November – December 2020 Commentary

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Illustration by James Yang

Retail – Digital Demand

Online shopping, which reported steady growth in recent years, has skyrocketed since the COVID-19 pandemic began in March. Amazon, Walmart, Target, and other e-commerce retailers have been hiring thousands of workers to keep pace with demand, and there don’t appear to be any signs the surge will plateau, let alone dip.

inside the numbersMichigan stands to benefit from the growth of online shopping across multiple business sectors. In recent years, Amazon has added more than 7,000 workers in metro Detroit and filled hundreds of additional positions statewide. The e-commerce giant has developed fulfillment centers, sorting facilities, and delivery stations, and has expanded its offices in Detroit to 600-plus corporate, engineering, and technology positions.

The hiring blitz will continue as Amazon, which overall has more than 1 million workers around the world, is building or planning new facilities in Pontiac, Sterling Heights, Detroit, Romulus, and elsewhere. It’s also taking over shuttered department store locations and converting them into sorting and delivery outlets. Apart from access to available workers and real estate sites, e-commerce players are attracted to Detroit Metropolitan Airport in Romulus and the region’s freeway system — a trend that was well in the works before the outbreak of the coronavirus.

With six runways, Detroit Metro’s takeoff and landing capacity for air passengers and freight operators leads other major airports among the Great Lakes states. What’s more, getting approvals to add runways can take years. While the virus has leveled the competition for air freight operators and passenger demand has fallen, overall traffic will eventually rebound during the next decade and beyond.

While warehouse positions may not be glamorous and are often fast-paced, the growing use of robots helps eliminate the most strenuous jobs. E-commerce players also provide plenty of cross-training opportunities to their respective workforces, to offset technological advances that may eliminate positions. Free training courses are offered in machine learning, AI, Big Data, cloud computing, and other growth sectors.

Another avenue of e-commerce that Michigan can tap into is a wave of advanced satellites that must be launched to keep pace with demand for instant communication, mobility platforms, GPS, and greater connectivity. Over the next decade, more than 7,000 satellites — each roughly the size of a football — are to be launched by the U.S. Department of Defense, along with aerospace firms like SpaceX, Blue Origin, ISRO, ESA Vega, and Firefly Aerospace.

When you fly in an airplane you see a little horizon. When you fly in space, you see a big horizon.  —  Al Worden, Michigan Native and Apollo 15 Astronaut

Driving demand are capacity issues at Cape Canaveral in Florida and Vandenberg Air Force Base in California. To draw investor and government interest, the Michigan Aerospace Manufacturers Association, an industry trade group in Sterling Heights, has been promoting the Michigan Launch Initiative. The program seeks to draw government and private players to launch rockets from northern Michigan into so-called polar orbits; southern locations require more fuel to reach outer space.

“Northern Michigan is uniquely positioned for a polar orbit satellite launch facility,” says Gavin Brown, executive director of MAMA. “It has a low-density population, the most restricted airspace east of the Mississippi River, access to the interstate highway system, and engineering and manufacturing capacity are readily accessible. E-commerce growth will help drive demand even further.”

Energy – Power Grid

As the world moves to improve air quality by electrifying everything from automobiles to unmanned aerial vehicles, industry and government need to figure out where all the power will come from. While reducing greenhouse gas emissions is a worthy goal, eliminating pollution in the atmosphere will require a major overhaul of utility systems that rely on coal, oil, and natural gas — the source of 85 percent of the world’s energy generation.

Wind turbines and solar arrays have reduced some of our reliance on fossil fuels, but more reliable green energy production facilities are needed to offset periods when the wind doesn’t blow and the sun doesn’t shine. Hydro power offers one pathway to a green future, but such projects often run into delays caused by local opposition. New nuclear and hydrogen energy sources fall in the same boat — most people like the concept of green power, as long as the infrastructure doesn’t impact their general neighborhood.

In turn, oil and utility companies often oppose green energy projects, and only agree to take on such projects due to regulatory mandates. To ease the way toward a green future offering reliable access to electricity, industry and government must work much more closely to provide clear regulations that take into account the required investment and the ability of end users to pay for new energy systems.

The regulations will likely need to be supported by tax breaks and subsidies, and the general public must be informed of all of the costs and tradeoffs that will come with adopting new green energy sources. If consistent policies can be adopted, the road to reducing our reliance on carbon fuel will be that much shorter.

Labor – Smart Jobs

A look at the labor market reveals what some may consider a counterintuitive trend: At a time when the COVID-19 pandemic has led to the loss of several million jobs, there are plenty of employment openings. Consider the September JOLTS report from the U.S. Department of Labor, which showed the country had around 6.5 million job openings in August — about as many as in December of last year.

How can that be? One reason is more people chose to skip work and collect generous unemployment benefits that were extended during the virus outbreak. Another factor is the growing need for technical workers. According to a recent survey by the National Federation of Independent Businesses, a third of small firms reported that unfilled job openings were due to the “quality of labor.”

Many jobs are available, but the skilled workers needed to fill them are either at home, working somewhere else, or don’t exist. On the latter point, there simply aren’t enough qualified candidates to fill all of the smart jobs that are posted. With the world embracing technology to boost efficiency and reduce redundant tasks, the problem will only get worse. As more baby boomers move into their retirement years, the situation is compounded even more.

The shortage of candidates for tech-related jobs can be overcome, but it won’t be due to a sudden (and unrealistic) surge in births. Rather, business, scholastic, and government leaders need to develop a mindset that the education cycle doesn’t end when a graduate earns a diploma. Rather, on-the-job training should be available across entire careers so workers have multiple skills, some of which are evolving.