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					 The Marine Trades Industry
   in the Water Counties

                Final Presentation
                  April 21, 2006

   Rebecca Brown--Mary Donegan--Matt Harris
Tom Mitchell-- Olga Nesterova--Paul O’Shaughnessy
         Janelle Santos--Rebecca Schenk
    University of North Carolina-Chapel Hill
    Presentation Overview
•   Purpose of Project
•   The Industry
•   The Role of a Business Association
•   The Workforce
•   The Training Centers
•   Land Use
•   Key Takeaways
          The Project
• Why were we brought in?
  – Existing and growing marine trades
  – Growth bumping up against two

• Need for updated workforce
• Need to protect boating shore
    The Project: Location
• Five Eastern NC Counties
   – Carteret, Craven, Jones, Onslow, and Pamlico
   – Linked geographically, through commuter flows,
     and through the location of the industry
   Coastal Sub-region: Water Counties
Earlier studies termed this area the Water Counties
Convenient to use in this report
What are the Marine Trades?
The commercial and industrial activities that
  support the production, distribution and use
  of boats and boat-related products, including:

• Suppliers of production inputs and boating
• Boat builders and manufacturers
• Distribution, sales and transportation firms
• Boat storage and maintenance facilities
• Support services across a range of activities
Analyzing the Marine Trades
Using BLS and SBTDC data to analyze:
• Employment, firms and wages
• Trends and changes over time
• Comparisons with state and nation
• The structure of the value chain
• Competitive advantages
• Potential links between need and
                        Trends 1994 - 2004
                       Growth Rate 1994 - 2004
                       Water Cos        US

Marine cargo,
salvaging                 98%           8%
Yacht Clubs &
Marinas                   74%          28%
Ship and Boat Bldg        74%           4%       ◄ Regional Growth > US
Design and
Engineering               65%          23%
Boat Hauling              26%          13%
Marine shipping           0%           24%
Boat and Ship Rental      0%           20%
Boat Dealers             -29%          41%
Marine Surveyor          -72%          25%
                                                 ◄ Regional Growth < US
Boating Insurance        -200%          4%
Schools                  -289%         25%
          Comparative Advantages
     Intra-County Comparison

                                Carteret   Craven   Jones    Onslow   Pamlico
Marine Storage Batteries Mftg
Boating Lighting Mftg
Technical/Trade Schools
Ship and Boat Bldg
Design and Engineering
Boat Hauling
Marine shipping
Boat and Ship Rental
Yacht Clubs & Marinas
Other Services
Boating Insurance
Marine cargo, salvaging
Marine Surveyor

                                                            Source: NCESC, BLS

   20% of NC Marine Trades in Water Counties
     What is the Regional Value Chain?

Useful for:
Organizing industries into activities
that add value                             Production

Understanding competitive strengths &
Observing density of industries in the    Distribution   Other Services

Thinking about Marine Trades in terms
of linkages between industries and firms    Storage &
Provide insight into what drives the
   Water Counties                                   vs          North Carolina
Employees:         74                                                   Inputs
Location Quotient: 0.05                                      Employees:          76,180
Change 94-04:      -74%                                      Change 94-04:      -7.4%
Average Wage:      $47.733                                   Location Quotient: 1.27
Change 94-04:      135%                                      Average Wage:      $44,344
Firms:              4                                        Change 94-04:       -8.75%
Change 94-04:      -91%                                      Firms:             1,071
                                                             Change 94-04:      15%

          Production                                                   Production
Employees:         879                                       Employees:          12,681*
Location Quotient: 0.80                                      Change 94-04:      33%
Change 94-04:      217%                                      Location Quotient: 0.28
Average Wage:      $29,011                                   Average Wage: $39,988
Change 94-04:      32%                                       Change 94-04::     -10%
Firms:             105                                       Firms:             614
Change 94-04:      156%                                      Change 94-04:      44%

         Distribution                   Other Services                Distribution                      Other Services
Employees:         694          Employees:         428       Employees:          20,221         Employees:         428
Location Quotient: 1.18         Location Quotient: 0.32      Change 94-04:      33%             Change 94-04:      -39%
Change 94-04:      -74%         Change 94-04:      54%       Location Quotient: 0.84            Location Quotient: 0.73
Average Wage:      $25,919      Average Wage:      $32,805   Average Wage:      $39,000         Average Wage:      $32,805
Change 94-04:      1%           Change 94-04:                Change 94-04::     -9.4%           Change 94-04:      0.59%
Firms:             101          Firms:                       Firms:             2,013           Firms:
Change 94-04:      -17%                            74        Change 94-04:      33%                                74
                                Change 94-04:      -19%                                         Change 94-04:      -19%

   Storage & Maintenance                                        Storage & Maintenance
Employees:         1,316                                     Employees:         31,102**
Location Quotient: 1.41                                      Change 94-04:       21%
Change 94-04:      287%                                      Location Quotient: 1.03
Average Wage:      $14,404                                   Average Wage:      $15,340
Change 94-04:      26%                                       Change 94-04:       -20%
Firms:             101                                       Firms:              1,911
Change 94-04:      248%
                             WC Avg wage: $23,535            Change 94-04:       25.5%
                                                                                           NC Avg wage: $34,632
         Trade Schools                         Marine Hardware                  Boating Lighting           Radio Equipment
Employees:                   74
Change 94-04:             -74%                 Employment either               Suppressed 2004            Employment either
Location Quotient:        1.06                 0 or suppressed in              79 emp, 1994               0 or suppressed in
Average Wage:          $47,733                        2004                                                       2004
Change 94-04:           228%
Firms:                       4
Change 94-04:            -79%

  Paint Coating &           Plastics Product             Rubber Product Mfg         Boilers Tanks, Shpg     Marine Storage
   Adhesive Mfg                    Mfg                                                   Containers          Batteries Mfg
                                                          Employment either
Employment either         Employment either               0 or suppressed in        Employment either     Suppressed 2004
0 or suppressed in        0 or suppressed in                     2004               0 or suppressed in    185 emp, 1994
       2004                      2004                                                      2004

 Majority of Inputs are commodities purchased outside region
 Some specialized components and value added activities
 Competitive Opportunity is ability to cultivate skilled workforce
         Ship & Boat Building                      Design & Engineering
Employees:                    339         Employees:                    540        Anodizing & Coloring
Change 94-04:                 285%        Change 94-04:                 186%
Location Quotient:            3.20        Location Quotient:            0.61      Employment either 0 or
Average Wage:                 $25,394     Average Wage:                 $32,629    suppressed in 2004
Change 94-04:                 14%         Change 94-04:                 50%
Firms:                        16          Firms:                        89
Change 94-04:                 33%         Change 94-04:                 207%

Competitive Advantage in Boat Building: increasing employment, good
wages, high concentration of industries (33, SBTDC)
Potential Competitive Advantage in Design & Engineering: includes
consultants, environmental specialists, laboratories, architects

 Independent craftsmen not captured by surveys
          Boat Dealers                    Boat Hauling               Boat & Ship Rental (1994)
Employees:              275     Employees:               419            Suppressed in 2004
Change 94-04:          -23%     Change 94-04:            35%     Employees:               356
Location Quotient:     2.45     Location Quotient:      1.49     Location Quotient:       0.26
Average Wage:         $28,786   Average Wage:          $23,052   Average Wage:        $29,130
Change 94-04:          38%      Change 94-04:            -6%     Firms:                    44
Firms:                  45      Firms:                    56
Change 94-04:          18%      Change 94-04:            60%

                                          Marine Shipping

                                        Suppressed 2004
                                        24 employees in,

 Competitive Advantage in Boat Dealers: firms and wages increasing, yet
 employment has decreased
 Competitive Advantage in Boat Hauling: increasing employment,
 relatively constant real wage. Untapped specialized freight capacity?
  Need more information on Boat and Ship rental. Smaller industrial
 concentration, but potential source of revenues from outside the region
      Storage, Maintenance, Services
    Storage & Maintenance                                      Other Services

       Yacht Clubs & Marinas             Marine Surveyors                  Marine Cargo & Salvaging
   Employees:         1,316       Employees:           340                     Suppressed in 2004
   Change 94-04:      287%        Change 94-04:        -42%             Employees:           50
   Location Quotient: 1.76        Location Quotient:  0.95              Location Quotient:  0.76
   Average Wage: $14,404          Average Wage:      $20,848            Average Wage:      $43,303
   Change 94-04:      26%         Change 94-04:        40%              Firms:               10
   Firms:             101         Firms:               49
   Change 94-04:      248%        Change 94-04:       -22%

               Boat Lifts Mfg                              Boating Insurance
                                                    Employees:            38
             Employment either                      Change 94-04:        -67%
             0 or suppressed in                     Location Quotient:   0.04
                    2004                            Average Wage:       $34,274
                                                    Change 94-04:         24%
                                                    Firms:                15
                                                    Change 94-04:       -46%

Competitive Advantage in Yacht Clubs & Marinas: Critical for
commercial and recreational activities. Concerns about private acquisition
Potential Competitive Advantages in Surveyors and Salvage. Need more
info on regional activity.
               The Value Curve

                                                                   Boat Manufacturers

                                                                   Water Counties

 Trained     Available    Local      Knowledge    Infrastructure
Workforce   Waterfront   Suppliers    Diffusion
                The Industry

What did firms say we should focus on?
• The Workforce
   – Increasing demand for boats and technical innovation has
     shown that the workforce is not qualified.
• Which is more important: skilled workers or more firms?
  Skilled workers.
   – A supplier cluster or even a manufacturing cluster not as
     important as a skilled workforce cluster
   – Spend incentive dollars on training
• Land Use
   – Waterfront development has led to a decline in public
     access points and slips for producers
   – Potentially cripples local demand, storage, tower
     installation and repair services
      Business Associations
A business association could:
• Be a center for knowledge diffusion
   – Technical change is key in the industry
• Identify collective problems
   – Workforce
   – Training
   – Land Use
• Create a regional identification
   – Allows for collective response
   – Potential for future marketing value
    Workforce and Education

• What We Knew
  – Boatbuilding depends on a stable and skilled yet
    flexible workforce
  – As the technology of boatbuilding changes,
    workforce skills must continually change

• What We Didn’t Know
  – Is there a shortage of workers, skills, or both?
  – If so, what are the causes of these shortages?
              Labor Force Supply:
   If there is a problem, where is it and what causes it?

             Is there an existing worker pipeline from high school, or the cc’s?
 Schools     Reasons for problems: Lack of information about careers, limited
             internships, etc

             How and where are companies looking for workers?
Recruiting   Reasons for problems: Poor formal recruiting channels, poor
             social networks, etc

 Hiring      Are the “ideal” workers accepting job offers?
             Reasons for problems: wages, benefits, commuting, family
             commitments, etc

Retaining    Are the “ideal” workers staying?
             Additional reasons for problems: direct competition,
             indirect competition, etc
              Labor Force Supply:
               Results from firms interviews

             Currently, there is no boat building “career pathway” at Carteret
 Schools     High School, there is limited knowledge about the internship
             program, and there is no formal apprenticeship program.

             Many boat builders are recruiting from Cape Fear Community
Recruiting   College and other locations, since the local community colleges
             do not offer many general courses (more on this later).

 Hiring      Does not appear to be a major issue: if firms can find the
             workers, chances are they can hire them.

             Main problems appear to be due to direct competition and lack of
Retaining    information. Skilled workers may leave for work at Cherry Point, where the
             government wages and benefits are much higher.
                 Labor Force Skills:
    If there is a problem, where is it and what causes it?

 Schools     Are new workers adequately prepared, in terms of basic skills?
             If not, is there a mechanism in place to address this?

  Other      Are new workers adequately prepared, in terms of general and
             specific skills? If not, is there a mechanism in place to address
 Training    this?

 Initial     How are workers trained for their initial duties?
Training     Does this system work?
             Are forms afraid of losing their investment (through worker

             How successful is retraining?
Retraining   Are long-time workers prepared for today’s retraining?
             If not, what mechanisms are in place to get them up to speed?
             Are firms not investing because of poaching fears?
                    Labor Force Skills:
      If there is a problem, where is it and what causes it?
             In the mass-production shops, workers lacking “basic” and “soft” skills.
             Basic: How to use a ruler, fractions, reading comprehension, etc.
 Schools     Soft: Communication and “work ethic” problems
             These are the foundation that all other skills are built on
             Need for more guidance and communication for training in this area.
             “As long as they show up to work and want to work, we can teach them.”
  Other      The cold-molded and engine shops have hard times finding
             workers with these skills. While some can take courses at NC
             MARTEC, there need to be more joinery classes for carpenters
             to take. This is a significant problem.
 Initial     Workers are primarily trained on the job, or sent to specialized
Training     courses at NC MARTEC, Wilmington, or company training
             schools. But: firms may be afraid of poaching by other firms,
             which may be leading to underinvestment
             Retraining is a serious issue, primarily because of a lack of basic
Retraining   skills.
             As one NC MARTEC instructor stated, “They would be less
             afraid if I pulled out loaded shotgun than if I put fractions on
             the board.”
                   NC MARTEC
• Biggest strength is biggest weakness: location in NC
  Community College System
   –   Makes NC MARTEC administratively stable
   –   But means that NC MARTEC must follow state funding
   –   Instructor pay set at State; roughly 1/4 of market rate
   –   Delayed funding makes expansion hard
• Currently, NC MARTEC focuses on firm-specific training
  to ensure they are meeting local business needs
   – Doing a lot of training work with large firms
   – Small firms we spoke all expressed interest
        • Potential opportunity for expansion and development, since
          small firms are growing fast
   – Success of training could be improved by ensuring that
     students have good basic and general skills
• CCs competing with NC MARTEC
   – Best training from complementary strategies, not direct
  Workforce Recommendations
• Work with schools for “career pathway,” internships, etc
• Work with CC’s and NC MARTEC to develop “boat
  building basic skills” courses
   – Develop a “skills panel” (as Matt will talk about later)
   – In doing so, the CC’s and NC MARTEC must stake out their
     “turf”NOW… and then abide by their agreement
• Establish a nonprofit
   – Businesses, public sector, and other nonprofits
   – Can fund “market rate” that instructors will be paid
   – May be able to fund general skills training for workers,
     correcting current underinvestment

• Teach generalized courses, reserving specialized courses
  for exceptional cases
Commercial Waterfront and Boat Access:
Why Economic Development Must Care
• Public access key in workforce development
   – “The best workers are the folks who grew up
     on boats, who have built their own, who do
     their own repairs…they really develop a love
     and understanding for boats.”
• Commercial waterfront important in marine
  trades cluster
   – Large boats must be finished at the water
   – Waterfront location imperative for marinas
• Marine trades cluster important to local economy
   – Good jobs, many year-long
   – Component of coastal character
   – Tourism benefits
Commercial Waterfront & Boat Access:
      Problem and Causes

Decreasing supply of marinas, large lifts, ramps
   • High demand for residential waterfront
Increasing demand for storage and repair services
   • Additional residences adds boats
   • More boaters in general public

 1) Increasing prices (pushing out lower-income
  2) Economic uncertainty
   • At what point will demand drop? supply collapse?
               Commercial Waterfront:
•   Begin a process of identifying and convening stakeholders
    to identify funding strategies for second marine industrial
•   Apply to NC Dept. of Commerce for funding commercial
    site development
•   Prepare educational piece on options for property owners
    to reduce taxes and preserve commercial waterfront
•   Write guide for marine trades businesses on state, local,
    and federal permitting procedures

• Pursue state legislative action to expedite commercial
  waterfront property permits if a public amenity is provided
• Lobby the state for authority to tax commercial waterfront
  properties as agricultural land
• Lobby the state for more funding to aid waterfront
                    Boat Access:

•   Zoning changes requiring waterfront development to
    provide minimum boat access and boat slips
•   Gauge interest in a “no net loss” policy for public access
•   Partner with other public and non-profit entities to
    provide access
•   Apply to NC Park and Recreation Trust Fund for building
•   Partner with North Carolina Coastal Land Trust to buy
    land or purchase development rights
•   Gauge political and community will for passing a general
    obligation bond to buy land or purchase development

• Lobby the state for more funding for more public boat
              What Has Worked Elsewhere
• Boatbuilding Industry in Washington State
    –   Large firm presence, but disconnected
    –   Effort undertaken to unlock the full potential of the cluster
• The Center of Excellence for Marine Manufacturing and Technology:
   “a one-stop shop" - a place where Industry and Educators partner to stay abreast of
   emerging technologies and employment trends
• A 12 County Partnership comprised of:
    –   Companies
    –   Community/technical colleges
    –   Workforce councils
    –   Economic development associations
• Roles:
    –   Train new employees and upgrading incumbent workers
    –   Develop an emerging industry alliance composed of over thirty companies
    –   Support the development of K-12/community college curriculum
    –   Provide technical assistance, bringing in nationally recognized consultants
    –   Create a library of resources and clearinghouse for information and best practices
        in marine manufacturing and technology
          Key Takeaways
• Entire gamut of skill formation must be
   – Skill formation can be thought of as a pyramid:
     need basic and soft skills before general and
     specific skills
   – Requires collaboration between businesses, NC
     MARTEC, community colleges, and local schools
• Land use is critical for economic development
   – Land use changes are complex, and require
     participation from many actors
• A Business Association is critical for:
   – The long-term viability of the cluster
   – Ensuring strong linkages between marine trades
Shadow Slides
          Marine Trades in the Water Counties
                      Category                      Carteret   Craven   Jones   Onslow   Pamlico   Total   Pct of

     Administration                                   89         33       1       35       2       160       24.1%

     Boat Sales or Brokerage                          23         13       0       9        1        46        6.9%

     BoatBuilder                                      27         2        1       1        2        33        5.0%

     Boatyard or Marina with Repairs                  20         3        0       8        1        32        4.8%

     Marina – No Significant Repair                   51         10       0       14       3        78       11.7%

     Marine Construction                              21         9        0       7        2        39        5.9%

     Product for BoatBuilder                          47         40       1       14       5       107       16.1%

     Product for Marine Construction                   6         6        0       0        2        14        2.1%

     Services for Boaters                             102        31       0       20       3       156       23.5%

                                      Total Firms     386       147       3      108       21      665

Source: SBTDC

                      20% of NC Marine Trades in Water Counties
                                      Trends 1994 - 2004
                                               Water Counties vs. US Marine Trades Growth 1994 - 2004

                                                     Marine cargo, salvaging                             Yacht Clubs & Marinas
                                                                   Design and Engineering

                                      Ship and Boat Bldg            Boat Hauling
                  -10%           0%                    10%                     20%                 30%                     40%                  50%
Regional Growth

                                                                                                                                 Boat Dealers
                                                                                               Marine Surveyor

                                            Boating Insurance

                                                                                            Technical/Trade Schools

                                                                        National Growth
                  Evidence of a Cluster?
       Intra-County Comparison      Carteret         Craven          Jones          Onslow          Pamlico
Industry                         1994     2004    1994    2004    1994   2004    1994    2004    1994     2004
Total Private Industry
Marine Storage Batteries Mftg     4.22              -               -              -               -
Boating Lighting Mftg             4.22              -               -              -               -
Ship and Boat Bldg                1.58     4.21    1.80     -       -      -       -       -       -        -
Boat Builders                     1.40     1.69    1.50    0.72     -      -      0.26    0.43    1.73     4.16
Boat Hauling                      0.19      -       -      0.66    5.14   3.63    2.26    2.11    0.94     2.00
Marine cargo, salvaging                    4.21             -              -               -                -
Marine shipping                    -               2.89             -              -               -
Boating Insurance                 2.81      -       -      1.41     -      -      0.91    3.45     -        -
Boat and Ship Rental              0.62             2.46             -              -               -
Design and Engineering             -       0.91    1.51    1.47     -      -      1.30    0.57     -        -
Marine Surveyor                   3.58     1.20     -      1.00     -      -      0.41    0.89     -        -
Technical/Trade Schools            -        -      2.46     -       -      -      0.40    1.96     -        -
Yacht Clubs & Marinas              -       2.00     -      0.73     -      -      2.32    0.76    4.84     1.16
                             Competitive Industries and Wages
                                                                Industry Specialization and Wages


                                                             Technical/Trade Schools

                                                  Marine cargo, salvaging

Avg. Wage

                                              Design and Engineering
                                                                                                                    Boat Dealers

            $23,535                                                            Boat Hauling

                                                                                                                                      Ship and Boat Bldg

                                Marine Surveyor
                                                                                                 Yacht Clubs & Marinas


                      0.00      0.50                 1.00               1.50              2.00               2.50              3.00        3.50            4.00
                                                                               Location Quotient (US Ref)
        Custom Built (Cold Molded)
ORDER                                                           DIST
                           In House Tasks

   Boat           Frame            Ribbands       Engine     Finish and
  Design        Construction       and Hull       Install   Accessories

               Wood Supplier                      Major        Local
Design Firms                    Atlantic Veneer
               (Douglas Fir)                      Engine    Craftspeople
                               (Okoume Wood)      Manf.

                         Outside Contributions
                    Mass Production
ORDER                                                          DIST
                             In House Tasks

   Boat          Plug and          Boat Mass    Engine       Finish and
  Design           Mold            Production   Install     Accessories

                Mold Maker         Fiberglass      Major
Design Firms
               w/ 5 axis router                    Engine

                           Outside Contributions

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