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1 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Developing the 21st CenturyAerospace Workforce
MIT Center for Technology, Policy and Industrial Development
Lunch Presentation, October 2001
“Right Skills, Right Place, Right Time”
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
2 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
OverviewOverview
Ø Introduction to the “Labor AerospaceResearch Agenda”
Ø Sample Research Findings on Instability
Ø A Call to Action on Instability and InstitutionalInfrastructure
Ø Draft Outline for White Paper for PresidentialCommission on the Future of the U.S.Aerospace Industry
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
3 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Introduction to LaborIntroduction to Labor
Aerospace Research AgendaAerospace Research Agenda
Ø Sponsor: USAF ManTech
Ø Lead Partners: UAW and IAM
Ø Principal investigators and ResearchTeam:
Ø Tom Kochan (Co-PI), Joel Cutcher-Gershenfeld (Co-PI), Betty Barrett,Rob Scott, Takashi Inaba, EricPartlan, Shannon O’Callighan,Kevin Long, and other teammembers
Ø Links to LAI:
Ø Organizations and People,Knowledge Deployment, OtherResearch/Product Teams, andCurriculum Development
Ø Funding:
Ø ~$300K/yr
Ø Focus:
Ø Impact of instability on employmentand workplace innovation in theaerospace industry
Ø Social capital and institutionalinfrastructure
Ø Methods
Ø National random sample survey(194 facilities)
Ø Individual surveys (400+ surveys)
Ø Case studies (6)
Ø Collective bargaining contractanalysis
Ø Archival data analysis
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
4 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
LARA: Phases I and IILARA: Phases I and II
Phase IØ Instability and employment
Ø National Random Survey (194facilities)
Ø Individual Surveys (400+)
Ø Case Studies (6)
Ø Collective Bargaining Analysis
Ø Activity Based Costing Analysis
Ø Global Supply Chain/StrategicAlliance Exploration
Ø Conference Presentations andBriefings
June 2000 LAI Executive; March 2000LAI Plenary; January 2000 “Enhancingthe Effectiveness of the NationalWorkforce”
Phase IIØ Instability and employment
Ø Intellectual Capital &Institutional Infrastructure
Ø Panel Study Follow-up onNational Survey
Ø Policy Recommendations
Ø Case Studies (1-2)
Ø Collective Bargaining Guide
Ø Global Supply Chain/StrategicAlliance Chart
Ø Conference Presentations,Briefings, Articles, Website andother Knowledge Deployment
May 2000 LAI Executive; April
LAI Plenary
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
5 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Products Made by IAM & UAWProducts Made by IAM & UAW
MembersMembers
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
6 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Why Worry About Instability?Why Worry About Instability?
0100200300400500600700800900
1,0001,1001,2001,3001,400
1985 1987 1989 1991 1993 1995 1997 1999
Year
(In
Th
ou
sa
nd
s)
Source: AIAPrepared by: IAM Strategic Resources Department
PullPullPull
FlowFlowFlow
StabilityStabilityStability
T1 T2 T3 T4 T5 T6 T7 T8 T9 T10
Inte
rdep
ende
nce
Time
Total U.S. Aerospace Employment
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
7 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Why Worry About Instability?Why Worry About Instability?
SOURCE: Credit Suisse First Bank 1980 1982 1984 1986 1988 1990 1992 1994 1996 1997
BOMBARDIERBOEING
RAYTHEON
BDM (CAR LYLE)
LOCKHEEDMARTIN
NORTHROPGRUMMAN
DE HAVILLAND AIRCRAFTBOEING
ARGO SYSTEMSUTL
LITTON PRECISION GEARROCKWELL INTERNATIONAL
MCDONNELL-DOUGLAS
HUGHESGENERAL MOTORS
BET PLC’S REDIFFUSION SIMULATIONGENERAL DYNAMICS MISSILE DIVISION
MAGNAVOXREMCO SARAYTHEON
STC PLC-NAVIGATION SYSTEMSTRW-LSI PRODUCTS
CORPORATE JETSE-SYSTEMS
TEXAS INSTRUMENTS DSEG
HONEYWELL-ELECTRO-OPTICSFAIRCHILD WESTERN SYSTEM
GOODYEAR AEROSPACEXEROX-DEFENSE/AEROSPACE DIVISION
NARDA MICROWAVELORALNYCOR
FORD AEROSPACEBDM INTERNATIONAL
LIBRASCOPELTV-MISSILE BUSINESSIBM-FEDERAL SYSTEMS
UNISYS DEFENSEGENERAL DYNAMICS-FORT WORTH
MELSANDERS ASSOCIATES
LOCKHEEDMARTIN MARIETTA
GOULD OCEAN SYSTEM DIVISIONGENERAL ELECTRIC-AEROSPACE
GENERAL DYNAMICS SPACE BUSINESS
NORTHROPLTV-AIRCRAFT OPERATIONS
GRUMMANWESTINGHOUSE ESG
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
8 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
What is at Stake?What is at Stake?
Consider One Form of InstabilityConsider One Form of Instability
"the money spent on canceled programs inrecent years could have bought:– 1,000 Abrams tanks,
– 100 F-16 Fighters
– 1,000 AMRAAM missiles
– 10 Titan Launch Vehicles
– 20 Joint STARS Aircraft
– 10,000 Javelin missiles
– 70,000 MLRS Rockets, and
– one nuclear attack submarine."
"Acquisition Reform Dream or Mirage?" Norm Augustine. Army RD&A,September/October 1996.
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
9 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
U.S. Engines and Parts Imports as aU.S. Engines and Parts Imports as a
Share of Total Aircraft Sales, 1981-2000Share of Total Aircraft Sales, 1981-2000
4
6
8
10
12
14
16
18
20
1981 1983 1985 1987 1989 1991 1993 1995 1997 1999
Year
Sh
are
of U
.S. A
ircr
aft
Sal
es (
Per
cen
t)
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
10 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
ContextualFactors
•Labor Markets
•Product Markets/Industry Segment
•Product Mix
•Public Policy
•Location, Size,Union Status, andDemographics
ProgramInstability
•Funding
•Technology
•OrganizationalChange
Work PracticeAdoption &Diffusion
•Tangible andIntangible
•Manufacturing andEngineering
•Lean and otherWorkplaceInnovations
Outcomes
•Employment
•EconomicPerformance
•OrganizationalLearning
Business & Labor Mitigation Strategies
•Training Initiatives
•Product diversification
•Worker Flexibility
Conceptual Model:Conceptual Model:
Facility SurveyFacility Survey
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
11 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Highlights From CasesHighlights From Cases
Ø Types of instability:
Ø Funding/orders
Ø Shift from R&D toproduction funds
Ø Fluctuations in demand forprimary product in facility
Ø Technology
Ø Changes in customerrequirements
Ø Shifts in materials
Ø Rapid pace of change incomputer capabilities)
Ø Environmental constraints
Ø OrganizationalØ Acquisition/layoffs
Ø Mergers/restructuring
Ø Relocation of productsamong facilities
Ø Two-tier relationshipbetween sister facilities
Ø Demographics --retirements/gaps in pasthiring, skill shortages
Ø Turnover -- management,engineering, and hourly
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
12 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Highlights From Cases (cont.)Highlights From Cases (cont.)
Ø Observed mitigation strategies:
Ø Business Strategy
Ø Increase proportion of commercial business sought
Ø Shift in product mix to increase focus on space
Ø Human Resource Management/Industrial Relations
Ø Cross-training/flexible utilization/teams
Ø Informal no-layoff practice
Ø Labor-management partnership
Ø Employee involvement
Ø Intensified training of hourly and salaried employees
Ø Co-location of engineers, teams
Ø Two-tier wage system
Ø Multi-facility transfer agreements
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
13 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Facility Survey: Survey ResponseFacility Survey: Survey Response
Rate, Facility and Respondent ProfileRate, Facility and Respondent Profile
Ø Population and Sample
Ø Estimated Population: approx. 5,000
Ø Sample Size: two mailings to 2,123, with 2 follow-up card mailings andover 900 follow-up calls – many bad addresses, many no longer in industry
Ø Valid Responses: 198
Ø Facility Profile Distribution Size Year
Ø Airframes and Mechanical Systems (n=54) 27.4% 1,051 1971
Ø Engines and Propulsion (n=19) 9.6% 880 1969
Ø Space and Missiles (n=8)* 4% 1,738 1971
Ø Avionics and Electronic Systems (n=40) 30.3% 318 1977
Ø Second/Third Tier Suppliers and Others (n=76) 38.6% 262 1976
Ø Respondent experience in Aerospace 20.5 years
* Note that 33 facilities listed space or missiles as a secondary sector, but not as primary sector
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
14 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Facility Survey:Facility Survey:
Sources of Instability Sources of Instability
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Changes inproduct demand
Changes incustomer
requirements
Changes ingovernment
budgets
Mergers/acquisitions
Changes inleadership vision
Focus on Four Categories of Instability
Budget and Market Instability
Changes in Product Demand, Changes in Government Budgets, Changes inCompany Budgets, Changes in Government Acquisition
Technology Instability
Changes in Customer Requirements/Technical Design, Changes inEquipment/Technology, Problems from Technical Challenges,
Organizational Instability
Mergers/Acquisitions, Changes in Leadership Vision, Re-Engineering/Re-Structuring, Voluntary Staff Turnover
Supply-Chain Instability
Changes in Supplier Performance, Problems of Cooperation with Customers/Partners/Suppliers, Subcontracting of Work, Reducing the Number of Suppliers
% o
f F
acilit
ies S
ele
cti
ng
Ite
m a
s M
ost
Sig
nif
ican
t
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
15 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
High Levels of Instability andHigh Levels of Instability and
Facility SizeFacility Size
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Funding and MarketInstability
Technology Instability Organizational Instability Supply Chain Instability
Under 100 employees (n=93)101-250 employees (n=44)
251-500 employees (n=16)
501-1000 employees (n=11)Over 1000 employees (n=26)
Remedies to Instability Have to Be Sensitive to Facility Size
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
16 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Impact of Instability onImpact of Instability on
Retention of Critical SkillsRetention of Critical Skills
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% Reporting increased loss of people with critical skills
Funding & Market InstabilityFunding & Market Instability
Less Technology Instability More Technology Instability
Less Organizational InstabilityMore Organizational Instability
Less Supply Chain InstabilityMore Supply Chain Instability
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
17 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Facility Survey: Reported Use of MitigationFacility Survey: Reported Use of Mitigation
Practices Practices –– Five Most Extensively Used Practices Five Most Extensively Used Practices
(past 3 yrs)(past 3 yrs)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Cross-training Employeetraining/skills devt.
Long-term supplieragreements
Computer-aidedmanufacturing
Increasedemployee control
Never
Limited
Extensive
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
18 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Facility Survey: Reported Use of MitigationFacility Survey: Reported Use of Mitigation
Practices Practices –– Five Least Extensively Used Practices Five Least Extensively Used Practices
(past 3 yrs)(past 3 yrs)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Formalemployment
security
Early retirement Work in from otherfacilities
Sending people toother facilities
Work sharing
NeverLimitedExtensive
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
19 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Facility Survey: Selected InnovationsFacility Survey: Selected Innovations
and Employment Changeand Employment Change
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
With LeanProduction
(n=78)
Without LeanProduction
With HPWO(n=25)
WithoutHPWO
With KaizenProcess(n=58)
WithoutKaizen
Process
Employment Decrease
No Change in Employment
Employment Increase
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
20 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Future Prospects for the U.S.Future Prospects for the U.S.
Aerospace EnterpriseAerospace Enterprise
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Engineers Production Workers Managers/Supervisors
Technicians/Specialists
“I would highly recommend that my children work in this industry”(Agree or Strongly Agree, n=482)
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
21 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
““Enhancing the Effectiveness ofEnhancing the Effectiveness of
our National Workforceour National Workforce””
Ø Workshop held January 2000Ø Approximately 65 participants – industry, labor, government, university
Ø Featured presentations on instability, HPWO and other innovations, policy dialogue
Ø Workshop Recommendations covering:Ø Fostering partnership with the workforce
Ø Identifying/addressing sources of instability that impact the workforce &innovation
Ø Supporting a broad definition of “lean” aimed at industry revitalization
Ø Briefing for LAI executives
Ø Briefing for DoD, Congressional officials and others
Ø Exploring industry-level and other initiatives
”One key principle and message I’m taking away from this session is that we can’timplement lean principles without partnership with the workforce. We should have beenhighlighting this 4 years ago so there is a sense of urgency here about this.”
Ø Sheila Widnall, MIT, at “Enhancing the Effectiveness of Our National Workforce” (January 2000)
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
22 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
A Call to Action:A Call to Action:
LAI Executive BoardLAI Executive BoardØ Dimensions of an employment crisis in Aerospace:Ø Increasing skill shortagesØ Changing skill mix in a post-cold war era
Ø Reduced investment in training and development
Ø Divisive and immobilizing concerns over job securityØ Industry has lost over 500,000 jobs since 1990
Ø Demographic “cliff”Ø Average age of IAM members is 44 in the Commercial Sector and 53 in
Defense – with over 20% eligible to retire in next 3 years
Ø Global competitive dynamicsØ Projected loss of jobs and revenue due to increased global
competition
Ø Projected increase in foreign content – with complex implications
Ø Projected job growth in European Aerospace Industry
Ø Inability to attract and retain a 21st Century workforce
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
23 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Sample Human Capital Issues inSample Human Capital Issues inLean Enterprise ValueLean Enterprise Value
XP5Y XFYXP5Y XFYA2D F8UA2D F8UXC120 F6M1XC120 F6M1F4D U2F4D U2F3H SY3F3H SY3B52 F105B52 F105A3D X13A3D X13X3 C133X3 C133S2F F107S2F F107X2 B58X2 B58F10F F106F10F F106F2Y F5DF2Y F5DF100 X14F100 X14B57 C140B57 C140F102 T2F102 T2R3Y1 F4R3Y1 F4F104 A5F104 A5A4D T39A4D T39B66 T38B66 T38F11F AQ1F11F AQ1C130 X15C130 X15F101 F5AF101 F5AT37 X1BT37 X1B
A6A6B52B52
SR71SR71SC4ASC4AX21X21X19X19C141C141B70B70
XC142XC142F111F111A7A7
OV10OV10X22X22
X26BX26BX5AX5AX24X24
F14F14S8S8
YA9YA9A10A10F15F15F18F18
YF-17YF-17B1B1
YC15YC15YC14YC14AV8bAV8bF/A18F/A18
F117F117F20F20X29X29T46T46T45T45B2B2
V22V22
F22 EMDF22 EMDYF22YF22YF23YF23
JSF X36JSF X36JSF X37JSF X37
C17C17JSF EMDJSF EMD
UCAVUCAV BXBX
Retired Retired
Retired Retired
Experience: 1-2 ProgramsExperience: 1-2 Programs
1950s1950s 1960s1960s 1970s1970s 1980s1980s 1990s1990s 2000s2000s 2010s2010s 2020s2020s 2030s2030s
Mid Career Mid Career
Very Very Few Few
Experience: 1 ProgramExperience: 1 Program
“We believe that a declining experience level has been a contributing factor to the
problems we observe in many recent aircraftprograms.”
RAND
Experience: 6+ ProgramsExperience: 6+ Programs Retiring Retiring
40 Year Career Span40 Year Career Span
Source: RAND Study (chart by Northrop Grumman) -- Vertical Bars: Military Aircraft Program StartsVertical Bars: Military Aircraft Program Starts
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
24 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Draft Overview of theDraft Overview of the
White PaperWhite Paper
Executive Summary
Forward by Sheila Widnall
Preface on LARA and LAI
1.0 Statement of the Problem
Ø 1.1 Challenges in Attractingand Retaining a 21st CenturyWorkforce
Ø 1.2 Inadequate Infrastructurefor Enabling Wise Investmentin Human Capital
Ø 1.3 Limited Mechanisms forDiffusing Best PracticesAcross the AerospaceEnterprise
Ø 2.0 Root causes and Research Findings
Ø 2.1 The end of the Cold War and the rise ofglobal competition
Ø 2.2 Industry “maturity” with reducedopportunities for innovation
Ø 2.3 Instability in funding, technology, andorganizations
Ø 2.4 Disincentives to train and invest inhuman capital – market failure
Ø 2.5 Slow rate of diffusion of workplaceinnovation (linking social and technicaldimensions)
Ø 2.6 Gaps in training and developmentinfrastructure
Ø 2.7 Gaps in workforce skill mix, curricularequirements, and educational completion
Ø 2.8 Imports, offsets and other globaldynamics
Ø 2.9 Underlying assumption thatresponsibility lies at the level of theindividual firm/facility
DevelopingDevelopingThe 21The 21stst Century Century
Aerospace WorkforceAerospace Workforce
25 -- Labor Aerospace Research Agenda © 2001 Massachusetts Institute of Technology
Draft Overview of theDraft Overview of the
White Paper (cont.)White Paper (cont.)
Ø 3.0 Selected Innovative Models andLinkagesØ 3.1 School-to-work transition
programs in selected communities
Ø 3.2 Lean/high performanceworkplace transformation initiativesin selected locations
Ø 3.3 Joint training partnershipsamong major employers andunions
Ø 3.4 Industry-level forecasting andtraining in Canada
Ø 3.5 Linking R&D funding toworkforce attraction andintellectual capital development
Ø 3.6 Core challenge: Moving beyond“islands of success”Ø Note: There are additional topics
and examples that will be added tothis section
Ø 4.0 Conclusions andRecommendations
Ø 4.1 Public Policy Priority ProtectingInvestment in Intellectual Capital
Ø 4.2 Aerospace Capability Network
Ø 4.3 National Training andDevelopment Partnership
Ø 4.4 Regional and Local WorkforceInitiatives
Ø 4.5 Innovation by Government asan Employer
Ø 4.6 R&D Investment DrivingDemand for the 21st CenturyWorkforce