Two years ago, Valerie Shaw used her public relations skills to recruit students interested in learning the craft of shoe repair. Today, she is recruiting trainees for the Shoe Healer, her own high-tech shoe repair shop in Hollywood, Calif.

"The No. 1 problem in my industry is finding good people who will stay," said Shaw. In her quest to find energetic and loyal employees, she has hired former gang members and felons as well as skilled cobblers she affectionately calls "the cowboys."

Shaw and her four master cobblers are gearing up to train future cobblers with state employment training funds available to business owners.

"The short-term needs of businesses are so great that many can't pay attention to longer-term needs like training," said John Hurley, president of the Alexandria-based American Society for Training and Development.

Hurley, who heads the corporate training department at Chase Manhattan Bank in New York, said U.S. businesses and corporations invest about $475 billion a year in capital improvements but spend only $30 billion a year on training and education programs.

Although most executives agree that training workers is important, a recent survey by the society found that only 0.5 percent of the executives polled were willing to invest money to improve the problem-solving skills of their workers.

"More executives are interested in dumbing-down the work rather than smartening-up the people," said Hurley, who recommends that business owners spend at least 1 percent of their payroll cost to train workers.

Although big companies budget for in-house training programs, small-business owners have to be creative. Hurley suggests asking the bigger companies from which you buy or to which you sell for help with training your workers. Many large public companies, including Ford Motors Co., Motorola Inc., Xerox Corp. and International Business Machines Corp., spend millions of dollars training workers at all levels and attribute their growth and profits to investing in their employees.

Forty-six states offer some type of state-funded, industry-specific training programs. Last year, California's Employment Training Panel paid companies $62.8 million to help business owners train or retrain 35,000 workers who were previously on unemployment or needed new skills to maintain a competitive edge. Seventy-nine percent of the businesses that participated in the program have fewer than 250 employees, said Ken Nather, an analyst for the panel's planning and information unit. Companies receive the money after they train and hire the workers.

The federal Job Training Partnership Act also provides about $4 billion a year to train economically disadvantaged workers. About 11,000 business representatives serve on the private industry councils set up across the country to allocate the federal training funds.

Shaw, who established her business with help from her mother, wants to help her employees buy Shoe Healer franchises in the next few years. Shaw obtained her training funds with the help of Nanci Prince, executive director of community and women's business development for the Central Park Five Council, a nonprofit organization in Los Angeles.

"We are able to apply for city, state and federal monies that were at one time anti-poverty program funds," said Prince, who charges clients $250 to prepare grant applications. If the grant is denied, she refunds the money to the business owner. If the grant is approved, clients pay her an extra $500 fee.

In addition to writing grant applications, Prince collects money, equipment and supplies from corporations interested in helping small-business owners train workers.

In exchange for their financial support, Prince and a group of colleagues provide free meeting and party planning services for participating corporations.

In recent months, Shaw's team has obtained sewing machines from Singer Co. and computers from International Business Machines Corp. She has recruited a maker of baby bedding to train seamstresses; a heating and air-conditioning contractor to train workers; and a commercial photographer to train assistants and photographers.

To qualify for the training money, business owners must contribute to the state's unemployment insurance program and have the ability to train people at their place of business. They must also be willing to hire a third of the workers who complete the training program and help find jobs for the others, according to Prince.

For workers who can earn at least $8 an hour, employers can qualify for about $3,000 in training funds. Businesses that provide training for jobs paying $10 or more an hour can qualify for about $5,000 per trainee.

"So many programs turn people out to make less than $10 an hour, and you can't live on that," said Prince. She said that to qualify, trainees must be unemployed, on welfare or considered under-skilled.

Prince and her colleagues are available to set up similar job training programs anywhere in the country. Prince can be contacted through the Central Park Five Council, 1043 West 46th St., Los Angeles, Calif. 90037.

The American Society for Training and Development is at 1630 Duke St., Alexandria, Va. 22313. Business owners who join can obtain brochures and information about training programs. The phone number is 703-683-8100.Jane Applegate welcomes letters and story suggestions from readers. Please write to her at the Los Angeles Times, Times Mirror Square, Los Angeles, Calif. 90053.