TALENT-DRIVEN INNOVATION The #1 driver for creating a competitive advantage. Ben Dollar Principal Deloitte Consulting LLP
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1 TALENT-DRIVEN INNOVATION The #1 driver for creating a competitive advantage Ben Dollar Principal Deloitte Consulting LLP
2 Exploring the drivers of manufacturing competitiveness Deloitte has collaborated with the World Economic Forum, the U.S. Council on Competitiveness and the Manufacturing Institute to explore the drivers of manufacturing competitiveness worldwide. Interviews with CEOs, university presidents, national lab leaders, and labor leaders Surveys of 1,000s of senior executives worldwide Surveys of average Americans
3 Talent-driven innovation and competitiveness 1000s of CEOs participating in the Global Manufacturing Competitiveness Index identify talent-driven innovation as the most important driver of competitiveness Rank Main Driver 1 Talent-driven innovation 2 Economic, trade, financial and tax system 3 Cost and availability of labor and materials 4 Supplier network 5 Legal and regulatory system 6 Physical infrastructure 7 Energy cost and policies 8 Local market attractiveness 9 Healthcare system 10 Government investments in manufacturing and innovation Most important sub-component Quality and availability of researchers, scientists, and engineers Quality and availability of skilled labor Quality of primary and secondary schools to produce sufficient student populations proficient in science, technology & math Quality of colleges and universities and their partnerships with business in research and innovation Effective and efficient immigration policies Source: 2013 Global Manufacturing Index, Deloitte and Council on Competitiveness
4 United States students lag in STEM literacy 2012 Program for International Student Assessment (PISA) OECD nations in BOLD U.S. is ranked 36 th in Math and 24 th in Science U.S. is ranked 23 rd in Reading, down from 17 th in 2009! Source: OECD.org
5 The United States lags significantly in graduating engineers The latest data show that engineering degrees as a share of total first university degrees were a meager 4.4%. The U.S. engineering graduate share is markedly behind Japan at 17.1% and Germany at 12.4%. Manufacturing Institute, MAPI, NAM. Facts About Manufacturing. November About a third of engineering majors work as engineers. Pew Research Center from 2012 American Community Survey = The automotive industry is competing with other industries for a small pool of talent!
6 There is indeed a skills gap Our 2014 Skills Gap study confirmed a significant shortage of U.S. manufacturing talent. of executives surveyed agree there is a talent shortage in U.S. manufacturing and they indicate It takes 90+ days to recruit highly skilled workers SIX out of TEN open skilled production positions are unfilled due to talent shortage even when 80% of manufacturing companies are willing to pay more than the market rates in workforce areas reeling under talent crisis Source: 2014 Manufacturing Institute and Deloitte Public Perception of Manufacturing Study
7 The skills gap is widening Over the next decade* nearly 3 ½ Million manufacturing jobs likely need to be filled 2.7 Million baby boomer retirements 700K manufacturing jobs expected from economic expansion 3.4 Million manufacturing jobs are likely to be needed over the next decade Sources: Bureau of Labor Statistics (BLS) and Deloitte analysis 1 Milken Institute and Economic Planning Institute. 2 The U.S. Department of Commerce, Bureau of Economic Analysis. The skills gap is expected to result in of those jobs being unfilled Only 1.4 Million jobs are likely to be filled leading to an expected 2 Million manufacturing jobs unfilled due to the skills gap *Next decade means the time period Million The implications are significant In 2011, 600K jobs were unfilled due to the skills gap Every job in manufacturing creates another 2.5 new jobs in local goods and services 1 For every $1 invested in manufacturing, another $1.32 in additional value is created in other sectors 2 By 2025 the skills gap is expected to grow to 2 million The retirement of baby boomers, strength of the economy and attractiveness of the industry are ranked among leading factors impacting the talent shortage.
8 The impact of the skills gap Talent shortage significantly impacts manufacturers by negatively influencing operations, company growth and the bottom line in a variety of ways. of executives believe the skills gap will impact 82% their ability to meet customer demand Executives also agree it will impact their ability to: 78% implement new technologies and increase productivity 69% provide effective customer service 62% innovate and develop new products Implications are significant Between 2004 and 2012, U.S. manufacturing industry lost $9 billion to $25 billion per year of output because of open positions that went unfilled. 1 1 Bureau of Labor Statistics and Deloitte Analysis 48% expand internationally Source: 2014 Manufacturing Institute and Deloitte Skills Gap Study *Bureau of Labor Statistics and Deloitte Analysis
9 Americans are steadfast in their support for manufacturing Americans value a strong manufacturing sector Americans support manufacturing job creation 90% If given an opportunity to create 1,000 new jobs in their community, manufacturing tops the list of Americans believe manufacturing is very important to economic prosperity Americans believe the industry can compete globally 73% Technology use and availability Manufacturing is ranked among the most important domestic industries for helping maintain a strong national economy 72% Research and development capabilities 69% Energy availability U.S. competitive advantages identified by respondents # 1 Manufacturing Facility 2. Technology development center 3. Energy production facility 4. Healthcare facility 5. Retail center 6. Communications hub 7. Financial institution But Source: 2014 Manufacturing Institute and Deloitte Public Perception of Manufacturing Study
10 Americans are reluctant to choose careers in manufacturing While more than half of respondents believe manufacturing jobs are interesting and rewarding, negative perceptions toward manufacturing still exist and need to be addressed. Only 1 out of 3 Parents would encourage their children to pursue a career in manufacturing. WHY? While 1/2 Of Americans believe manufacturing jobs to be interesting and rewarding Only 1/3 Agree that manufacturing jobs are increasingly available and accessible 59% worried about job security and stability 45% believe the industry has limited career prospects 53% believe school systems provide exposure to manufacturing skills 30% believe school systems encourage students to pursue manufacturing careers Reasons for not encouraging child or younger generation 3/4 Believe manufacturing jobs are the first to be moved to other countries Source: 2014 Manufacturing Institute and Deloitte Public Perception of Manufacturing Study
11 Good news: Americans have strong views on what needs to change Americans agree action and investment is necessary to drive manufacturing competitiveness and when the industry engages, perceptions change. 82% 72% 68% 61% 52% of Americans believe the U.S. should further invest in the manufacturing industry Americans indicate targeted programs would increase interest in manufacturing careers Internships, work study or apprenticeship Certification or degree programs for manufacturing skills training On campus recruiting by manufacturing firms Tours of advanced manufacturing facilities for students Familiarity increases positive perception Those familiar with manufacturing are 2X as likely to encourage a child to pursue manufacturing Ranked manufacturing 3 rd as career choice out of 7 key industries versus 5th overall Source: 2015 Manufacturing Institute and Deloitte Public Perception of Manufacturing Study
12 Closing the gap: attracting and developing talent is essential A holistic approach is needed in order close the gap and remain competitive Start by developing and retaining current workforce: The most effective skilled production workforce development strategies cited by executives Percentage of executives that indicate current employees are not sufficient in key skills 94% Internal employee training and development 72% Involvement with local schools and community colleges 64% External training and certification programs 49% Creation of new veteran hiring programs Then use methods to attract and develop people: Find: Employ advanced analytics to enhance candidate screening Develop: Invest in training programs and partnerships that build skills Target: Develop targeted and integrated recruiting and communications Grow: Change the public s perception to grow the pool of interest Source: 2015 Manufacturing Institute and Deloitte Public Perception of Manufacturing Study
13 This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this presentation.
14 About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ( DTTL ), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as Deloitte Global ) does not provide services to clients. Please see for a detailed description of DTTL and its member firms. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. 36 USC Member of Deloitte Touche Tohmatsu Limited
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