On Friday, October 5, 2007, Northrop Grumman Corporate Vice President and Chief Human Resources and Administration Officer Ian Ziskin addressed the Advanced Manufacturing Workforce Conference at Los Angeles Valley College in Los Angeles, Calif.. Below are his remarks.
I am thrilled to be with you this morning as we talk about a subject I love – helping people and businesses be more effective and competitive. As the person in charge of human resources at the company I work for – Northrop Grumman – we share many of the same concerns. I’m happy that you – educators, policy formulators, and economic development experts – are engaged in trying to understand and anticipate the manufacturing workforce ten years from now. As someone once said, “Nothing is impossible for those who have to do it.” Well, all of us here today are the one who do have to do it. Let me just describe this company I’m a part of because the things our employees do, and the working environment in which they do them, are an excellent case study that is relevant to the conversation we’re having this morning.
I am very proud to represent Northrop Grumman, a company comprised of 120,000 employees. Our people are found in all fifty sates, and in 23 countries. In this state, we employ about 30,000 Californians and pay them about $2.5 billion per year – lots of salaries and lots commuters. Across our company, our employees build nuclear submarines, satellites, and just about everything in between. And not just military hardware and systems; we’re doing more and more every year for the civilian world as well … information technology for healthcare; environmental monitoring satellites; communications networks for police and firefighters; mail sorting systems for the Postal Service. One thing is common to just about everything we do – technology. Of our 120,000 employees, about 45,000 of them are scientists or engineers. We are a high-tech company with a high tech workforce.
The future is a high tech one. But it’s a double edged sword for companies like mine and many others you work with every day. Our dependence on trained, educated, technical workers will only grow, but the demographic trends indicate the supply of such workers is going to shrink.
For the next few minutes, I’d like to expand on these trends and demographics, their implications, and what can be done to prepare the workers of the future – people who might only now be in elementary school, but soon enough will enter the workforce and will expect to find well-paying, satisfying, secure jobs. It’s in the interests of all of us to do what we can to make sure those workers are prepared, and those jobs are there.
Let’s talk about some of those trends and demographics because they are revealing.
There are a few things we can say with confidence about the national workforce of 2017. First, everyone who will enter the workforce over the next 20 years has already been born – so we already know what the workforce will look like. For one thing, that part of the workforce, ages 40 and above, will grow by 33%, while the workforce, ages 25 to 39, will shrink by 5.7%. This means a shortage of available new talent irrespective of what that worker has been trained to do. Based on current global demographics, we also know that over the next ten years, Europe and North America will produce and educate only 3% of the world’s entering labor force. Asia, on the other hand, will account for about 75%.
Most companies in this country will face two realities: A shrinking workforce in general, and a shortage of talented workers with critical skills. Like other companies, Northrop Grumman is already feeling the pinch. Over the past three years we have hired a total of 46,000 people nationwide. However because of retirement and other attrition, we have only a net gain of 3,000. 43,000 have left. That’s a lot of churn. Our overall attrition rate is 9% -- quite good by any standard. However, we have experienced a 40% attrition among those employees with 1-3 years of service. This is important because we have found that if they stay for five years, they will stay long-term.
This is further aggravated by the fact that we average over 2,000 retirees per year and about 50% of our 120,000 employees will be eligible to retire over the next five years. This is an increasingly common challenge in many industries; our average age at retirement is 62; and approximately 30% of all eligible retirees leave before age 60. Our ability to hire and retain talent will continue to be a challenge and a major focus of our human capital strategy. Fundamentally, talented people expect great leadership and challenging, interesting work. That’s what keeps them working for any organization. It’s everyone’s job here today to ensure that great leadership and interesting work are in abundant supply here in Southern California. That is our competitive advantage.
Let’s overlay these demographics with a look at critical skills – the competencies required for any technology-based business engaged in manufacturing or high-end services.
In recent years organizations such as the National Academies, the National Research Council, and the National Science Board have all conducted studies on the state of America’s educational shortcomings, especially in those areas that will be so important to our future workforce – science, technology, engineering and mathematics – STEM for short. You may have heard some of these numbers before. In 2005 U.S. universities graduated only 70,000 engineers. Meanwhile, India graduated approximately 200,000 and China graduated more than 500,000. The most recent available data puts the U.S. at number sixteen among producers of science and engineering graduates as a percentage of population – behind South Korea, the European Union, and Lithuania. Thirty years ago we were third. In US colleges today, only 15% of students are graduating in STEM subjects. And of those who start out majoring in these disciplines, attrition rates of 50% are not uncommon with women and people of color being much too scarce. All in all, it’s pretty scary.
To re-emphasize, we are facing a shrinking workforce and one that will be ill-equipped to excel in the basic disciplines required for success in high-tech advanced manufacturing fields. These factors have captured my interest, and I hope they do yours as well.
Not only are our students avoiding these fields in high school and college, but their schools are having more and more trouble finding teachers. U.S. school districts will need to hire over 200,000 middle school and high school math and science teachers between now and 2010. Where will they come from? And how do we attract more people into teaching? These are important questions because if we fall behind other countries in STEM disciplines, it will be very hard to catch up again simply by virtue of the pace of technological progress. As the old test pilot said, “You ain’t been lost until you’ve been lost at mach three.” So we need to move fast, but we also have to have some direction and a game plan.
What can be done? Well, all of us – private sector, educators, and government, have a role to play, and all must play it. Let’s start with the private sector. I’ll share with you a few examples of what my company is doing – not because we have our arms wrapped around the problems, but as a live case study that illustrates just how big and hairy the issues really are.
Because technology progresses so fast, we have to work very hard to keep our workforce on the leading edge. Down in Redondo Beach our Space Technology sector maintains a thing called Space University. Space U provides training for our employees in everything from time management to lasers to robotics. Our shipyard in Newport News Virginia has a similar institution called the Apprentice School. These kinds of in-house schools are expensive but as investments in our workforce, they are pennies on the dollar for companies that have to “grow their own.”
We also do a lot of out-reach to the K through 12 education community, colleges and universities. We have a simple strategy. Our focus is two-fold – teachers and students.
We have all heard of the “Teach the Teacher” philosophy. If we can have an impact on a single teacher, we can have an impact on hundreds of students every year. In too many districts, STEM subjects are underemphasized. There are not enough teachers who are well-trained in these areas so our focus with teachers is on changing that. We are developing a corporate-wide Signature Education program that will focus on middle school teachers, giving them the training and support they need to be more effective at teaching middle school math and science. We underwrite such programs as Teach for America, which place middle school math and science teachers in disadvantaged communities in the Los Angeles area. And our Weightless Flights of Discovery brings middle school teachers together to pursue a math and science curriculum, capped off by a parabolic flight. By the time these teachers return to their classrooms, I guarantee you they are more excited than ever about STEM courses and that enthusiasm is contagious.
At the college level, we partner with 35 top engineering schools across the nation, 12 of which are located in Southern California. Last year, our financial support at those schools exceeded $50 million.
But the high-tech private sector has to reach out to students too, and we do. Because middle school students respond so well to hands-on activities we support such engineering-based activities as the Sally Ride TOY Challenge, “Mathcounts”, First Robotics, Lego League, and Odyssey of the Mind, all of which provide lots of interaction with STEM topics. We have to reach students by middle school to influence their education and career choices.
Among our most important goals, however, is in motivating more young girls and people of color to pursue these STEM fields of study; Important because – remember – we need to capture their imaginations by middle school. For a variety of reasons, none of which are related to their intellectual potential, women and people of color have historically avoided pursuit of STEM subjects beginning early in their educational careers. They represent pools of potential and talent that have yet to be fully tapped. We are doing a lot of work with historically black colleges and other institutions to change that, not only at the university level, but in middle and high school as well. We have pledged almost $2 million to a project initiated by UCLA, Cal State LA, and the National Science Foundation that is designed to make strides in diversity recruitment and retention of college-level STEM students.
We are not the only corporation engaging in such out-reach. Others are too. But even at its very best, the private sector can do only so much. Colleges and government have their roles too.
Even at the nation’s top engineering schools the attrition rate for STEM students is too high. According to reports from the National Academies, the National Science Foundation, and the National Academy of Engineering, too many schools are without formal programs designed to retain their STEM students through graduation. The de facto policy in many of these institutions is sink or swim, which is the wrong focus. A better focus would be on seeding in, not weeding out. Several researchers have suggested that one problem is senior faculty members who view their principal duty as research, not teaching or recruiting of STEM students. In some colleges and universities this is changing, but not enough. Another problem is that schools and professors are not rewarded for student completion rates or employability.
Two underutilized solutions are community colleges and Career Technical Education. I wonder how many students who did not succeed at a four year institution, would have thrived in a two year school or in a Career Technical curriculum, getting the education they needed to enter the job market until they were ready for more advanced course work. Community colleges and technical courses provide a safe place to build skills and confidence. They have far more to offer our future workforce than they are given credit for. We need them. We need you.
Beyond the private sector and our educational system, there is a third element that will play a role in shaping the workforce of 2017, and that is government.
We have all heard the term “global economy.” The columnist Thomas Friedman wrote a best-selling book about it titled, “The Earth is Flat”. Let me read you a quote from Friedman that really sums up what this new global economy means to all of us. He said this in an interview a couple of years back. He said:
“When the world was round, say 30 years ago, you would much rather have been born a B+ student in Indianapolis than a genius in Bangalore, India. Because the Indian genius, unless he or she could get a visa out of India, really could not plug and play with his or her talent. Today, you do not want to be a B+ student in Indianapolis. You would much rather be a genius in India, because that genius can now innovate at a global level without ever having to emigrate.”
For me, that sums it up. After World War II, ours was the only economy still standing, and we kept that advantage for forty years. We were the first and best choice. But no longer. Today’s workforce has to compete with markets and peoples we never thought about when I entered it almost three decades ago. Globalization equals choice, flexibility, freedom and competition. And this effect will be even more pronounced ten years from now. Every city and state in America is now trying to figure out how to compete for business and for workforce talent in this new flattened world.
This trend has particular relevance for our state. Ross Devol, an economist at the Milken Institute in Santa Monica, calculates that California’s cost of doing business is 30% above the national average – only three other states in America are higher. Who is willing to pay a 30% premium for anything these days? It is not an easy thing to recruit talent for business into any state when healthcare, housing costs and taxes are high; when school quality is questionable or highly variable; when regulatory burdens are onerous; when there’s too much traffic. These are complex issues that we are not going to solve today.
The private sector should not be afraid to point out the importance of solving these problems, but we would make a mistake waiting on the solutions because they will be years in coming under the best of conditions. I tend to agree with what Gary Toebben, President of the LA Area Chamber of Commerce, said about it. He said that because it is so difficult recruiting talent into our state, our best strategy is to take care of the talent we already have. I couldn’t agree more. Like any other major city, LA and Southern California have our share of challenges. And yet my company still manages to get and keep absolutely superb people. They are right here so let’s work together to invest in them – including STEM education and technical training; high-tech career mentoring and “apprenticeship” programs; academies and scholarships for technical leaders and teachers of STEM subjects; tuition discounts and tax breaks for people and companies that pursue and support STEM and technical-related education; phased retirements; A STEM Peace Corps among talented retiring technical workers who would work in exchange for research funding, tax breaks, or even carpool lane access. Let’s brand ourselves as that place that is synonymous with great technical leaders and cool, exciting technical work.
The technical and manufacturing heritage of Southern California is incredible. As many of you know, yesterday was the fiftieth anniversary of Sputnik and the start of the space age. Places like Pasadena, Caltech, Redondo Beach, El Segundo and all of Southern California, all played central roles in our progress in space, and in bringing all the subsequent benefits of that progress to our state, our nation and our world. Aerospace is the original high-tech industry in California, and to this day, California is one of the innovation capitals of the world – not just in aerospace but in IT, medical research and technology, and a host of other categories. But we didn’t achieve that standard by accident, and we don’t maintain it by reminiscing about past accomplishments.
Despite all the challenges we have discussed this morning, I am actually quite optimistic about the future of the advanced manufacturing workforce – particularly here in Southern California. Why? Well, can you imagine the power of a workforce that is globally and culturally diverse, highly entrepreneurial and flexible, innovative and passionate, and willing to brave high costs and long commutes to live and work in a place they love?
That sounds like a talent base worth cherishing, and worth investing in by all of us. And it sounds a lot like home.