warning?

14 Layoff aversion strategies are likely to work best with: Early identification of a troubled firm and affected workers Adequate lead time to organize an effective response Broad partnerships that mobilize education, workforce and economic development resources Sufficient capacity through outside business consultants or state personnel to assess the viability of firms and implement retention strategies (Source: NGA Center for Best Practices) Making Layoff Aversion Work

15 New York City: Focused Sectoral Strategies Model The New York Industrial Retention Network (NYIRN) NYIRN is a non- profit corporation that directs or brokers a number of key focused services to industry sectors. Massachusetts: State Financial Intervention Model The state-chartered Economic Stabilization Trust (EST) provides turnaround management assistance to companies, in addition to financing ESOPs and business loans. The state Workforce Department is also exploring a new early warning system. Cleveland: Neighborhood-based Industrial Cooperation Model The Westside Industrial Retention and Expansion Network –WIRE- Net--is a membership-based non-profit development organization that seeks to retain and grow manufacturing-related businesses and to provide employment opportunities in manufacturing. How are States and Communities Responding?

16 Pennsylvania: Statewide Core Services Contractor Model SVAs Strategic Early Warning Network (SEWN), operating as a state municipal authority, directly manages and brokers professional turnaround and consulting services. SEWN also operates an early warning system. Ohio:Assessment Model, Utilizing Consultants Kent States Ohio Employee Ownership Center (OEOC) provides funding and technical assistance for pre-feasibility studies to assess turnarounds or buyouts. The States workforce department also set up a $300,000 turnaround fund. Missouri: Regional Retention/Warning Teams Model The Missouri WIBs constructed regional Business Retention and Early Warning Teams, utilizing coordinators, to broker assessment services to firms (from MEPs, etc.) How are States and Commnities Responding?

17 In 1993, the State of Pennsylvania commissioned the SVA to construct an early alert network to help save area companies and jobs. In 2005, SEWN expanded to 49 counties. As of 2008, SVA has directly impacted 700 firms and saved or created over 14,000 jobs. SEWN provides direct services: Financial restructuring Buyouts and ownership transition Labor-management assistance Operations and cost management In Pennsylvania, SEWN…

18 Howd we do in ? Assisted an estimated 70 manufacturing businesses Had direct impact on 17 firms, retaining/creating 670 jobs Maintained a cost-benefit of $1,000-2,000 per job retained (historically under $5,000) Leveraged additional capital and investment funds for troubled businesses Launched a statewide inter-agency collaboration to respond to auto suppliers

19 And on the Auto Crisis, the Governor Responded… …And the SVA Led the Response Team. Commonwealth of PENNSYLVANIA Office of the Governor Harrisburg As a Pennsylvania manufacturer participating in the automotive supply chain, you are already well aware of the tremendous restructuring the U.S. automotive manufacturing sector continues to experience…. To help our Pennsylvania manufactures adapt to these structural changes, I have organized a specific outreach initiative to focus state resources on our motor vehicle parts industry, which is quickly becoming an at-risk market for many of our manufacturers. Edward G. Rendell Governor

20 The Nuts and Bolts of Early Warning…

21 Key Steps Early Warning Analysis and Assessment --Early Warning Monitoring --Pre-feasibility of Companies-in-Stress Response and Layoff Aversion --Core Retention Steps --Sectoral/Cluster Strategies --Workplace Change and Training

22 Early Warning: What it is… Early warning is a multi-stakeholder approach to identifying companies at risk. It seeks to: Identify individual firms that may be at-risk to develop and implement response strategies that prevent layoffs and support the firms in remaining viable; Identify potential layoffs of workers that can not be prevented to be able to provide adjustment services as quickly as possible; and Identify labor market trends to develop and implement economic/workforce development strategies.

23 So, Logical Network Stakeholders are? Regional Rapid Response Offices Regional Development Offices Workforce Investment Boards (WIBs) City, county and regional development groups Modernization Extension Programs (MEPs) Industry associations Labor councils and L/M groups Banks and investment groups, Independent managers and consultants Industry policy groups

24 NY Early Alert Stakeholders State Stakeholders As a starting point, New Yorks workforce and economic development departments have aligned their regional offices into ten divisions, potentially greatly easing information sharing, communications and coordination. NY Department of Labor NY Empire State Development Corporation NY Manufacturing Extension Partnerships (ITAC, etc.) NY State Energy Research and Development Authority NYSTAR and Centers of Excellence SUNY and Universities Local Governments and Workforce/Development Agencies

25 NY Early Alert Stakeholders Partner Stakeholders Among other critical stakeholders from the private, labor and non-profit sectors: Manufacturers Associations Business Council of New York State Regional Business Councils The New York State Economic Development Council International Unions, CLCs Workforce Development Institute New York Industrial Retention Network Policy and Workforce Groups, like the FPI and

26 Monitoring and Analysis

27 Early Warning Sources General DOL Monthly Workforce Industry Data Unemployment Insurance Claim Filing Notices Reports -Individual Claims Records -UI Claims Summary Reports -Mass Layoff Report ES-202 data -Employer Births and Deaths Information DOL Rapid Response WARN Reports (The Worker Adjustment and Retraining Notification Act) Trade Adjustment Act Petitions Workforce Intelligence Reports Shared Work Requests

28 Early Warning Sources General ESDC Business loan delinquencies MEPs Business Problems Industry Clusters DOL Regional Transformation Partnerships ESDC Cluster Report

29 Early Warning Sources Private Sector, Other Information Banks: Loan Delinquencies, Banks District Court: Records of Bankruptcies Direct Referrals Manufacturing Assns. Chambers Local Officials Local Economic Development Groups Union Reps and Workers

30 WARN as Starting Point Through the Worker Adjustment and Retraining Notification Act (WARN), employers must give local Chief Elected Officials, the State Rapid Response Dislocated Worker Unit, and workers, and their representative, advance notice of a plant closing or mass layoff. Thus, an informal network of informational channels already exists. The logical network of early warning informants include states, local mayors and council members, local unions, civic and religious institutions, chambers, and other institutions.

31 Research Tools: LMI The SVA has an agreement with the State Labor Department workforce information system to predict closures. DLI runs data system that tracks firms with inordinate layoffs and UI claims, against industry trends.

32 D&B and other financial services firms offer: For a cost, a stressed company list--companies that can be selected by industry, that have high financial stress scores. It is a strong predictive tool. How is it Used? The SEWN Network discreetly shares it: With state business calling agents… With state development offices… To determine if visit or call needed. Research Tools: Dun and Bradstreet

33 Two years ago, the SEWN program worked with multiple referral services in Pennsylvania, engaging 64 referred clients. This included 4 from L&I and 2 direct WARN notices, 13 from the private sector, 7 from local economic development and 9 from GAT. The following chart shows the historical breakdown of SEWN cases by referrals. Referral Sources:

34 Early Warning Assessment: Providing pre-feasibility assessments to determine continued financial and market viability of business or facility.

35 Response and Layoff Aversion

36 Sectoral Strategies Developing urban and rural models targeting industrial sectors in geographic areas. Workplace Training/Change Supporting high-performance workplaces to: promote incumbent worker training and labor- management cooperation, etc. improve working conditions, stabilize employment improve performance

37 Workplace Training and Change By addressing the training needs and knowledge practices of workers, the workplace change approach does not just provide training on specific skills and techniques of the job or production. Workplace change and training models include modernization skills upgrading and cross-training, high performance workplaces, and learning workplaces. We should promote greater cooperation between management and workers in production techniques as firms attempt to re-direct operations or upgrade their production capabilities.

38 Response and Layoff Aversion Core Retention Steps: Financial Restructuring Company Buyouts Business Continuity Operations and Cost Management Labor-Management Cooperation

39 So, what are the alternatives? Financial restructuring Cost reviews New market development and conversion to new products Incumbent worker training, work-sharing Bringing in new management Labor-management cooperation Succession planning Employee and management buyouts Strategic company buyouts Modernization and technology upgrades

40 For New York, A Joint Venture?


42 Why were here: Good Jobs Now, and in Future

43 Western PA SEWN Main Office Steel Valley Authority 1112 South Braddock Avenue Suite 300 Swissvale, PA (Voice) (Fax) Toll Free SVA Contact Information

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