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Intermodal Transportation Institute University of Denver The Role of Human Capital Investment in Sustainable Economic Development Patrick Sherry, Ph.D.

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Presentation on theme: "Intermodal Transportation Institute University of Denver The Role of Human Capital Investment in Sustainable Economic Development Patrick Sherry, Ph.D."— Presentation transcript:

1 Intermodal Transportation Institute University of Denver The Role of Human Capital Investment in Sustainable Economic Development Patrick Sherry, Ph.D. Director, National Center for Intermodal Transportation University of Denver

2 Intermodal Transportation Institute University of Denver Overview Effects of Human Capital Investment Anticipated Economic Activity Identification of Needed Areas for Human Capital Development Leadership Workforce Practical Considerations for Implementation

3 Intermodal Transportation Institute University of Denver I & ITS Experts Group Four Pillars of Activities Technology (Including ITS and Global Navigation Satellite Systems) The development and implementation of selected integrated technologies is important to the successful management and operation of intermodal transportation. Supply Chain Management (Focused on Transportation) Seamless interconnectivity of different modes of transportation. Efficient management of the supply chain involved in regional freight and shipping movement is critical to seamless interconnectivity. Sustainability (Including Energy and the Environment) The identification of opportunities for the development and promotion of fuel efficient transport policies and practices is particularly important in the APEC region. Human Capacity Development Human capacity skills are important to the effective movement of intermodal transportation. The ability of the work force to develop, manage, and safely implement existing and emerging technologies is essential to the ongoing facilitation of trade in the APEC region. 3

4 Intermodal Transportation Institute University of Denver Asian Economic Downturn 4

5 Intermodal Transportation Institute University of Denver US International Container Traffic 5 Source: RITA

6 Intermodal Transportation Institute University of Denver Circa Developing cooperative alliances Working with customers Investing in Technology Investing in equipment and infrastructure Investing in employees Hiring additional employees What Are US Railroads Doing to Increase Productivity & Profit?

7 Intermodal Transportation Institute University of Denver Railroad Performance Class I Railroads Index 1981 = 100 Source: Railroad Facts, AAR (Based on a design by R. Gallamore) Productivity Volume Revenue Price

8 Intermodal Transportation Institute University of Denver Railroad Capital Expenditures Class I Railroads – and so far 2008 looks to be a paradigm shift! Billions Source: Railroad Facts, AAR

9 Intermodal Transportation Institute University of Denver U.S. Railroad Intermodal Traffic (millions) Source: Association of American Railroads Weekly Railroad Traffic

10 Intermodal Transportation Institute University of Denver U.S. Railroad Intermodal Traffic Trailers vs. Containers (millions) Source: Association of American Railroads Railroad Facts

11 Intermodal Transportation Institute University of Denver Future Demand for Freight Transportation Will Continue to Grow p – U.S. DOT projection Billions of Tons of Freight Transported in the U.S.

12 Intermodal Transportation Institute University of Denver Projected % Growth in Trains Per Day From 2005 to 2035 by Primary Rail Corridor

13 Intermodal Transportation Institute University of Denver Source: Association of American Railroads Net Income Capital Spending Class I Railroad Capital Spending vs. Net Income (Current Dollars)

14 Intermodal Transportation Institute University of Denver 25% tax credit for projects that expand rail capacity Expense other infrastructure capital expenditures Leverage private investment Need tax CREDITS for HUMAN CAPITAL INVESTMENT Tax Incentives to Leverage Capacity Expansion

15 Intermodal Transportation Institute University of Denver Total Class I Employment: Jan Nov US Rail Employment is Up for the First Time in Decades Source: Surface Transportation Board

16 Intermodal Transportation Institute University of Denver Railroad Employee Productivity Class I Railroads, Ton-Miles Per Freight Service Employee Source: Railroad Facts, AAR Millions

17 Intermodal Transportation Institute University of Denver 17

18 Intermodal Transportation Institute University of Denver The Role of Training

19 Intermodal Transportation Institute University of Denver Investment in Human Capital Related to Increased Productivity Increased Percent Time in Training

20 Intermodal Transportation Institute University of Denver Source: Kim & Bloom (2003)

21 Intermodal Transportation Institute University of Denver The mean proportion of workers being trained in an industry is about 10%. If industry managed to increase the proportion of workers from the mean to 15% this would be associated with a 4% increase in productivity and a 1.5% increase in wages. Note that it took the UK economy 13 years to generate an increase in the proportion workers trained on this scale (from 9% in 1984 to 14% in 1996).

22 Intermodal Transportation Institute University of Denver Effects of Education on Productivity Becker 1964, Mincer 1974 looked at the impact of education on earnings or estimated private rate of returns (). A survey of growth accounting studies covering 29 developing countries found estimates of educations contribution to economic growth ranging from less than 1 percent in Mexico to as high as 23 percent in Ghana (Psacharopoulos, 1984).

23 Intermodal Transportation Institute University of Denver Education is also an important contributor to technological capability and technical change in industry. Statistical analysis of the clothing and engineering industries showed that the skill and education levels of workers and entrepreneurs were positively related to the rate of technical change of the firm (Deraniyagala, 1995).

24 Intermodal Transportation Institute University of Denver Lucas (1998), found that the higher the level of education of the work force the higher the overall productivity of capital because the more educated are more likely to innovate, and thus affect everyones productivity. Increased education of individuals raises not only their own productivity but also that of others with whom they interact, so that total productivity increases as the average level of education rises (Perotti, 1993). The impact of education on the nature and growth of exports, which, in turn, affect the aggregate growth rate, is another way in which human development influences macro performance.

25 Intermodal Transportation Institute University of Denver One of the emerging requirements for a successful economic development program is a workforce delivery system that works for local, emerging, and new businesses in the community. Survey after survey notes businesses need a skilled workforce to be competitive. Traditionally economic developers have not had to deal with the workforce delivery system and that system tends to be complicated by regulations, vendor influence, and perceptions that it only deals with those least capable of holding a job. International Economic Development Council

26 Intermodal Transportation Institute University of Denver World Bank: Knowledge Economy Index

27 Intermodal Transportation Institute University of Denver Bloom et al 2006

28 Intermodal Transportation Institute University of Denver In a study of more than 3,100 U.S. workplaces, the National Center on the Educational Quality of the Workforce (EQW) found that on average, a 10 percent increase in workforce education level led to an 8.6 percent gain in total productivity. But a 10 percent increase in the value of equipment increased productivity just 3.4 percent. Another study by ASTD showed that leading-edge companies trained 86 percent of employees while average companies trained only 74 percent. Leading edge companies also spent twice as much per employee. Companies that invest the most in workplace learning, the study showed, yielded higher net sales per employee, higher gross profits per employee, and a higher ratio in market-to-book values.

29 Intermodal Transportation Institute University of Denver 29 Difficulty in finding workers with key skills

30 Intermodal Transportation Institute University of Denver An Expanded Role for APEC To increase and sustain economic development there needs to be continued investment in education and training of workforce APEC can take the lead by providing training and development actiiities for key leaders throughout the region In addition to providing skills training APEC should seek to enhance the leadership and developmental sklls of key industry represntaitinves Focus should be aon giding and shaping the values and praoctices fo businesses from the top as well as supporting skills development at all levels 30

31 Intermodal Transportation Institute University of Denver Business Weeks 50 Most Innovative Companies 1 1 APPLE 2 2 GOOGLE 3 3 TOYOTA MOTOR 4 5 MICROSOFT 5 7 NINTENDO 6 12 IBM 7 15 HEWLETT- PACKARD 8 13 RESEARCH IN MOTION 9 10 NOKIA WAL-MART STORES AMAZON.COM 12 8 PROCTER & GAMBLE 13 6 TATA GROUP 14 9 SONY RELIANCE INDUSTRIES SAMSUNG ELECTRONICS 17 4 GENERAL ELECTRIC 18 NR VOLKSWAGEN MCDONALDS BMW WALT DISNEY HONDA MOTOR AT&T 24 NR COCA-COLA VODAFONE 26 NR INFOSYS 27 NR LG ELECTRONICS 28 NR TELEFÓNICA DAIMLER VERIZON COMMUNICATIONS 31 NR FORD MOTOR CISCO SYSTEMS INTEL VIRGIN GROUP 35 NR ARCELORMITTAL HSBC HOLDINGS EXXONMOBIL 38 NR NESTLÉ 39 NR IBERDROLA FACEBOOK M 42 NR BANCO SANTANDER NIKE 44 NR JOHNSON & JOHNSON SOUTHWEST AIRLINES 46 NR LENOVO 47 NR JPMORGAN CHASE 48 NR FIAT TARGET 50 NR ROYAL DUTCH SHELL APPLE GOOGLE TOYOTA MOTOR MICROSOFT NINTENDO IBM HEWLETT- PACKARD RESEARCH IN MOTION NOKIA WAL-MART STORES AMAZON.COM PROCTER & GAMBLE TATA GROUP SONY RELIANCE INDUSTRIES SAMSUNG ELECTRONICS GENERAL ELECTRIC VOLKSWAGEN MCDONALDS BMW WALT DISNEY HONDA MOTOR AT&T COCA-COLA VODAFONE INFOSYS LG ELECTRONICS TELEFÓNICA DAIMLER VERIZON COMMUNICATIONS FORD MOTOR CISCO SYSTEMS INTEL VIRGIN GROUP ARCELORMITTAL HSBC HOLDINGS EXXONMOBIL NESTLÉ IBERDROLA FACEBOOK 3M BANCO SANTANDER NIKE JOHNSON & JOHNSON SOUTHWEST AIRLINES LENOVO JPMORGAN CHASE FIAT TARGET ROYAL DUTCH SHELL

32 Intermodal Transportation Institute University of Denver Innovative Transportation Companies APPLE 22 GOOGLE 33 TOYOTA MOTOR 45 MICROSOFT 57 NINTENDO 612 IBM 715 HEWLETT-PACKARD 813 RESEARCH IN MOTION 910 NOKIA 1023 WAL-MART STORES 18NR VOLKSWAGEN 2014 BMW 2216 HONDA MOTOR 2931 DAIMLER 31NR FORD MOTOR 3428 VIRGIN GROUP 4549 SOUTHWEST AIRLINES 48NR FIAT

33 Intermodal Transportation Institute University of Denver Procter & Gamble Gets 400,000 applications for entry-level management positions each year. It will hire less than one half of 1% of them, "We actually recruit for values," says Chief Operating Officer Robert McDonald. "If you are not inspired to improve lives, this isn't the company you want to work for." The careful vetting, training, and career development pay off. P&G boasts 23 brands with at least $1 billion in annual sales and is the market leader in everything from detergent to diapers to razors. bringing in and promoting creative thinkers. Interviewers look for what they call a candidate's "power," including leadership ability and empathy. Innovation skills and values are measured in an online assessment. "Our managers are skilled at probing for the right fit," says William Reina, director for global talent. "The people they identify score well on the assessment." every department has its own "university." The general manager's college, holds a week-long school term once a year when there are a handful of newly promoted managers There are nearly 50 courseshelps managers with technical writing or financial analysis.

34 Intermodal Transportation Institute University of Denver Development of Human Capital Begins with the leadership Having a vision Recognizing that technology levels the playing fields Recognize that new technology will take time to develop Recognize that we need to improve our ability to identify new techs Recognize that we need to implement new techology

35 Intermodal Transportation Institute University of Denver Leadership Competencies Vision Communication Skills Execution Values Problem Solving

36 Intermodal Transportation Institute University of Denver How do you develop Innovative and Productive Leadership? Our Team at the National Center for Intermodal Transportation has Twenty Five years of experience developing leaders University of Denver Pioneer Leadership Program Center for Creative Leadership Consultants Academics – USC, Harvard, Georgia Tech Businesses - Trainers

37 Intermodal Transportation Institute University of Denver 37 1-E-4 Intermodal Training Model

38 Intermodal Transportation Institute University of Denver 38 Technical Assistance Provided by our extensive industry contacts and ITI board members Lindsay E. Fox Fox Group Australia Peter Keller Exec Vice President NYK Lines North America Clifford J. Hardt Fmr. VP Strategic Planning FEDEX Tom Hardin President, Hub Group

39 Intermodal Transportation Institute University of Denver 39 Construct a Competency Model

40 Intermodal Transportation Institute University of Denver The Key Competencies for Success

41 Intermodal Transportation Institute University of Denver Identify Gaps in Skill, Knowledge & Capacity Evaluate BENCH STRENGTH

42 Intermodal Transportation Institute University of Denver SUMMARY OF RESULTS Using Competency Model Competency LimitedSolidStrong World Class Courage / Initiative X Drive for Results X Partnering (One company focus) X Building Organizational Capability X Strategic Leadership X Thinking Skills X

43 Intermodal Transportation Institute University of Denver THINKING SKILLS Critical Thinking Skills

44 Intermodal Transportation Institute University of Denver 44 BOGOR

45 Intermodal Transportation Institute University of Denver Working With TOP Leadership Teams APEC Leadership SHOULD take the LEAD with Both PUBLIC and PRIVATE SECTOR Identify key COMPETENCIES needed Identify key areas for development Create opportunities to discuss and promote INNOVATIVE thinking and development Ensure that EXECUTIVES are thinking about how to develop their workforce Encourage incentives to promote HUMAN CAPTIAL INVESTMENT FACILITATE evaluation and growth of executive Capability & Bench Strength Examine key areas for growth Promote the thinking and investment needed to advance and develop the workforce Work with Teams to create Strategic Vision

46 Intermodal Transportation Institute University of Denver 46 Workforce Development Activities Identification of Skills Needed Identification of Available Training Programs Identification of Gaps Development of Skills Courses Intermodal Skills Insufficient Training Available Needed Intermodal Skills Intermodal Managers Refrigeration Handlers Provide COACHING and MENTORING

47 Intermodal Transportation Institute University of Denver 47 Priority Skill Areas FOUNDATIONAL KNOWLEDGE: Government Regulations & Policies Available Transport Technology Global Business Environment General Business Environment Labor Relations Various Transportation Modes How Modes Interface Understanding of Legal Issues INTERPERSONAL SKILLS: General Managerial Skills Customer Service Skills Communications Skills Listening Skills Sales Skills Coalition Building Skills Teambuilding Skills Conflict Management & Negotiation Leadership Skills ANALYTICAL SKILLS: Environ Impact Analysis Economic & Financial Analysis Policy Analysis Strategic Planning Forecasting Skills Futures Analysis Systems Analysis Ethical Analysis TECHNICAL SKILLS: Computer Applications Technology Management Modeling Skills Logistics & Supply Chain Processes Data Gathering, Analysis & Manipulation Marketing Skills Transportation Experience

48 Intermodal Transportation Institute University of Denver Success Stories Cohort José Antonio Pérez Antón was promoted to Chief Executive Officer of Grupo ADO. Cohort 1 Shannon Brown, Senior VP and Chief Human Resources Officer FedEx. Michael Byrne, CEO, Linfox Australia, Pty Limited. Bruce Denny, Asst VP, Terminal Operations, with Pacer Stacktrain. Barbara Gilliland, Principal at Parametrix Consulting in Denver. Adam Rodery, Director, Operational Process Improvement with Excel. Chris Schuleit,Vice President of the Enterprise Business Development with Hub Group. 48

49 Intermodal Transportation Institute University of Denver Cohort 2 Michael Brothers, Vice President, Intermodal Operations, at JB Hunt Transport Services, Inc., David Leech, Vice President of US Operations, Southern Region of FedEx Express. Adam J. Lemarr, Manager of Intermodal Hub Operations within Norfolk Southern. James Price, Vice President Rail Operations, Hampton Roads Transit, Norfolk, Virginia. Cohort 3 Grantley Martelly, Regional General Manager, Utah Transit Authority. Tim E. Naylor, Manager of Service Delivery, Utah Transit Authority. Than Seeds, Vice President of Operations, Americas with APL. Ben Sullivan, Country Manager of Linfox, India. 49

50 Intermodal Transportation Institute University of Denver 50 Challenges Economic activity increasing Shortage of skills in developing economies Intelligent Transportation Intermodal Transportation Employment outlook good Shortages of key talent identified Opportunity to shape the future Develop self-sustaining training efforts

51 Intermodal Transportation Institute University of Denver 51 Local Case Study Visit to JIT

52 Intermodal Transportation Institute University of Denver 52 Executive Level Management Bob Sleeker Exec Vice President of Intermodal Omnitrax Experience -- CSX Operates Terminals for the Major Class I railroads

53 Intermodal Transportation Institute University of Denver Executive Management of Intermodal Transportation Operations Module Objectives: Common organizational structures Leadership and motivation concepts Best practices in major IM transportation Teamwork and productivity theories Coaching and development strategies Improving collaboration, cooperation, and partnership Developed by: Professor Patrick Sherry University of Denver

54 54 Proposed Workforce Development Activities Strategy Identification of Skills Identification of Available Training Programs Identification of Gaps Between Skills Needed & Training Programs Development of Supplemental Training Programs Development of Train the Trainer Programs Scan of Workforce Skills Shortages External Funding of Training Programs Create a Roadmap for Workforce Development Intelligent Transportation Skills Needed?Transportation Security Skills Needed?


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