Learning in the Fast Lane
BMW's South Carolina plant is expanding its apprenticeship program in an attempt to grow a tech-savvy workforce
Dale Phillips, a night-shift maintenance supervisor at BMW's plant in Spartanburg, S.C., is busy balancing a full-time job with online coursework to complete a bachelor's degree in management. He oversees a team of equipment-services associates in the plant's paint shop, whose duties include preventing equipment breakdowns in the conveyors, lifts, pumps, and industrial robots. He says he never envisioned such a career until four years ago, when he started at the plant as an apprentice after spending most of his 20s and 30s as a grocery store manager.
"When I was 17 or 18, I was frustrated about what I was going to do after high school," explains Phillips. "I didn't have any guidance and didn't know how you prepare yourself for a good job. You just took whatever work you could find. But now I'm in a high-tech job, working as a supervisor. This is something I never even thought of."
Phillips is a graduate of the BMW Scholars program, an initiative that the company began in 2011 to secure a steady pipeline of high-skilled workers for its South Carolina operation. Modeled after European apprenticeships, it now trains about 35 workers a year in a partnership with local community colleges. Ninety-nine percent of them join the company full time upon completion, and that success rate is one reason why BMW is now planning to expand the program to 200 a year. It's also part of a broader effort to ramp up hiring: By 2021, BMW is expected to add another 1,000 workers to its current workforce of 10,000, while it aims to add a fifth model to its production lineup, the new BMW X7.
BMW's use of apprentices — a practice common in many other countries but still unusual in the United States — is only one reason the plant stands out. It's also the largest auto plant in the firm's global operations and one of the longest standing foreign-owned automakers, operating in the South since 1994. (See "When South Carolina Met BMW," Region Focus, Second Quarter 2011.) About 70 percent of its vehicles are exported, with most going through the Port of Charleston, a logistical advantage that was key for BMW when it was scouting locations. But like many other carmakers, its operations are increasingly high tech, relying on robots for what was once manual labor and on humans for the more complex and digitized tasks. The goal of the Scholars program, says its manager Ryan Childers, is to train workers to learn the required mix of "soft" and "hard" skills.
"You need to function in a team environment with both robot and human co-workers," he says. "This requires electrical and mechanical training, often some algebra or statistics, and IT know-how. It's a new level of being multiskilled."
Make Me a Match
Can the BMW Scholars experiment offer broader lessons for the United States? Spokesman Steve Wilson says the firm's overall worker retention rates are "very good," and he describes the Scholars program — which focuses on targeted and effective recruitment starting at the high school level — as one way to reduce the need to constantly replenish its skilled workforce. It's one approach that addresses a common and growing concern among firms in the region that a shortage of skilled workers is serving as an impediment to further hiring.
Both in academic research and at the policy level, apprenticeships are getting more attention as one possible solution to what is often termed a "skills mismatch" in the U.S. labor market, namely, a perception among employers that skilled labor is in short supply. The makeup of the U.S. job market has shifted in the last decade to reflect higher demand for workers with college education. According to the Bureau of Labor Statistics, over the last decade the share of employment in occupations requiring only a high school degree has fallen while the share of those requiring college has risen. One challenge, however, is that only around 70 percent of high school graduates go to college, and only around 57 percent of college freshmen complete their degree within six years; among students seeking certificates and associate degrees, completion rates are even lower. And more broadly, the rise in U.S. college attainment has been much more sluggish in recent years compared with the 2000s, especially among men.
Apprenticeships, as some economists see them, have several features that could help address skill mismatch. They can "fast track" workers (often from high school) to full-time employment in less time than a college education, as well as teach applied skills that are career-specific. And even though participating firms in "apprenticeship countries" often bear some upfront costs by paying for the apprentices' education, they can use the experience to better gauge potential over time before deciding to hire.
Harry Holzer, a senior fellow at the Brookings Institution and former chief economist at the U.S. Labor Department, points to another potential benefit of apprenticeships: They can train workers for what he terms jobs in "the new middle," ones that used to require only a high school degree but now demand more advanced technical and cognitive skills (such as health technicians and paralegals). In a 2015 paper, he concluded that the share of such positions among total jobs rose by 0.8 percentage point from 2000 to 2013, while the share of what he calls "old middle" jobs fell by 3.3 percentage points.
"If you look at sectors where employers have difficulty filling jobs, it's in health care, advanced manufacturing, IT, and transportation logistics," he says. "You don't need a college degree, but you do need something beyond high school. The 'old middle' jobs in fields like traditional manufacturing and clerical work do not. And that's where jobs are disappearing and wages are shrinking."
Lessons From Abroad
Apprenticeships have long been established abroad, especially in Northern Europe. In those nations, upon high school completion, more young people — sometimes more than half of the total — choose apprenticeships over a university degree. While these programs vary from country to country, they typically require a young adult to apply to train with a firm upon graduation from high school. The apprentice then combines part-time work with part-time study at a local university and, over the course of three to four years, completes both the workplace training and the equivalent of an associate's degree; the combination of practical experience and coursework is known as the "dual system." The coursework relates directly to the job, and the trainee contributes to the firm's production and is paid, albeit at a low wage. The tuition is usually paid for by the state, the employer, or both.
When trainees in the dual system graduate, they become broadly employable because they secure a certification that is universally recognized in their field. These certifications encompass a wide range of middle-class jobs, often in technical or specialized professions. Many graduates are also offered a job at the firm, but the certification enables them to search beyond if they choose; in Germany, for example, about half take a job elsewhere.
Does this alternative to college make a difference in labor market outcomes? Economists who have studied the European job market note that youth employment rates are much higher in countries that have well-established apprenticeships — for example, Germany, Austria, and Switzerland — than in those that do not, mostly in the south. Those rates range between 40 percent and 60 percent of 15- to 24-year-olds in the former and between 15 percent and 30 percent in the latter, according to the Organisation for Economic Co-operation and Development (a gap that, to be sure, also reflects other differences among those economies). Young people in apprenticeship countries are also far less likely to be unattached under the OECD definition — that is, not working, studying, or training — than their counterparts elsewhere, often by a factor of two or more. In one recent study on the relationship between apprenticeships and youth employment in Germany, economists Regina Riphahn of the University of Erlangen-Nuremberg and Michael Zibrowius of the Cologne Institute for Economic Research found that apprentice graduates, by age 25, were more likely to be fully employed — by 30 percentage points — than those with neither training nor college with other factors held constant, including overall labor market conditions.
But the outlook appears much more mixed in the long run, according to economist Eric Hanushek of Stanford University. He warns that while apprenticeships can help boost youth employment by imparting specific vocational skills, they might not be useful in building general skills that involve cognitive reasoning, which can make workers more flexible when retraining is needed in the later years. In particular, he notes, this can be an issue when a worker has to adjust to new technologies. In terms of employment and earnings over a lifetime, he says, economists need to consider these factors rather than just look at the short run.
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