America's Newest German Import: Job Training

US corporations have spent the past couple of decades offloading every expense they can think of: among them customer satisfaction (those annoying automated phone response systems), component manufacturing (many factories are assemblages of units owned and operated by suppliers) and job training.

But they are beginning to learn that the supposed cost savings may carry a higher price than previously realized.

In the case of training, in particular, despite the 8% unemployment rate, companies are complaining that they can not find enough skilled workers in various disciplines and trades. This should not come as surprise as the companies themselves have often exported key jobs to Asia, have cut apprenticeship and training programs in order to eliminate 'non-essential' costs and through their lobbies in Washington like the Chamber of Commerce, have opposed government funding for such programs.

Having reaped the reward of their own miscalculation, they have begun to eye the success of the German automotive transplants, primarily in southern states like South Carolina, Tennessee and Virginia which do not have a strong tradition of government funding for training. But the demand by US companies for 'competitiveness' initiatives has changed minds. Just as suppliers and customers have shared space for manufacturing, so they are now learning from German companies that have established in-house training in order to 'grow their own.'

The irony is that as recently as the 90s, similar programs were established as partnerships between local businesses and community colleges. As funding was withdrawn the concept withered, but is now being revived as the understanding dawns that this is how the Germans do it in their own country and have begun to do it in the US. It is too soon to know whether this will become sufficiently widespread to institute a trend. Budgets remain tight and many senior executives are skeptical that the investment in a skilled workforce can pay off. But as non-US companies that do train their workers continue to win market share, the competitive imperative may become too compelling to ignore. JL

Vanessa Fuhrmans reports in the Wall Street Journal:

Germany's transplant-factories, like the sprawling Volkswagen AG complex here, aren't just cranking out cars, machinery and chemicals. They're also bringing a German training system that could help narrow America's skilled labor gap.
Volkswagen, whose auto factory will graduate its first class of U.S. apprentices next year, is one of dozens of companies introducing training that combine German-style apprenticeships and vocational schooling.

These worker training programs are winning U.S. adherents as manufacturers grapple with a paradox: Though unemployment remains stuck above 8%, companies can't find enough machinists, robotics specialists and other highly skilled workers to maintain their factory floors. An estimated 600,000 skilled, middle-class manufacturing jobs remain unfilled nationwide, even as millions of Americans search for work.

"We've learned it is better to build our own workforce instead of just relying on the market," said Hans-Herbert Jagla, Volkswagen's human resources chief at its one-year-old Chattanooga plant. The German car maker has launched a three-year apprenticeship program to ensure it has skilled workers to maintain and troubleshoot the car maker's high-tech robotics and assembly line systems.

Companies and federal and state policy makers have begun taking a closer look at programs at VW, Siemens AG SIE.XE -0.03%and BMW BMW.XE +1.79%AG. All have joined forces with community colleges to train workers in machining, welding and maintaining high-tech gear.

In Charleston, S.C., where German auto-parts and engineering firm Robert Bosch GmbH has run an apprenticeship program since the 1970s, aluminum products maker JW Aluminum, aerospace and industrial equipment maker Eaton Corp., ETN +0.91%engineering company ITT Corp. ITT +0.26%and nearly a dozen other U.S. companies have set up apprenticeship programs in the past few years with Trident Technical College, Bosch's partner.

"There is not a company I've spoken to that isn't interested in the concept," said Mitchell Harp, Trident's director of apprenticeship programs, who adds that the Bosch program has come to be seen as "the gold standard" in the area. "It is really a question of how to get it into the budget."

In March, Northern Virginia officials visited Siemens and other companies in Germany to explore how they could forge similar skills-building programs with local companies and local schools. White House and Education Department officials also have inquired about a high school skills-training program that German engine maker Tognum AG TGM.XE +0.81%plans to launch this fall in South Carolina, where it operates a manufacturing plant.

"In the U.S. we've evolved to the point where we think the only thing people should strive for is a four-year college education, and factory work is seen as dirty, dangerous and repetitive," said Tom Duesterberg, executive director of the Aspen Institute's Manufacturing and Society in the 21st century program. "In Germany, the work that is done on the factory floor and prepared by its vocational education system is highly valued."

In Germany, nearly two-thirds of the country's workers are trained through partnerships among companies, technical schools and trade guilds. Last year, German companies took on and trained nearly 600,000 paid apprentices. The schools provide theoretical lessons on the side, while trade unions help ensure training is standardized.

In the U.S., such close cooperation doesn't often exist. Another stumbling block has been companies' fear of spending on training, only to see apprentices go elsewhere. Siemens spends approximately $165,000 an apprentice in its new three-year mechatronics training program in Charlotte, N.C.

But where apprenticeship programs are reaching a critical mass, U.S. companies have joined. At Central Piedmont Community College in Charlotte, where some 200 German firms have nearby operations, 18 companies participate in company-tailored apprentice partnerships. Most are European, but a few, such as U.S. bearings maker Timken Co., TKR +2.51%also take part.

Carolina CAT, a Charlotte, N.C., heavy equipment distributor, last year launched a service technician training program loosely modeled on the German companies' apprenticeships. It sponsors students for 12 months of custom-tailored courses at the college followed by eight weeks of hands-on training at Carolina CAT. When the first class graduates later this year, students are likely to get full-time jobs at the company.

"American companies are beginning to realize they have a part in creating a more reliable supply of skilled workers," said Tony Zeiss, Central Piedmont's president.

The training programs aren't necessarily expensive, said Jörg Klisch, vice president of Tognum's North American operations. The German engine maker is targeting high-school students unlikely to pursue a higher degree. It provided the local school district with a two-year curriculum to train six students this fall as industrial mechanics in its vocational center.

The only cost to Tognum will be the several hours a week it pays students for hands-on work starting at $8 an hour. "We think we've found the missing link in the education system between high school and starting college," Mr. Klisch said.

Companies such as Volkswagen warn that without training its own skilled workers, they may struggle to expand. The car maker should know: As it ramped up production to meet growing demand for its U.S.-produced Passat this year, it needed a nationwide advertising campaign to fill 100 of the more specialized new jobs at the plant, including those for maintenance technicians and manufacturing engineers.

"We can't just limit ourselves to this region," VW's Mr.Jagla said. "It is too hard to find enough people."

Its apprenticeship program is a backup plan to ensure it has enough skilled workers for future plant expansions. About two dozen students join the program each year, then toggle between on-site classroom and on-the job training, while getting paid a starting $10 an hour.

One recruit was 28-year-old Brian Burton, who joined the program last year. When they graduate in 2014, he and his brother Mark will have Volkswagen job offers—likely in skilled maintenance jobs starting at $22 an hour—as well as technical diplomas from Chattanooga State Community College. "It's not an education we can get anywhere else," Mr. Burton said.