Impact on Hoosier Tech Labor - Billions of investment starting up semiconductor manufacturing in Indiana
Last week, I had the opportunity to speak briefly with Indiana Senator Todd Young about the Labor impact of his economic development plan to make Indiana a global hub for semiconductor manufacturing and AI development. He estimates that his efforts will lead to 9,000 new jobs in Indiana.
Funded through the CHIPS & Science act authored by Senator Young, just one of the four semiconductor plants locating in southern Indiana near Crane Technology Park is expected to bring 400 jobs to Daviess County. And, Indiana headquartered Applied Research Institute has received $33 million to start building the Silicon Crossroads Microelectronics hub, the largest of the eight hubs planed in the US. Additionally, a chip packaging fabrication and R&D facility will be constructed by SK Hynix with a $3.8 billion investment in West Lafayette.
Thanks to Senator Young’s hard work and leadership, Indiana is poised to be a global leader in semiconductor manufacturing and artificial intelligence - and a major employer for high paying technology positions for decades to come.
I mentioned that an August 2024 McKinsey & Company study forecast an 80,000 shortfall in Engineers to staff silicon fab plants from 2024 to 2029. (Reimagining labor to close the expanding US semiconductor talent gap - August 2024)
My suggestion to Senator Young was that we need to expedite and increase the number of H1B Visas available to foreign engineers in an attempt to bridge this catastrophic shortfall in engineering talent for such a significant economic boon for Indiana. He did respond that he is working on this. The ripple effects of the operational silicon fab plant are transformational to the Indiana economy and especially the counties surrounding the facilities. But the ripples do extend to all our major universities and trades schools in the state that will train the workforce for these very high paying jobs .. and to non-technology employers too.
“every industry that has adapted to address labor shortages, another industry has suffered the consequences of taking inadequate action or outright inaction.” - page 10, McKinsey & Co, “Reimagining labor to close the expanding US semiconductor talent gap, August 2024.
In addition to Engineers, the fab plants of course need skilled tradespeople - Engineering Technicians, Operating Technicians, and trained technical staff for all sort of supporting roles to the manufacturing process in areas like product testing and maintenance.
Salaries and wages have been increasing across industries, post pandemic. And as industries facing labor and talent shortages have tried to attract new talent with higher salaries and wages, they have found that it isn’t the sole answer. (Big Oil’s Talent Crisis: High Salaries Are No Longer Enough, Wall Street Journal, August 6, 2023)
Based upon the McKinsey report, I thought that people currently in the silicon fab industry must be highly sought after for the thousands of openings that must be filled if the dream of this economic boon is to become reality. So I reached out to my Purdue fraternity’s former House Director who had been a graduate student completing his PhD in chip making materials (my joke with him was that Frito Lay will be a great place to work). He has foregone the job market to continue in a research and development role at Colorado State University. His reply to my question if he had been contacted and made an offer that he couldn’t refuse to come back to the silicon chip world was, “I have been approached with a couple offers from the semiconductor industry, though to be honest I wouldn't go back for any amount of money“. So not everyone specifically trained and qualified for semiconductors is going to take these positions in Indiana.
If I were opening a silicon fabrication plant, reaching out to people with training in this field or currently in this field would be my first targets to fill thousands of openings.
McKinsey says this isn’t enough. They say part of the answer is to raid Engineers and Technicians from neighboring manufacturers in different industries and retrain them. In Indiana, this is would be a logical choice and a fertile talent pool given the state is the most manufacturing intensive in the nation. The report’s recommendations for addressing labor shortages:
Near term strategies
•Expand sourcing of candidates outside the semiconductor industry to adjacent industry sources include those with engineers and technical talent with relevant transferable skills in machining, heavy equipment, and clean room manufacturing in automotive & engine manufacturing, aerospace manufacturing, power generation & maintenance, chemical processing, medical device manufacturing, and pharmaceuticals.
Indiana has plenty of these adjacent industry sources for the 9,000 new job openings in Indiana’s burgeoning semiconductor industry. The challenge is going to be the cascading effect of raiding neighboring employers. We already have a shortage of talent in Engineering and technical fields. If we start robbing Peter to pay Paul throughout Indiana’s manufacturing community, then where will it end. HOW will it end?
The McKinsey reports second near term strategy is to appeal to immigrant communities in the US. There are examples across the US and in Indiana an employer has tailored its hiring to attract a specific immigrant or refugee community with some success. But this will not solve the problem for the more specialized roles in engineering and other technically trained areas.
Other recommended strategies include educational partnerships. This is happening in Indiana and is the key part of Senator Young’s plan and why Indiana will be a successful hub for the semiconductor industry. Purdue University is the leading partner in Indiana with semiconductor manufacturers (Prioritizing Partnerships Pays Off For Purdue, May 2024). But the output of the educational talent pipeline at the university level will be a lower volume than can meet the demand of the opening facilities.
Indiana high schools could contribute to solving the talent shortage by working with semiconductor industry employers to develop certification and apprenticeship programs. School corporations could partner directly with semiconductor employers and apply for funding for workforce development from state and federal programs like the CHIPS Program.
High school students trained through an apprenticeship and certification program while juniors and seniors could be hired upon graduation into entry level roles as equipment technicians or operators. Through the IEDC’s READI program, Ivy Tech and Purdue have started offering semiconductor workforce development programs for high school juniors and senior in the Lafayette and West Lafayette high schools. This program really needs to be adopted at the Indiana Department of Education level and offered across the State of Indiana.
If the McKinsey report is remotely accurate then there are not enough bodies available to meet the projected pace of growth in start up silicon fab plants. Their growth plans will have to be slowed or be stretched out.
This initiative is a huge leap forward for Indiana and will elevate the workforce. But in the short term, Hoosier employers in every industry are going to be very challenged to fill Engineering and Technician positions. Employers will have think outside the box to fill openings, pay higher salaries & wages, and provide accommodations for new employees who may be coming to Indiana from out-of-state and probably outside of the US. So Indiana will need access to more H1B Visas and we would benefit from a more progressive “guest worker program” like those in European countries.
Career Solutions is in its 29th year of helping employers and hiring managers, we look forward to the opportunity of assisting you. For inquiries or just general advice, please contact Steve Fero at sfero@careersolutionsindy.com or (317) 502-3361
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