CUED

Market Feasibility Analysis for a
Proposed Chicago Commons Proprietary Industrial Training Facility

Commons is considering the possibility of operating these industrial training programs as part of a proposed proprietary school that might include in-service training and that would participate in the student financial aid programs run by the U.S. Department of Education. As part of its efforts to assess the overall feasibility of launching this venture, Chicago Commons requested that the Center for Urban Economic Development at the University of Illinois at Chicago (UICUED) complete a relevant market feasibility analysis.

UICUED's examination began with an analysis of demand, supply, and prospects relevant to each of the four labor markets together with an analysis of prospects pertaining to the major industries which employ screw machine setup/operators; industrial mechanical inspectors; plastics injection molding technicians; and packaging machinery mechanics.

Cook-County industries employing the largest number of screw machine workers include screw machine products (SIC 345); metal stampings (SIC 346); metal services (SIC 347); miscellaneous fabricated metal products (SIC 349); and miscellaneous machinery, except electrical (SIC 359). Employment of screw machine workers in 1995 is expected to decline from 1984 levels due foreign competition, less expensive domestic substitute parts, and the increased adaptation CNC machines to some traditional screw machine applications. Nevertheless, it appears that future demand for experienced screw machine setup workers will exceed available supply.

Cook-County industries employing the largest number of plastics injection molding machine operators and setters include miscellaneous plastics (SIC 307); electric lighting and wiring equipment (SIC 364); toys and sporting goods (SIC 394); fabricated rubber products (SIC 306); and electronic components and accessories (SIC 367). Miscellaneous plastics products will continue as the largest employer of injection molding operators and setters through 1995. Demand for these workers will increase during the period.

A major local employer of industrial machinery mechanics, which includes packaging machinery mechanics, is the industry designated soap, cleaners, and toilet goods (SIC 284) Demand for these workers will increase by 1995.

Among the Cook-County industries expected to increase their employment of industrial mechanical inspectors by 1995 are nonferrous foundries and related (SICs 335 and 336); fabricated structural products (SIC 344); metalworking machinery (SIC 354); drugs (SIC 283); soap, cleaners, and toilet goods (SIC 284); and miscellaneous plastics products (SIC 307). By 1995, miscellaneous plastics will become the largest employer of industrial mechanical inspectors in Cook County, followed by electronic components and accessories (SIC 367) and motor vehicles and equipment (SIC 371).

In an attempt to confirm the findings which were suggested by the industry and labor market analyses and to identify training opportunities for the proposed proprietary school, UICUED staff interviewed relevant trade organizations and schools, and representative employers of each of the four job categories examined in the study. UICUED was unable to identify and interview more than one employer of packaging machinery mechanics. While this interviewee indicated that future demand for these workers might warrant training to upgrade their skills in relation to new machinery, he suggested that a significant share of such training could be provided by the manufacturers of such machinery. Future demand for experienced plastics injection molding and screw machine setters is expected to exceed supply. Interviewees felt that future training opportunities for these occupations would be strongest in the area of in-service training that would upgrade the skills of shop-floor workers. With reference to training opportunities relevant to plastics injection molding, Chicago Commons was urged to provide additional training in the physical properties of materials and in the areas of equipment maintenance and process control. While some employers of plastics injection molding workers encouraged Chicago Commons to continue to train apprentices, an overwhelming number of employers of screw machine workers did not see much value in continued training of apprentices in this area. Interviewees interested in industrial mechanical inspection indicated that there would be a need for continued training in this area. Two of three interviewees urged in-service training; at least one urged Chicago Commons to continue to train apprentices. Additionally, Chicago Commons was encouraged to expand its quality control training to include the use of CNC machines, the physical properties of products, and statistical methods of quality control.

All employers who recommended in-service training indicated that their firms would probably be willing to pay a reasonable service fee. Also, they suggested that training should be scheduled so that it would not conflict with peak work hours.

A representative of the Chicago Board of Education suggested that there might be opportunities for the Chicago Commons proprietary school to work with existing and planned vocational programs.

Interviews with representatives of five local vocational proprietary schools indicated that: Student enrollments are declining and that such declines will continue

The most effective means of marketing programs was student Referrals Tuition ranged from $2660/year to $5,000/year From 70 percent to 95 percent of students in non-Bachelor degree programs receive U.S. Department of Education financial aid.

A review of the most recent annual reports of National Education Centers, Inc. and DeVry Inc. -- two large vocational proprietary schools that operate in Chicago -- indicates that proprietary schools that can offer graduates a high chance of employment and that are revamping their traditional vocational training in favor of specially tailored in-service training for industry and government tend to be profitable operations which enjoy relatively favorable enrollment patterns. The rate of operating profit at the two schools approximates 10 percent per year.

In the City of Chicago, there are no training programs that would compete with Chicago Commons' proposed proprietary school. The College of DuPage operates training programs in plastics injection molding, quality control, and machine maintenance mechanics. Triton College discontinued its screw machine training program in 1988. Two additional suburban community colleges may offer programs in manufacturing technology, but UICUED did not examine these programs. The two schools are Moraine Valley in Palos Hills and Elgin Community College.

In order for the Chicago commons proprietary school to participate in all the major U.S. Department of Education financial aid programs, it will have to win accreditation from the National Association of Trade and Technical Schools, approvals from the Illinois State Board of Higher Education and the U.S. Department of Education, and qualify as a "vocational school" and a "post-secondary vocational institution."

CUED recommends that the proposed proprietary school include in-service training and apprenticeship training.

In-Service Training for Experienced Workers
a) Training to be provided via contracts with employers
b) Employers to pay cost plus
c)Training sessions to be scheduled for off-peak work hours
d) The total number of training sessions need to be as small as possible
e) Programs need to be marketed heavily.

Apprenticeship Training
a) Students to be matched with probable employment opportunities
b) Government financial aid programs to pay costs of apprenticeships plus profit, or to subsidize total costs
c) Programs to lie marketed heavily
d) Industry to have input and other involvement
e) Programs to qualify for all U.S. Department of Education financial aid programs

In order to secure start-up funding for the proprietary school, Chicago Commons should apply to foundations for program related investments.

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