Techonomy detroit september 12, 2012 detroit, mi
Our Challenge in an Era of Global Competition
Speakers:
Edward Alden, Council on Foreign Relations
Vivek Kundra, salesforce.com
Paul Mascarenas, Ford Motor Company
Michael S. Teitelbaum, Alfred P. Sloan Foundation
Moderator:
James P. Dougherty, Council on Foreign Relations
Kirkpatrick: You know, when we described this conference, the first thing I always say is about U.S. competitiveness because I think it all ties back to that.
The next session, please come out, panelists and moderator.Jim Dougherty, who is a very good long-time friend of mine, who is a Fellow at the Council on Foreign Relations, is going to moderate.We organized this panel in conjunction with the Council on Foreign Relations and it's all about U.S. competitiveness.Let's get it under way.The panelists there.All right, Jim!Take it away.
Dougherty:Good morning, everyone.It's great to be here in Detroit.First time in a while, I have to make it happen more often.So we're going to have a nice conversation.We have to cover off on a lot of things in 40 minutes, so we're going to start right away.You can see and look in the program and you can see the panelists.You can see their backgrounds.Michael, Paul, Vivek, and Ted, great panel.
In 40 minutes, what we're going to try to cover off on is looking at infrastructure, education, and immigration.Trying to look at it through the lens of technology and the role of urban centers in these.And take a look a little bit at what the current state is in the United States in each of these things, what some of our best practice competitors are doing and maybe a couple suggestions on tactical things that the United States can do to do a better job.That's a lot to cover in 40 minutes.And we'll try to take some calls at the end if we can.
So without further ado, I want to ask Vivek to start.So, Vivek, your last job was CIO of the United States of America.That's a pretty big job.So you got to see lots of things.You had a great perspective on these three areas in the United States, the immigration, education, and infrastructure.Could you pick one or two of those and comment on what the current state is in the United States in terms of being competitive in the world with those issues?
Kundra:Sure, I think when you look at the story of America, it is a story of entrepreneurs and the ability to disrupt not just, you know, at the local level, but the global economy.Unfortunately, what you are hearing is too much of the gloom and doom in terms of where America is when it comes to competitiveness.My view is that it is still the best country in the planet when it comes to starting up a business, advancing an idea that you have or access to talent.
The challenge we have before us, because we are the architects of our own destiny, that there are key issues that we need to confront.If you look at the next 30 years, if we don't address them, I don't think we can remain the most competitive country in the world.
First, I think it comes down to immigration.It is broken.It makes absolutely no sense when we educate some of the smartest people in the world with advanced degrees and then ask them to leave the country and go start up companies elsewhere.Why aren't we stapling right to their graduate application a Visa or a green card?
Second, when it comes to education, the challenge we have domestically is that that system is also broken as we look forward to the next 30 years.In Detroit, for example, there are 3,400 IT job openings in the Detroit metro region.The challenge is that we haven't done enough in terms of retooling the workforce, in terms of transitioning from one career path to another.I know that there are some interesting programs underway that need to be scaled.
For example, the Wayne Community College has a program where they brought in instructors from around the world.They have trained people to actually move into the IT career track.And at the same time, this was done in about a 16-week period.And 73 people graduated from this program and 27 of them have jobs as a result of that.
So we need to figure out from an education perspective, how do we become better at retooling the workforce that we already have domestically as we try to make sure that we remain competitive globally when it comes to immigration policy.
Dougherty:Paul, Ford faces a big challenge.You have to have a core group of manufacturing and engineering here as well as overseas.How do you make that balance?And what are the things that make the United States a better place for you to locate things versus outside of the United States?Very specifically.
Mascarenas:It's really a great question.It's really built off of Vivek's comments.It's possibly a slightly different perspective, but to focus on some of the things gone right, you know, if you start with the customer, we've got a huge customer base here in the U.S.
If you focus on really creating the products that the customers want, the products that the customers value, high-quality products that are safe, green and smart, clearly that runs around the world in terms of common themes.And as you mentioned, Jim, we have to maintain a global footprint in terms of our manufacturing and education.
But in terms of commitments in the U.S. and some of the things that are really happening here, we have recently announced, for example, over the next four years $16 billion of investment in engineering and manufacturing in the U.S.We've announced the creation of 12,000 new jobs in manufacturing and engineering here in the U.S.Just this week we announced another 1200 jobs at our Flat Rock assembly plant here in Michigan, where we'll be producing the new Fusion vehicle.
A year or so back, we completely retooled our Michigan assembly plant.And now we're producing a whole range of vehicles, some of them with the real best-in-world technologies around electrified powertrains and so on.
So there is a huge amount of good news here.And it really comes down to working with all the key stakeholders to ensure that we've got world-class quality, world-class productivity, that we leverage all of the local knowledge around what the customers here in the U.S. want, and really striving to make the U.S. not only a competitive place from a manufacturing and export sense, but also from the sense of engineering great products.
If I could really just -- one other point that I would like to mention, the point around immigration, education, and so on.We, as an industry, face a little bit of a crisis in terms of recruiting critical skills into the auto industry, particularly around controls engineers and software engineers and just in general the STEM disciplines.And, you know, we're doing a tremendous amount at Ford to promote education, to promote the technical disciplines, to bring the best engineers into our company and to give them a career that can last many years, can last a lifetime.
So, you know, I support all of the points he made, but I think they are already going well, particularly at Ford Motor Company.
Dougherty:Michael, you've literally written the book on science and engineering education, both in the past -- and you're actually writing a book on it now.Maybe you could talk a little bit about, you know, what's going on and what's the current state of science education in the United States and maybe some of your view of what we could be doing better.
Teitelbaum:Well, if you look at the university level, the U.S. is still the predominant science and engineering producer in the world.If you look quantitatively, you'll get all kinds of dissidents on the numbers because of very large engineering graduation rates in some very large companies, particularly China.But there's a lot of dispute about what those numbers actually mean.
In terms of quality, the science and engineering fields in the U.S. in the university level and research university level are the highest and still predominant in the world, though other countries are catching up, as others have said, because the U.S. was the only man left standing or only person left standing at the end of World War II.And it had a free field for two or three decades.
As far as K-12 is concerned, things are quite different.There you have a huge disparity in the quality.Even within a few -- I don't know, 50 miles or so, I think of this where we're sitting today -- you'd probably find outstanding quality science and math education in K-12 and terrible quality science and math education in K-12.
And that's a microcosm of the U.S. as a whole, which has huge inequalities in its K-12 education system.So its average performance on all the indicators is medium among developed countries or some would say mediocre, if they want to be critical.The top tier does extremely well.The top quartile of graduates from K-12 U.S. schools does very well by international comparisons.The bottom quartile does terribly.So the median is somewhere in the middle.
If you are worried about the science and engineering workforce questions, almost all of those people come from the top quartile.And the K-12 with all of its problems -- and there are a lot of them -- is producing plenty of people at very high caliber who, if they can be attracted to go into science and engineering, will do extremely well.
But we're leaving behind the bottom quartile who are doing very badly.And that's an equity issue.That's a, you know, workforce issue of a non-science and technology sort.You really want people to be literate and numerate in all occupations these days.So that's a quick overview on the education side.
Dougherty:Ted, so for those of you -- if you get a chance to go to a little commercial, cfr.org, Ted writes, has a great program called Renewing America.And it's definitely one of the best places you'll find information on this topic as it gets updated.
Ted, maybe since you get this great perspective, maybe you can comment on what you think the most important issues are and what we should be thinking about.
Alden:Well, I guess I'm going to be slightly gloomier than where we started because there are sort of two stories going on in the U.S. economy.One is the one Vivek tells.And I think at the level of innovation, entrepreneurship, start-ups, U.S. is unparalleled and continues to be that way.But if you look in terms of spreading economic benefits broadly throughout the economy, we have not done terribly well in the last 30 years.I mean, a reasonable definition of competitive economy is one that's creating a lot of high-wage work for its people, so their standards of living continue to rise.And on that standard, we have not actually done tremendously well over the last several decades.
And it's a good example.If you take kind of the archetypal industries and you go back to the '50s and '60s when Detroit was in its heyday, the auto industry employed millions of people directly and in the spin-offs.You take the showpiece industry of our current era, it's consumer electronics, smartphones, televisions, the supply chain for that is all in Asia.A lot of value added in the United States.A lot of smart people doing important creative things, but a lot of the work not expanding in the United States.So consumer electronics is not the enormous employer that the auto industry is.
So the expansion of Ford in Detroit, these have a big impact here.We're not seeing the same thing on the technology side.So I think a lot of the challenge, if we are, in fact, moving into another era of tremendously disruptive change, as David argued at the outset -- and I think is undoubtedly correct -- we, as a country, have to be thinking strategically about how do we do better for more of our people in this next era of disruptive change than we did in the last one.It's not that we're in a zero sum global economy.The Chinese can rise, the Indians can rise, and we can all rise together.
Relatively speaking, we haven't done well for a broad swath of our people for several decades now.And you can see the results in a city like Detroit here.
Dougherty:Vivek.
Kundra:So I think, you know, when you look at that view, I think you've got to think about the global population.There are 7 billion people in the world.There are only 310 million people in the United States.Therefore, the only way we're going to be able to compete in the global economy is to create a destruction of broad sectors of our economy.When you think about 310 million people competing against, you know, the rest of the world, what becomes really interesting here is that talent and capital is going to flow where it's most welcome.
And from a public policy perspective, I think we need to make sure that we're advancing an agenda that welcomes both the talent and the capital.And companies that have been created here in the United States, whether you go back and you look at the auto industry, whether you look at what's happening with the semiconductor industry, classically what happened to Intel when it came to manufacturing memory cards and then shifting to chips, I think we need to be able to think about the broader economy in that context.
And I think the big problem at the base of this pyramid is fundamentally education.Across the country, there are 3.6 million job openings today.3.6 million.We just are not able to find the talented workforce to be able to fulfill those jobs.
Dougherty:Paul, what are the things that are uniquely great about the American system that work for you?And what are the things that maybe are uniquely not so great that you'd like to see fixed?
Mascarenas:Good question.Actually, some of the numbers that you threw out are some of the numbers that I spent a lot of time thinking about.There are 7 billion people in the world.There are only 300 million here in the U.S., but 300 million is still a lot of people.
You know, our global auto industry, out of that 7 billion, is less than 100 million vehicles per year.Around about 15, 16 million of those vehicles are here in the U.S.So, you know, the numbers are big and absolute.Some may be small in percentages, but I think what is absolutely compelling for us in the auto industry is that huge installed customer basis, the number of vehicles in service, the fact that we expect for the foreseeable future to have a very strong auto market here.
And really, it comes down to -- you know, you asked about what's uniquely U.S.And you could say the same thing for many other regions or many our countries around the world.But I think what is unique here is clearly an understanding of the environment, the customer.
If you come back to my initial comment about producing -- focusing on the customer and producing products that our customers really want and value, so it's an understanding of the market, the customer, manufacturing where you sell in the sense of the economics, distribution of vehicles, the supply base.
You know, I talk about the 12,000 jobs at Ford.But the adjacent jobs in the supply base and related engineering activities, there's a big multiplier on that number.So, you know, I really just keep coming back to the market itself, the opportunity to put great vehicles out there, to focus on the things that people really want.
And to tie it back to the high-tech jobs, you know, historically, our industry, and in particularly the domestic manufacturers here in the Detroit area, Ford now too, the main competitors have had this kind of image of rust-built and, you know, vehicles that are not high-quality vehicles or vehicles that don't perform well from a fuel economy perspective.
On just one area at Ford, we've been focusing tremendously in the last few years on fuel economy and emissions.We made a commitment to engineer the highest-quality vehicles that offer the best fuel economy in every segment that we compete, every market around the world.
If you come back to some of the investments that I mentioned earlier, a very large percentage of those investments have been in very high technology powertrains, whether they are hybrid vehicles, plug-in hybrids, battery electric vehicles.
We now have six electrified vehicles that we'll be selling here in the U.S.Eight vehicles that achieve over 40 miles per gallon.Most of that engineering was done right here in Michigan at our engineering center in Dearborn along with the supply base.And a lot of the component manufacturing is coming into this area as well, battery assembly, component, power electronics and so on.
So it really does come down to this commitment that we've made to focus on the customer, to focus on engineering the very best in world products.And obviously, to do that, you need the market knowledge and you need the engineers.And it just keeps tying right back to your point on education on the technical disciplines.