The Texas Industry Cluster Initiative
“Innovate and Implement”

August 2007

Engines of the Texas Economy

“The Next Big Thing”

• The vision for the Texas cluster initiative is based on beating the competition in a global marketplace
• The cluster initiative identifies industries in which Texas has a competitive advantage
  • Product, place, price
  • Culture, history, workforce, infrastructure, education, research
• The initiative recommends policies and programs that create strategic leverage
  • Education, training, incentives
  • Business climate, collaboration, commercialization
• The cluster assessment lets Texas employers look over the horizon
  • Creative disruption, emerging markets, emerging technologies
  • Emerging skills and competencies, robust workforce pipeline
  • “Know your competition as you know yourself”

Auto – Original Equipment Manufacturer Integrated Product Logistics Model

The 2006 - 2007 Cluster Initiative

Regional Forums With Over 700 Stakeholders

Information & Computer Technology Cluster Map

What gives a cluster a competitive advantage?

• Clusters are collaborating and competing interests in close proximity to one another, organized around a common economic advantage.
• Competitors will inevitably overtake any company that stops improving and innovating. Ultimately, the only way to sustain a competitive advantage is to upgrade it.

  1. Factor conditions. The region’s position in factors of production, such as skilled labor or infrastructure, necessary to compete in a given industry. This also includes such factors of production as land, labor, capital, and intellectual property

  2. Demand conditions. The nature of local market demand for the industry’s product or service.

  3. Related and supporting industries. The presence or absence in the region of supplier industries and other related industries that are internationally competitive

  4. Firm strategy, structure, and rivalry. The conditions in the region governing how companies are created, organized, and managed, as well as the nature of domestic rivalry

Common Issues Identified Across Clusters

Four Major Themes for Economic Growth

• Education and Workforce Development
• Business Climate
• Commercialization
• Collaboration

The education / workforce pipeline is key for Texas

• The quantity and quality of educated workers is suffering
• Industry and state agencies must come together to implement professional certification programs to counter the loss of workers to retirement
• Putting resources together to fill needs is still a challenge
• “School systems should be the most important economic development organization in the state”

Cluster Findings - Emerging Industries

Cluster Findings - Emerging Trends

• Automation and outsourcing of low skill jobs
• Semi-skilled jobs become more technical
• High skill jobs require systems design and management capabilities
• All jobs increasingly require multidisciplinary, problem solving, and networking skills

Cluster Findings - Emerging Talent Gaps

• 65% of the fastest growing occupations require some postsecondary education or training
• By 2010, 42% of all U.S. jobs will require a vocational certificate, associate degree, bachelor’s degree or higher.
• Also by 2010, all jobs will require some form of technological literacy; 80% of those jobs do not yet exist
• By contrast, only 35% of high school graduates are college or career-ready

Listen to the  Natives – and Adapt…Fast!

The Jobs Revolution

Demographics

• In 2008 the Baby Boomers begin retiring. In 2011 they begin qualifying for Medicare.
• But as Baby Boomers leave, no one is ready to replace them.
• By 2030, some 76 million Baby Boomers will have retired while only 46 million people in Generation X and Y enter the workplace.

Workplace Skill Demands

• The workplace itself is changing
• Future jobs in occupations not yet created
• Average worker expected to have 10-14 jobs in his / her lifetime.
• Workers must learn and relearn, with in-demand skills

The Good News for Texas!

• Texas’ youth and population growth is a competitive advantage
• Texas leads the nation in the diversity of our population – even rural Texas because of the growth of the Hispanic population

Texas Employers

Voicing Concern:

• Lack of Work Ethic & Basic Skills
• Generational Differences
• Workplace Diversity in a Global Economy
• The Demographic Cliff
• Critical Need for Skilled Workers

The Talent Race:

• Texas, as well as the U.S., faces the converging factors of demographic shifts, workplace change and global competition.
• To win the race for economic development, Texas must capitalize on strengths by significantly increasing educational achievement in all segments of the population but particularly among Hispanics.

The Challenge for Texas

• We are trailing the nation in educational attainment at both ends of the spectrum (GED and BA)
• For the 25 and older population, Texas has had the lowest High School Diploma
• Rate in the U.S. for each of the last three years.
• There is a gap in educational attainment for our fastest growing population segment.
• The Texas labor force of the future will be less well educated
• The Texas labor force will be less skilled
• Demand for workforce training & services will increase
• The Texas labor force will earn less

Projected Labor Force by Educational Attainment in Texas, 2000 and 2040

Cluster Recommendations – Education and Training

• Approach education and training as a lifelong learning continuum
• Design learning experiences to update skill and competencies at every exit point
• Articulate programs and develop competency based certification

Cluster Recommendations – Education and Training

• Focus initiatives on high priority occupations, develop career ladders, and map supporting career exploration activities to high performance training programs and curricula
• Streamline the education and training process to support retention and increase completion rates by supporting alignment, increasing efficiency in approval processes for curriculum development and articulation, and expediting implementation of “best practice” models.

Cluster Recommendations – Education and Training

• Teach multi-disciplinary courses that develop problem solving skills. Promote application-based learning, workplace readiness certification, STEM equivalencies in career and tech education.
• Make technology access ubiquitous, then raise expectations of the students.
• Ask new questions that let students exploit the technologies that are part of their daily lives.
• Fund career and technology training courses.

Build a Career Pathway

Regional Partnerships with Industry

• Community Workforce Partnership, Lubbock
  • Retain skilled automotive talent in the region
  • Align regional employer needs and expectations with workforce and education system programs to increase skilled talent supply
  • Create applicable and consistent educational opportunities and curriculum designed to prepare the future workforce
  • Provide real world, application-based learning experiences that support academic study
• Aerospace Workforce Innovation Network, Bay Area Houston
  • Prepare for significant workforce transitions in the aerospace industry occurring because of Shuttle phase out and Constellation startup
  • Develop high school through graduate credit and continuing education curriculum development and activities to inspire, recruit and retain youth 14 and older
• Texas Bioscience Institute, Temple
  • Diversify the economy by emphasizing the growth and development of a bioscience industry
  • Leverage medical research activities to attract businesses
  • Offer multiple educational opportunities designed to prepare high schools students, military personnel and the dependents, displaced workers, and others for work in bioscience professions

Governor Rick Perry

If you have questions or comments, please contact

Doug Ridge
Director, Office of Employer Initiatives
Texas Workforce Commission
Austin, Texas
512-463-1986
doug.ridge@twc.state.tx.us