1 -- Labor Aerospace Research Agenda © 2002 Massachusetts Institute of Technology Developing the 21...

1 -- Labor Aerospace Research Agenda © 2002 Massachusetts Institute of Technology

Developing the 21st Century Aerospace

Workforce

Presentation to:

May 2002

MIT Labor Aerospace Research Agenda (LARA),

Center for Technology, Policy and Industrial Development, MIT

http://mit.edu/ctpid/lara

“Right Skills, Right Place, Right Time”


Key ChallengesKey Challenges

Demographic “cliff” Average age of production workers is 44 in the Commercial Sector and 53 in

Defense

BLS estimates 20-30% of the engineering and production workforce will retire within five years

Increasing skill shortages/changing skill mix Inadequate number of scientists and engineers in the educational pipeline and/or

demonstrating an interest in aerospace

Inadequate number of apprentices in the pipeline and lack of incentive for individual establishment or firm to make these investments in the absence of an overall industry commitment to do so

Changing skill mix – increased importance of information and science-based technologies, communications and team-based interaction skills, and other shifts in skills needed for development/production of aerospace products/services

Reduced attractiveness of aerospace; increased competition from other industries

Reduced innovation in products, processes and services

Declining appeal of aerospace for current and next generation workforce. Less than 20% of current workforce would encourage their children to pursue careers in

aerospace

Increased attractiveness of other sectors for the “best and brightest”


Key Challenges Key Challenges (cont.)(cont.)

Divisive & potentially immobilizing concerns over job security & instability Industry has lost over 500,000 jobs since 1990

Destabilizing shifts as a result of industry concentration, frequent shifts in government spending, rapidly changing technologies, suppliers seeking business out of aerospace, and changing corporate leadership vision and strategies

Fundamental changes in the nature of work and labor management relations Importance of stability for continuous improvement in new work systems and the

diffusion and sustainability of labor-management partnerships

Islands of innovation in work systems and labor-management relations exist, while the majority of relationships reflect a traditional arms length, command and control mode. Aerospace lags other industries in the use of knowledge-driven work systems and supporting labor-management partnerships

Aerospace lags other industries in use of knowledge-driven work systems and supporting labor-management relationships

Global competitive dynamics Projected loss of U.S. jobs and revenue due to increased global competition

Projected increase in foreign content; projected job growth in European Aerospace


Recommendation 1: Recommendation 1: Interagency Aerospace Interagency Aerospace Workforce Task ForceWorkforce Task Force

Create a cross-departmental task force – spanning the Departments of Defense, Labor, Education and Commerce – to coordinate government workforce initiatives centered on attracting and retaining a 21st Century workforce with the skills and capabilities needed to support a world-class aerospace industry.

Charge this Task Force to fund or otherwise help ensure world-class apprenticeship and training programs for production and technical workers and the educational programs needed for ensuring a steady and adequate supply of engineers, scientists, and managers for the aerospace industry.


Recommendation 2: Recommendation 2: Aerospace Capability Network Aerospace Capability Network

Create and fund an Aerospace Capability Network to develop public/private partnerships in which all key stakeholders—business, labor, government, and community groups—coordinate activities such as: Development of aerospace skill standards and

certification programs, Dissemination of information on occupations and job

availability, Grants for demonstration projects at local and regional

levels to foster the growth of aerospace-related industry and mitigate the impact of instability on employment and program performance and to facilitate worker mobility across firms when necessary.


Recommendation 3:Recommendation 3:Aerospace Industry Innovation Aerospace Industry Innovation

& Promotion& Promotion

Develop and implement a strategy for diffusing best practices in career development, employment relations, and life-long learning across the industry.

Mount a national campaign to attract public attention to opportunities within the aerospace industry targeted to primary schools, secondary schools, community colleges and universities coordinated through the Aerospace Capability Network and funded through public and private sources.


Recommendation 4: Skills and Recommendation 4: Skills and Employment Relations Employment Relations

Requirements Statement Requirements Statement

Defense Department procurement contracts in excess of a designated amount (such as, for example, $50 million) should include “Skills and Employment Relations Requirements Statement” which would include:

The primary skills and capabilities anticipated as essential for execution of the contract

An assessment of investment required to develop/maintain these skills and capabilities over the project or product life-cycle

An assessment of the quality of the work systems and labor-management relationships in place and plans for continuous improvements in these domains over the life of the project/contract

Workforce impact statements and plans associated with major shifts in government funding

An assessment of skills and capabilities associated with work that will be placed outside of the U.S. (with specific number of jobs involved and verification of adherence to international labor standards).


Concluding CommentConcluding Comment

All of the above recommendations require substantial contributions from public and private sectors – not just contributions of funds, but of leadership time and attention

We call for a deep commitment to fundamental cultural change in this industry – valuing human capital as the key to future success.


Appendix: Selected Appendix: Selected Supporting MaterialsSupporting Materials

Recommendation 1: Aerospace Workforce Investment

and

Recommendation 2: Aerospace Capability NetworkWhy worry about instability?Highlights from case studies on InstabilityInstability and program performanceInstability and the loss of critical skillsMitigation of Instability – most common and least common practices

Recommendation 3: Aerospace Industry PromotionDeclining experience levelsLooking ahead to the next generation

Recommendation 4: Human Capital Impact StatementsFundamental changes in the nature of work Sales and employmentImports and employment

Background on MIT’s Labor Aerospace Research Agenda (LARA)Overview on LARASample LARA Publications


Why Worry About Why Worry About Instability?Instability?

0100200300400500600700800900

1,0001,1001,2001,3001,400

1985 1987 1989 1991 1993 1995 1997 1999

Year

(In

Thou

sand

s)

Source: AIAPrepared by: IAM Strategic Resources Department

PullPullPullPull

FlowFlowFlowFlow

StabilityStabilityStabilityStability

T1 T2 T3 T4 T5 T6 T7 T8 T9 T10

Inte

rdep

ende

nce

Time

Total U.S. Aerospace Employment


Highlights From Case Highlights From Case Studies on InstabilityStudies on Instability

Types of instability: Funding/orders

Shift from R&D to production funds

Fluctuations in demand for primary product in facility

Technology Changes in customer

requirements

Shifts in materials

Rapid pace of change in computer capabilities)

Environmental constraints

Organizational Acquisition/layoffs

Mergers/restructuring

Relocation of products among facilities

Two-tier relationship between sister facilities

Demographics -- retirements/gaps in past hiring, skill shortages

Turnover -- management, engineering, and hourly


Highlights From Case Highlights From Case Studies on Instability Studies on Instability

(cont.)(cont.) Observed mitigation strategies:

Business Strategy Increase proportion of commercial business sought

Shift in product mix to increase focus on space

Human Resource Management/Industrial Relations Cross-training/flexible utilization/teams

Informal no-layoff practice

Labor-management partnership

Employee involvement

Intensified training of hourly and salaried employees

Co-location of engineers, teams

Two-tier wage system

Multi-facility transfer agreements


Instability and Instability and Program Performance Program Performance

Table 1. Average Annual Program Cost Growth and Its Sources

Source of Program Cost Growth

Government Sample Average

Annual Cost Growth (N=101)

Contractor Sample Average

Annual Cost Growth (N=80)

Budget or Funding Instability

2.3% 1.8%

Technical Difficulties 2.4% 2.7%

Requirements Changes 2.5% 2.7%

Other 0.1% 0.8%

Total 7.3% 8.0%

Source of Program Schedule Slip Government Sample Average Schedule

Slip (N= 76)

Contractor Sample Average Schedule

Slip (N= 66)

Budget or Funding Instability 8.2% 7.8%

Technical Difficulties 6.3% 5.8%

Requirements Changes 5.0% 3.4%

Other 4.2% 4.0%

Total 23.7% 21.0%

Mean Baseline (months) 85 70

Table 2. Sources of Program Schedule Slip

Source: Eric Rebentisch, MIT Lean Aerospace Initiative, 1996


Instability and Instability and Loss of Critical Loss of Critical

SkillsSkillsPercent of Facilities Reporting Loss of People with Critical Skills

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Budget or FundingInstability

Instability Associatedwith New Technology

OrganizationalInstability

Supply Chain Instability

Organizations Reporting Low Levels of Instability

Organizations Reporting High Levels of Instability

Source: MIT Labor Aerospace Research Agenda National Facility Survey, 1999 (n=194)


Facility Survey: Reported Use of Facility Survey: Reported Use of Mitigation Practices – Five Most Mitigation Practices – Five Most

Extensively Used Practices (past 3 Extensively Used Practices (past 3 yrs) yrs)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cross-training Employeetraining/skills devt.

Long-term supplieragreements

Computer-aidedmanufacturing

Increasedemployee control

Never

LimitedExtensive



Facility Survey: Reported Use of Facility Survey: Reported Use of Mitigation Practices – Five Least Mitigation Practices – Five Least

Extensively Used Practices (past 3 Extensively Used Practices (past 3 yrs) yrs)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Formalemployment

security

Early retirement Work in from otherfacilities

Sending people toother facilities

Work sharing

NeverLimitedExtensive



Declining Experience Levels -- Declining Experience Levels -- Military Aircraft ProgramsMilitary Aircraft Programs

XP5Y XFYXP5Y XFYA2D F8UA2D F8UXC120 F6M1XC120 F6M1F4D U2F4D U2F3H SY3F3H SY3B52 F105B52 F105A3D X13A3D X13X3 C133X3 C133S2F F107S2F F107X2 B58X2 B58F10F F106F10F F106F2Y F5DF2Y F5DF100 X14F100 X14B57 C140B57 C140F102 T2F102 T2R3Y1 F4R3Y1 F4F104 A5F104 A5A4D T39A4D T39B66 T38B66 T38F11F AQ1F11F AQ1C130 X15C130 X15F101 F5AF101 F5AT37 X1BT37 X1B

A6A6B52B52

SR71SR71SC4ASC4AX21X21X19X19

C141C141B70B70

XC142XC142F111F111A7A7

OV10OV10X22X22

X26BX26BX5AX5AX24X24

F14F14S8S8

YA9YA9A10A10F15F15F18F18

YF-17YF-17B1B1

YC15YC15YC14YC14AV8bAV8bF/A18F/A18

F117F117F20F20X29X29T46T46T45T45B2B2

V22V22

F22 EMDF22 EMDYF22YF22YF23YF23

JSF X36JSF X36JSF X37JSF X37

C17C17JSF EMDJSF EMD

UCAVUCAV BXBX

RetiredRetired

RetiredRetired

Experience: 1-2 ProgramsExperience: 1-2 Programs

1950s1950s 1960s1960s 1970s1970s 1980s1980s 1990s1990s 2000s2000s 2010s2010s 2020s2020s 2030s2030s

Mid CareerMid Career

VeryVery FewFew

Experience: 1 ProgramExperience: 1 Program

“We believe that a declining experience level has been a contributing factor to the

problems we observe in many recent aircraftprograms.”

RAND

Experience: 6+ ProgramsExperience: 6+ Programs RetiringRetiring

40 Year Career Span40 Year Career Span

Source: RAND Study (chart by Northrop Grumman) -- Vertical Bars: Military Aircraft Program StartsVertical Bars: Military Aircraft Program Starts


Future Prospects for Future Prospects for the U.S. Aerospace the U.S. Aerospace

EnterpriseEnterprise

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Engineers ProductionWorkers

Managers/Supervisors

Technicians/Specialists

“I would highly recommend that my children work in this industry”(Agree or Strongly Agree, n=482)


Fundamental Changes Fundamental Changes in the Nature of Work in the Nature of Work

Social Technical

Systems Systems

Craft Production Decentralized Enterprises Custom Manufacture

Mastery of Craft Specialized Tools

Mass Production Vertical Hierarchies Assembly Line

Scientific management Interchangeable Parts

Knowledge-Driven Work Global, Network Alliances Flexible Specialization

Team-Based Work Systems Information Systems

Adapted from: “Knowledge-Driven Work: Unexpected Lessons from Japanese and United States Work Practices” (Oxford University Press, 1998)


Sales and Sales and EmploymentEmployment

Aerospace Aircraft Sales and Employment: 1960-2000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1960 1965 1970 1975 1980 1985 1990 1995 2000

(source: Aerospace Industries Association, Aerospace Facts and Figures, 2000 )

Em

plo

yem

ent

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

$140,000,000

$160,000,000

Sal

es (

tho

usa

nd

s)

Total Employment

Sales (Deflated, 1992=100)


Imports and Imports and EmploymentEmployment

U.S. engines and parts imports as a share of total aircraft sales, 1981-2000U.S. engines and parts imports as a share of total aircraft sales, 1981-2000

4

6

8

10

12

14

16

18

20

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999

Year

Sh

are

of

U.S

. A

irc

ra

ft S

ale

s (

Pe

rc

en

t)


Overview on the Labor Overview on the Labor Aerospace Research Agenda Aerospace Research Agenda

(LARA)(LARA)

Sponsor: USAF ManTech

Lead Partners: IAM and other Labor Organizations in Aerospace

Principal investigators and Research Team:

Tom Kochan (Co-PI), Joel Cutcher-Gershenfeld (Co-PI), Betty Barrett, Rob Scott, Takashi Inaba, Eric Partlan, Shannon O’Callighan, Kevin Long, and other team members

Links to MIT’s Lean Aerospace Initiative (LAI):

Organizations and People, Knowledge Deployment, Other Research/Product Teams, and Curriculum Development

Funding: ~$300K/yr

Focus: Impact of instability on employment

and workplace innovation in the aerospace industry

Investments in social capital and institutional infrastructure driving future success in aerospace

Methods National random sample facility

surveys

Individual surveys

Case studies

Collective bargaining contract analysis

Archival data analysis

Conferences and working sessions


Sample LARA PublicationsSample LARA Publications(available at (available at http://http://mit.edu/ctpid/laramit.edu/ctpid/lara))

Resource Guide: Collective Bargaining in the Face of Instability: A Resource for Workers and Employers in the U.S.

Aerospace Industry

Case Studies: A Decade of Learning

International Association of Machinists and Boeing Joint Programs

Transformation Through Employee Involvement and Workplace Training: The Challenge of a Changing Business Context

Rocketdyne Propulsion and Power and the United Automobile Workers

Employing Activity Based Costing and Management Practices Within the Aerospace Industry: Sustaining the Drive for Lean

Boeing Commercial Airplane Group, Wichita Division and the International Association of Machinists

Fostering Workplace Innovation and Labor-Management Partnership: The Challenge of Strategic Shifts in Business Operations

Pratt and Whitney (UTC) and the International Association of Machinists

Fostering Continuous Improvement in a Changing Business ContextTextron Systems

From Three to One: Integrating a High Performance Work Organization Process, Lean Production, and Activity Based Costing Change Initiatives

Boeing Commercial Airplane Group, Wichita Division and the International Association of Machinists

Note: LARA Research is also incorporated into Lean Enterprise Value: Insights from MIT’s Lean Aerospace Initiative (Palgrave, 2002)

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