A Leaner, More SkilledU.S. Manufacturing Workforce

National Associations of State Liaisonsfor Workforce Development Partnerships

by Eric Mittelstadt, CEONational Council for Advanced Manufacturing (NACFAM)

August 1, 2006

Intense Collaboration forNetwork-centric Manufacturing

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Purpose Today

Discuss the state of U.S. manufacturing

Describe NACFAM & its Workforce Projects

Define “Intense Collaboration” for “Network-centric Manufacturing” and why it is essential for significantly improved U.S. competitiveness

Discuss why that requires “A Leaner, More Skilled U.S. Manufacturing Work Force” including: STEM Education (Science, Technology, Engrg. & Math) Lifelong Learning

Tee up your discussion on how states can help support manufacturing & what states are doing

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Observations about U.S. Manufacturing

Numbers are positive:

Profitability returning to that of late 90’s boom years U.S. output of manufactured goods highest ever

Jobs holding steady, albeit “churning”

Productivity increases continue

Plus Manufacturing must be important or states would not compete as hard as they do to get it!

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Observations, cont.

Productivity must continue to increase because of: Demographics – 20% smaller workforce in 12 years

Consumer pressures for higher quality, content and customization at lower prices

Increasing global competition

Inevitable fluctuations in the economy

Because we are a smaller nation, to remain a world power, we must be more innovative, creative & productive

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Observations, cont.

Inescapable trends:

Increased productivity means producing more with fewer people

Thus, an inevitable reduction in the number of manufacturing jobs

Trend similar to agriculture in the past, but not as severe

Need innovation in both product and process development

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Observations, cont.

Therefore, metrics for healthy U.S. manufacturing should be:

“National prosperity creation,” in terms of:

Ever increasing value-added manufacturing output

Unimagined new industries with new jobs from R&D, both public & private

Not just number of manufacturing jobs or % of GDP

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Observations, cont.

We want to take care of our workers, so government must:

Devise innovative ways to minimize unemployment

Creatively mitigate inevitable short-term displacements in a growing economy

Make its policies & programs for manufacturing the most competitive with other countries

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About NACFAM

Vision for U.S. Manufacturing – Sustainable & globally competitive, through increased customization & innovation in workforce, technology & supply chains

Vision for NACFAM – Nationally respected research organization, shaping public policies and programs, to make U.S. manufacturing globally competitive

Mission – Bring key stakeholders together in an objective, non-partisan, non-adversarial, collaborative environment, to identify, research, formulate, and communicate policy proposals & programs, to achieve global competitiveness of manufacturing in the U.S.

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About NACFAM, cont.

Value Proposition – Opportunity to impact the informed voice that shapes manufacturing policy and programs critical to stakeholders, by brokering the needed “intense collaboration” so all stakeholders can leverage their respective resources

Strategy Focus on a few “below-the-line” topics which require

“intense collaboration” Manufacturing issues of Workforce, Technology,

Supply Chain, Sustainability Not Manufacturer issues of Taxes, Trade, Tort,

Energy, Health Care, Pensions, Regulations Competitive advantages of:

NACFAM’s CEO & people “speak the language” of OEM’s, SMM’s, educators, government, labor, et al

Thus able to define what is really required

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About NACFAM

Members Advanced Manufacturing Firms Associations (including AMBA, AMT, ASMC, NCATC,

RIA, SME, et al) Universities Members of Congress & their Staffs Executive Agencies (incl. NASA, NIST, Federal Labs)

Workforce Projects Manufacturing Skills Standards Council (MSSC) Work Group to define ETA Advanced Manufacturing

Competency Model Career Cluster Leader for Manufacturing

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NACFAM Focus: Future Shape of Manufacturing Biggest Trend: “Network-centric Manufacturing”

OEMs becoming more and more assemblers or integrators of systems, subsystems and components manufactured & developed by their supply chain; i.e., the “Network”

Requires more capability throughout the “Network”, including over 300,000 smaller manufacturers (SMMs)

These SMMs face same challenges as OEMs, but without the resources of big companies to cope

(Note: Based on Lockheed Martin Aeronautics sponsored workshops &analysis with NACFAM.)

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Context for Today’s Discussions New “Network-centric” paradigm requires:

New forms of “intense” Collaboration & Connectivity, plus innovation among all stakeholders

Alignment of Government policies & programs with real needs of those extended enterprises, and

across agencies, to achieve competitiveness of the public sector to assure competitiveness of the U.S. economy!

Easier Access to the multiplicity of those programs

KEY POINT: REAL STRENGTH OF OUR ECONOMY IS AT SUPPLIER – SMALL MANUFACTURER – LEVEL,SO WE MUST MAKE THE ENTIRE NETWORK BETTER

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Advanced Manufacturing “Intense Collaboration”

Industry(OEM’s & Suppliers)

Federal Government

(Many Executive Agencies & Congressional Committees, Caucuses, Task Forces, etc.)

Enablers (State Governments,

Universities, Community Colleges, K-12 Systems,Associations, Non-Profits)

NACFAM

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How do we involve stakeholders in a total solutions package to support the performance

of the network?

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OEM

SMM

SMM

SMM

OEM

SMM

SMM

SMM

SMM

Network-centric Manufacturing

SMM

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OEM

OEM

DOD

Army

Navy DLA

OEM

SBIR

DARPA

Mantech

p

Indirect Effects on the rest of the supply base?

EPA

Dept of Labor

NSF

OEM

p pp

p

p

p

p

MORE IMPORTANTLY:HOW GAPS IN COLLABORATION AND CONNECTIVITY IMPACT THE ENTIRE NETWORK • NETWORK ENVIRONMENT• PUBLIC SECTOR NETWORK INTERFACE• ENABLERS

The Challenge of a Public Sector Response to Network-centric Manufacturing

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OEM

OEM

DOD (Pentagon?)

OEM

Office of TechTransition

MEP

OEM

NETWORK-CENTRIC MANUFACTURING: ENABLERS AND PILOTS

Miltech

DOD Labs

MT State

Ohio

TechsolvePD Offering

DOL

???

EPANSFStates/

UniversitiesNIST ATP

ALIGNMENT OF“PUBLIC

ENTERPRISE”

Associations

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OEM

OEM

OEM

OEM

Stakeholders in the Network-centric Manufacturing

OEMs

Congress

SMMs

Associations

Mission Agencies

States Universities

NACFAM

NACFAM’s Role – Broker“intense collaboration”where required

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Overriding Challenge

To achieve “prosperity creation” U.S. must strengthen the viability & innovation of our industrial base, within the realities of: Increasing demands on the supply chain Ever stronger global competition Shrinking workforce More demanding environmental requirements

Network-centric Manufacturing has implications on at least three levels: Industry State Workforce Development Government

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Industry Implications in Manufacturing

For OEMs & SMMs, competitiveness comes from: Innovation – workforce, new technologies, products,

processes Faster times to market with the resulting products And with the help of the entire network

This requires robust capabilities at all tiers in: A “leaner & more skilled” workforce Innovation in product & process design &

development Supply chain collaboration & connectivity Increasingly in corporate citizenship, including

sustainability, environmental concerns, etc.

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State Workforce Implications in Manufacturing

Because of demands on companies, future workers at all levels (& in all industries & businesses) must be enabled to work in a more “Network-centric” way with: Collaboration skills for teamwork, inside & outside of

their company Connectivity skills for IT for better data exchange More skills in Science, Technology, Engineering &

Math (STEM) Creativity, analytical & problem solving skills, for

greater innovation in products & processes Continuous updating of all these skills to be:

The best they can be for their current employer, & Easily mobile to other jobs in new industries

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State Workforce Implications, cont.

To respond to these needs States, Educators & Trainers must:

Collaborate intensely with companies to understand industry needs, both current & future

Collaborate intensely with the federal government to innovatively optimize the return on public dollars they spend

Both with focus on output rather than just input

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Government Implications in Manufacturing

In today’s constrained budget environment, more important than funding levels (input) is return on public dollars (output), from a robust nation-wide interagency infrastructure, for all areas, including :

Workforce Investment – for example, Economic Development along with Workforce Development, lifelong learning, STEM talent development, etc.

R&D & Innovation – Creating New Industries & Jobs from new technologies, products & processes

Supply Chains – Beyond lean to “intense” collaboration & connectivity, including impact on the first two areas above

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Government Implications, cont.

Robust nation-wide interagency infrastructure for both SMMs & OEMs, really for the “network”: Based on the realities of “Network-centric

Manufacturing”, helping the network as a whole Moving the entire “network” up the innovation

value chain

A more synergistic, collaborative approach to meeting environmental concerns & goals by: Utilizing innovation & implementation skills of

businesses, thereby Achieving more stringent environmental

objectives at lower cost

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Value Proposition, Industry

OEM’s deliver end-user value through supply chain synchronization & serving as the network hub

Suppliers, mostly SMMs, provide value to their OEM customers & end-users through innovation, know-how in manufacturing, engineering capability, etc.

Both OEM’s & suppliers are “customers” or at least partners of State Workforce Development, of Other Enablers, and even of Federal Government

In today’s “hyper-competitive” global economy, there is a much greater need for industry to “intensely collaborate” as partners with state & federal governments, especially in workforce development

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Value Proposition, Enablers

State Governments – Education & training, economic development, research

Universities – Research, education & training

Community Colleges & K-12 Systems – Education & training

Associations – Problem identification, policy solution pathways, issue management, etc.

Non-Profits – Funding, problem identification, etc.

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Value Proposition, Federal Government

Executive Agency Programs – Improve U.S. economy & global competitiveness of U.S. industry

- For example ETA, NSF, MEP, NIST, etc.

Inter-agency Working Groups – Coordinate & focus

manufacturing policies & programs, expenditure guidance, alignment with needs & resources, etc.

Manufacturing Council – Advice & counsel from industry to help accomplish the above

Congress – Legislative authorizations, mandates, & appropriations

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Value Rec’dBy Providers

Supply Chain Integration Initiative Total Solutions Package Model

SolutionWho

ProvidesWhat

ProvidedLeveragingOpportunity

Value Rec’dBy SMMs

Small and Medium-Sized ManufacturersInternal Investments Made• • •

Competitive Advantages Gained• • •

Enhance Collaboration Skill Sets

Establish Collaboration Framework and Environment

Institutional Incentives

Acquisition Reform

Enhance Connectivity Skill Sets

Improve Non-Techn. Collab. Capability

Establish Techn. Collab. Capability

Co

llab

ora

tio

nC

on

nec

tiv

ity

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Summary for Employment & Training Admin.

Who

Provides

What

Provided

Opportunities

for ETAEmployment

& Training

Administration

(ETA)

- Lead the implementation of “Mfg. in America” recommendations on Employment & Training, including leadership of the Subcommittee on Workforce & Education of the IWG on Mfg. Competitiveness

Identify the needed “intense collaboration” & by whom for:- More competitive “network-centric manufacturing” through enhanced workforce skills at OEM’s & SMM’s incl.:- Collaboration, including for purchasing agents & other supply chain professionals- Connectivity; e.g., use of IT tools for better exchange of both technical & non-technical data & information- STEM at all levels due to increasing use of IT tools at all levels- Lifelong Learning, to be best for current employer & the next ones as well

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Summary for ETA, cont.

Who

Provides

What

Provided

Opportunities

for ETA

Subcommittee

on Workforce & Education

of the IWG on Manufacturing Competitive-

ness

- More effective federal investment in education, training & retraining to educate the next generation of mfg. technologists & leaders- Develop, approve & promulgate competency models for use with HGJT & CBJT grants- Develop new initiatives to carry forward the President’s mfg. initiative

Lead understanding of need for: - Alignment w/ industry needs,- Alignment across agencies,- “Leaning out” of government programs for efficiency,- Improved access to government programs for SMM’s,

(all in the context of the several “opportunities for ETA” on the previous slide)

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NACFAM’s Possible Contribution to NGA

Define similar “Opportunities for NGA”

Develop with NGA a detailed Plan for achieving them

Articulate with your help the value of the needed “intense collaboration” to improve the entire “network-centric manufacturing” model

Broker the needed “intense collaboration” to engage Industries, Federal Agencies, Other Enablers with NGA Bringing all together in productive ways Focus on leveraging their respective resources

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Possible Entities to be Engaged

Industries Large OEM’s in Defense, Aerospace, Automotive to

begin with; others can be added Large Suppliers to above OEM’s Small & Medium Manufacturers supplying all above

Enablers Universities Community Colleges K-12 Systems Associations Non-Profits

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Possible Entities to be Engaged, cont.

Federal agencies, depending on the project Dept. of Labor, Employment & Training Admin. (ETA) Department of Education National Science Foundation (NSF) NIST, Manufacturing Extension Partnership (MEP) NIST, Manufacturing Engineering Laboratory (MEL) Dept. of Commerce, Manufacturing & Systems (MAS) Department of Defense (DoD) Dept. of Energy, Federal Labs Environmental Protection Agency (EPA) National Aeronautics & Space Agency (NASA) Interagency Working Groups (IWGs) Etc.

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Closing Observations

New “Network-centric” paradigm requires:

New forms of “intense” Collaboration & Connectivity, plus innovation among all stakeholders

Alignment of Government policies & programs with: Real needs of those extended enterprises, Across agencies, and with Focus on output rather than only input

Easier Access to the multiplicity of those programs

-- ALL TO MAKE THE ENTIRE NETWORK BETTER

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Closing Observations, cont.

Globally competitive companies are those who: Do the most things best, the most consistently,

and constantly

So too with countries

Thus, we must never stop improving, no matter what the quarterly or annual numbers say,

In both company competitiveness and in governmental policies & programs for manufacturing Especially for a leaner, more skilled workforce

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Essential: Leadership in Today’s “Flat World”

Business: Innovatively use workforce development, lean, 6-

Sigma, automation, R&D, etc., and then, beyond lean: Partner with government & enablers where needed

Workforce Development Partnerships: Prepare workers to be best they can be today, while Continuously learning to improve & be ready for new

jobs not now imagined Government at all levels:

Realize optimum return on public dollars by: Aligning programs across Interagency lines & with

the needs of manufacturers & workers, focusing on output, consistent with other public priorities

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What’s Needed from You Today

Why is it so important? You are the leadership group Discussants are experts to get us going All can give each other ideas for action

Overriding Questions: What are we missing? Are we doing it the right way? What do you believe are the real problems?

Who can help? How? Priorities? Etc.? What are your ideas for how NACFAM can help?