Talent-driven innovation The #1 driver for creating a competitive advantage
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1 Talent-driven innovation The #1 driver for creating a competitive advantage Craig A. Giffi Vice Chairman and U.S. Automotive Industry Leader Deloitte LLP August 5, 2014
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 Studies identify: Drivers of competitiveness Americans perception of manufacturing Policy recommendations to improve competitiveness Copyright 2014 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited 2
3 Talent-driven Innovation and Competitiveness Rankings by 550 CEOs participating in the 2013 Global Manufacturing Competitiveness Index identified talent-driven innovation as the most important driver of competitiveness Global Manufacturing Competitiveness Index Rank Index Score Main Driver Talent-driven innovation Economic, trade, financial and tax system Cost and availability of labor and materials Supplier network Legal and regulatory system Physical infrastructure Energy cost and policies Local market attractiveness Healthcare system Government investments in manufacturing and innovation Most important talent-related sub-components 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 Copyright 2014 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited Source: 2013 Global Manufacturing Competitiveness Index 3
4 United States Students Lag in STEM Literacy Math Science Reading 1. Shanghai-China Shanghai-China Shanghai-China Singapore Hong Kong-China Hong Kong-China Hong Kong-China Singapore Singapore Chinese Taipei Japan Japan Korea Finland Korea Macao-China Estonia Finland Japan Korea Chinese Taipei Liechtenstein Viet Nam Canada Switzerland Poland Ireland Netherlands Netherlands Poland Estonia Liechtenstein Liechtenstein Finland Canada Estonia Canada Germany Australia Poland Chinese Taipei Netherlands Belgium Netherlands Macao-China Germany Ireland Switzerland Viet Nam Macao-China Belgium Austria Australia Germany Australia Switzerland Viet Nam Ireland Belgium France United States United States United States 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 4
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. It s noteworthy that more are non-stem managers (18%) than computer workers (15%). Pew Research Center from 2012 American Community Survey The automotive industry is competing with other industries for a small pool of talent! Copyright 2014 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited 5
6 The Growing Skills Gap A Deloitte and Manufacturing Institute study revealed 600,000 U.S. manufacturing jobs remain unfilled because employers can t find people with the right skills Shortage of U.S. workers by job type Boiling Point The Skills Gap in the United States Low Shortage No Shortage Moderate Shortage Serious Shortage 7% 26% 30% -55% -12% Overall Percent of responses serious shortage 42% -22% -6% Unskilled production 5% 12% 14% 27% 26% 23% -38% -40% -33% -45% Skilled production -20% Engineering technologist -17% Scientists Design Eng Greatest shortages associated with skilled production workers, technologists, scientists and design engineers Copyright 2014 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited Source: Boiling Point: The Skills Gap in the United States 6
7 The Growing Skills Gap The aging global population and retiring skilled workers will increase talent shortages The most rapid increases in the 65-and-older population are occurring in developing countries, which will see a jump of 140% by 2030 Female 65+ 5% % Under 5 13% Total Population = 2.5 Billion Male Female % % Under 5 9.1% Total Population = 7 Billion Male Female % % Under 5 7.9% 2025E* Total Population = 8.2 Billion Male By 2025, those over 65 years old worldwide are expected to outnumber the young * for the first time in history Copyright 2014 Deloitte Development LLC. All rights reserved. Source: Why Population Aging Matters; NIA, NIH (2007), McKinsey Global Institute (2006); World Population Prospects, the 2010 Revision; United Nations, Population Division, Deloitte Analysis Member of Deloitte Touche Tohmatsu Limited * Young is defined as under five years old 7
8 Manufacturing s Perception Gap Americans generally do not perceive manufacturing as a desirable career choice In a recent survey, manufacturing ranked second to last out of seven major industry groups as a career choice Among year-olds, manufacturing ranks last among industries in which they would choose to start their careers Many Americans fear the loss of manufacturing jobs offshore will continue, contributing to a sense that manufacturing is an unstable long-term career choice Only 35 percent of Americans would encourage their children to pursue manufacturing careers, despite the advanced skills and above average pay that are characteristic of work in today s highly technical, advanced manufacturing facilities Copyright 2014 Deloitte Development LLC. All rights reserved. Source: Leadership Wanted: The public's view of the manufacturing industry today, 2012, Deloitte and The Manufacturing Institute. Member of Deloitte Touche Tohmatsu Limited 8
9 Manufacturing s Gender Gap There is a gender imbalance in manufacturing. Despite talent shortages, manufacturers have not effectively targeted women with recruiting and development efforts While women represent nearly half (46.6%) of the total U.S. labor force, they only comprise a quarter (24.8%) of the durable goods manufacturing workforce 80% of women feel that manufacturing does not do a good job of promoting itself to potential female candidates Women are also more likely to recommend manufacturing careers to their sons (70%) vs. their daughters (55%) Copyright 2014 Deloitte Development LLC. All rights reserved. Source: Untapped resource: How manufacturers can attract, retain, and advance talented women, 2012, Deloitte and The Manufacturing Institute. Member of Deloitte Touche Tohmatsu Limited 9
10 Summing it up CEOs view talent-driven innovation as the #1 driver of competitiveness The U.S. lags internationally in STEM literacy and number of students graduating with engineering degrees 600,000 U.S. manufacturing jobs remain open because employers cannot find the right skills The gap will increase as the population ages and Boomers retire Manufacturing ranks last among year-olds as a career choice Women continue to be under represented in U.S. manufacturing sectors What to do?
11 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 more detailed description of DTTL and its member firms. Copyright Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited 11
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