DIFFERENCES BETWEEN LABOR FORCE SKILLS AND THE REQUIREMENTS OF BLUE COLLAR JOBS ARE RECONCILED BY MEANS OVER WHICH THE EMPLOYER, ALONE OR WITH A LABOR ORGANIZATION, EXERCISES CONTROL. THE ADJUSTMENT MODEL PRESENTED IN THIS STUDY RECOGNIZES AN INPLANT LABOR MARKET CONNECTED TO THE EXTERNAL MARKET AT A LIMITED NUMBER OF POINTS. CERTAIN VARIABLES--INPLANT JOB STRUCTURE, ADMINISTRATIVE RULES, EXTERNAL LABOR FORCE SIZE AND CHARACTER, HIRING STANDARDS, COMPENSATION, AND PROCEDURES FOR RECRUITING, SCREENING, AND TRAINING--FORM BOTH THE MAJOR DETERMINANT OF INPLANT LABOR COSTS AND THE MEANS OF ADAPTING TO CHANGING TECHNOLOGY AND LABOR SUPPLY. PRIVATE ADJUSTMENT MECHANISMS, MOSTLY TRAINING ON THE JOB, CORRECT IMBALANCES BETWEEN NEEDED JOB SKILLS AND LABOR FORCE CHARACTERISTICS, BUT THEY OPERATE AT A COST. FEDERAL MANPOWER PROGRAMS SHOULD STRESS GENERAL TRAINING IN BASIC MATHEMATICAL AND VERBAL SKILLS, SUBSIDIZED INPLANT TRAINING AND SELECTION PROGRAMS, AND INFORMATION EXCHANGE AMONG PLANTS. (DOCUMENT INCLUDES 110 REFERENCES.) THIS DOCUMENT, PB-174-614, IS AVAILABLE FROM THE CLEARINGHOUSE FOR FEDERAL SCIENTIFIC AND TECHNICAL INFORMATION, SPRINGFIELD, VA. 22151. MICROFICHE $0.65, HARDCOPY $8.00. (AUTHOR/LY)