Remarks by Emily Stover DeRocco President, The Manufacturing Institute at the Milwaukee WIRED Meeting May 20, 2010 Milwaukee, WI

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1 Remarks by Emily Stover DeRocco President, The Manufacturing Institute at the Milwaukee WIRED Meeting May 20, 2010 Milwaukee, WI Good morning! Thank you so much for inviting me today. It is good to be back in Milwaukee and back with good friends. It s been nearly two and half years since I left the U.S. Department of Labor, but I still miss the WIRED regions and think about you often. For those who don t know me, I am now the President of The Manufacturing Institute but I used to be the Assistant Secretary of Labor in charge of the agency that funded and directed the WIRED Initiative at the national level. After I left the Labor Department, I stayed in touch with many of the WIRED regions and had the chance to work with some of them on manufacturing related issues. But this is the first time that I ve had an opportunity to speak to a WIRED region about the Initiative with the added perspective of both distance and time. Like so many other creative endeavors, WIRED was born from a fortunate confluence of events and timing. I had been with the Labor Department for four years and during that time had focused on making the workforce system more demand driven. We were building relationships with industry and looking to make the workforce system more responsive to businesses needs. But as much as that was a worthy and important goal, it never seemed to make much difference. Employers knew little or nothing about the workforce system. Community colleges were reluctant to work with us. And Economic Development ignored us. In short, the workforce system was just another government silo with no reach beyond its immediate audience. This was a heady time in the economy though. The country had rebounded from the dot com crash and the major economic voices were saying that innovation was the key to economic growth and that clusters and networks at the regional level were the optimal solution. It was also the time when the importance of talent and skilled workers moved to the forefront. Several prominent studies were released specifically identifying talent as the

2 key driver of economic success and surveys were showing that employers were considering availability of talent above all else when deciding where to locate. But here we were with a $10 billion annual budget, offices around the country, and tuition assistance available to skill or re-skill workers, yet we weren t even in the discussion. That had to change if the workforce system was going to become anything greater than simply the unemployment office. So we used one of the most underrated tools in the arsenal of innovation the cocktail napkin. Sketching out a system design that integrated workforce development, economic development, and education, we found some money with enough flexibility to support our creation and asked the country to respond. The results were amazing. An incredible diversity of regions and organizations responded. Universities, community colleges, and economic development organizations each took the lead in different regions. They brought new ideas and a new vitality to our workforce development system. We also were successful in engaging political leaders, showing that economic and workforce development can truly be a non-partisan issue. Nowhere was that better demonstrated than right here in Milwaukee. Mayor Barrett was one of the earliest supporters of WIRED, even before southeast Wisconsin was funded, and his commitment to a regional strategy, inclusive of areas outside the city, was a major step at a critical time. Though it wasn t intentional at the time, we ended up selecting a large number of regions that had previously been heavily dependent upon a single industry. I think these regions recognized that the traditional approach to education, workforce, and economic development wasn t going to get it done this time. They needed to bring creativity to the challenges that they faced and innovate their way back to competitiveness. It probably isn t a coincidence that manufacturing was the dominant industry in many of these regions because the manufacturing sector was going through a similarly difficult and painful process around the same time. For more than a century, manufacturing had been the bedrock of America. It had created the wealth that lifted the majority of Americans into the middle class and provided the tools and machines that secured our freedom. Manufacturing s success was also its biggest challenge though, because peace and prosperity led directly to the globalized economy we know today. Countries all around Southeastern Wisconsin WIRED Page 2

3 the world, with a population willing to work for pennies an hour, now competed with U.S. firms. The result was inevitable as low skill jobs fled the U.S. and companies were forced out of business. Contrary to conventional wisdom, this was not the death of U.S. manufacturing. U.S. firms adapted and started producing high value goods. Computers and robotics can now be found on nearly every shop floor and engineers and skilled technicians have replaced assemblers. This move up the value chain makes manufacturing as important today as it was in the past. Manufacturers may no longer be able to employ entire towns, but they are making entire towns employable. The value added by manufacturers and the amplifying effect of research and development combine to give manufacturing the greatest multiplier effect of any industry in the country. Investing in manufacturing creates jobs all across the economy. This focus on value and quality has kept the U.S. the global leader in manufacturing, producing over 22% of goods worldwide. China, with all the press and concern that it generates, stands at 14%. Continuously producing high value goods is not an easy process, however, because once a good has been on the market, competitors and imitators can find ways to make it for less. Our leading position is dependent upon our on-going ability to innovate. We have to always push the envelope and create new things with even greater value. But here s the thing about innovation. There is no manual or formula that can make a machine innovate. It is almost entirely a human process. It is men and women using their skills and creativity to design and create new things. This puts a tremendous responsibility on our education and workforce development systems to produce the talent capable of innovating in manufacturing. The Manufacturing Institute is now taking some small steps to ensure that that talent is available to manufacturers. Through something called the Manufacturing Skills Certification System, we are working with several other leading industry groups to create a set of nationally portable, industry-recognized credentials. These credentials provide employers with confidence that they are hiring an individual who can perform on the job immediately and give workers the security of a national industry certification that validates their skills for future employers. We are currently implementing this system in four states where community colleges are updating their courses and curriculum to align with the skill certification requirements. Another 19 states are at some level of engagement including Wisconsin where a member of my team just recently visited to begin the process. Southeastern Wisconsin WIRED Page 3

4 One of the things we ve noticed during this time is that manufacturers are starting to think about their workforce needs much as they would any other commodity as part of a supply chain. They are beginning to work with suppliers of talent like community colleges to ensure a steady delivery of reliable talent. This approach can t be successful unless manufacturers from a region form a network where the aggregate demand for workers is strong enough that their voices are heard by the education system. This is clearly not happening everywhere around the country, but as manufacturers focus more of their attention on innovation and the resulting workforce requirements, we are starting to see greater use of this human resources network. This is of critical interest to you because regions that are able to reduce the delivery time between the skills the economy demands and the talent schools produce are going to have a strategic advantage in this economy. And the only way to effectively do that is to have a network of education, workforce, and economic development groups that understands the economy and can respond to its demands. This, of course, brings us back to WIRED. The original design of WIRED was based on several key ideas that we tried to integrate into a single strategy. The first was that talent development should be at the heart of economic planning and development. When we looked at the successful areas of the country, and they re the same now as they were then, they all had strong university anchors and attracted the top talent from around the country in their respective industries. It wasn t possible to replicate the models of Silicon Valley or the Research Triangle, but it was possible to begin building the talent base that would permit regions to grow and thrive. I m excited to hear that Southeast Wisconsin is going to follow up WIRED by pursuing the Talent Dividend strategies described by CEOs for Cities. It is precisely this long term commitment to talent development strategies that I hope will bring this area continued prosperity. The second key idea was that the workforce system needed to better understand and integrate with the activities of education and economic development. This was an important goal from a public policy perspective because the taxpayers spend significant amounts of money on the system and if it s going to survive in the coming era of tighter budgets, it s going to need to demonstrate real value. This region was one of the stars of that effort. I remember when I first visited here, the WIRED activities and the workforce boards were described to me as a little box hanging off the bottom corner of the Milwaukee 7 strategic plan. And now at the conclusion of Southeastern Wisconsin WIRED Page 4

5 WIRED, the Initiative and the boards played a vital role in the region s overall strategy and I hope that they will continue to do so in the future. Looking across the other WIRED regions, I saw a number of activities that workforce boards would never have done without WIRED. I think, more than anything, WIRED gave workforce boards the authority and permission to innovate. And now, there are proposals coming out under the WIA reauthorization debate that would ensure that flexibility and permission continues. The final key idea was that areas of the country needed to think and act as regions. We knew that this was going to be a particularly challenging goal because in many ways, our identities were forged as rivals within a region. Milwaukee, Racine, and Kenosha were competitors within the region while the WOW counties tried to stand apart from all three. Regionalism was also the issue on which we had the least leverage. It clearly wasn t part of the Labor Department s mission and, frankly, if the regions had just decided to divide the money among their key areas and forget it, there was very little we could do. It s rather ironic then that regionalism has really been the greatest success to come from WIRED. Usually the first thing that I hear when I see someone from a WIRED region is how well they re all still working together. I know that the Milwaukee 7 was created prior to WIRED and that puts you way ahead of the curve, but I hope that WIRED was successful in reinforcing and tightening the bonds among these seven counties. It isn t just the WIRED regions that are in tune with the benefits of a regional strategy. Two of the major think tanks in Washington -- the Brookings Institution and the Center for American Progress both released studies highlighting the benefits of regional innovation clusters. This led the Obama Administration to direct the government agencies to spend on projects that were place-based and regional in nature. Now we have the Energy Department doing Regional Energy Clusters, the Commerce Department funding Regional Economic Strategies, even the National Economic Council, which I didn t even know had money, just released an RFP seeking to fund regional strategies. Many of my former colleagues will probably be aghast at my claiming credit for some of President Obama s economic policies but I believe that the success our WIRED regions had and the unique characteristics of the WIRED Initiative led to a rethinking of how the federal government funds some of its programs. And it isn t just the federal government that WIRED has influenced. A number of the Land Grant Universities have partnered to pursue an initiative they call Transformative Regional Engagement. Led by Penn State University, this group is trying to use the Southeastern Wisconsin WIRED Page 5

6 resources of large state universities to create economic transformation in regional economies. The group got started, in large part, because of the role Purdue and Michigan State played in leading their respective WIRED teams. You know you re on to something when two traditional and slow moving institutions like government and academia are both responding to an initiative. While it s certainly exciting and personally gratifying to see the impact that WIRED has achieved at the national level, it is the on-going success of the individual WIRED regions that gives me the most joy. It seems like every week I read a story about a plant opening or education alliance or grant award in one of our regions. This is the real legacy of WIRED and it is a tribute to you in this room and the teams from the other 38 regions. You took a creative idea and transformed it into an amazing success. Thank you so much for the work you have done and I look forward to reading about the future success of the Milwaukee 7 and southeastern Wisconsin. Thank you. Southeastern Wisconsin WIRED Page 6

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