1. 1 Building the 21st Century National Aerospace Workforce Aerospace Industries Association Special Session on “Revitalization of the Workforce” March 27, 2003 Presentation by: Steve Sleigh, IAM Joel Cutcher-Gershenfeld, MIT “Right Skills, Right Place, Right Time”

2. 2 Mission and Vision Overall Mission for the Aerospace Industry: –Enabling the global movement of people and goods; –Enabling the global acquisition and dissemination of information and data; –Advancing national security interests; and –Providing a source of inspiration by pushing the boundaries of exploration and innovation Source: Lean Enterprise Value: Insights from MIT’s Lean Aerospace Initiative (Palgrave/MacMillan, 2002) 21 st Century Workforce Vision: –Attract and retain a 21 st Century aerospace workforce with the skills, capabilities and commitment to enable transformation and success in the aerospace industry

3. 3 Strategic Challenges Knowledge and Capability –Demographic “cliff” –Gaps in “pipelines” – skilled apprenticeships and aerospace engineering programs –Changing skill mix requirements and new technologies –Fundamental changes in the nature of work and operations Competitive Challenges –Global competition and organizational instability –Institutional barriers, monuments and gaps in the “social infrastructure” –Divisive dynamics around job security, benefits and flexibility –Reduced attractiveness of careers in aerospace

4. 4 Institutional Opportunities Aerospace Inter-Agency Task Force –Spanning the Department of Defense, NASA, FAA, Departments of Labor, Education, Commerce and Homeland Security – to coordinate government aerospace workforce initiatives Aerospace Capability Network –Public/private partnerships spanning all key stakeholders—business, labor, government, universities and community groups –Development of aerospace skill standards and certification programs –Dissemination of information on occupations, job availability, high performance partnerships, and new work systems –Grants for demonstration projects at local and regional levels Industry Promotion and Development –Best practices in career development, employment relations, and life-long learning across the industry –National campaign on aerospace opportunities – primary schools, secondary schools, community colleges and universities

5. 5 Aerospace Workforce Knowledge, Skills and Abilities (KSAs): A Conceptual Map Overall Stability, Capability, and Growth in the Aerospace Industry Conception... Design/Development... Production... Sales/Sustainment Multiple Product / Service Value Streams Across the Enterprise Industry/Workforce Skills Assessment Industry/Workforce Retention Initiatives Industry/Workforce Knowledge Management School-to-Work Initiatives Skill Standards and Certification Government Policies and Initiatives (within and across agencies) on Aerospace Workforce National, Regional & Local Aerospace Workforce Initiatives (Industry / Labor / Government) Workplace-Specific Initiatives Knowledge-Driven Work Systems (Lean, Six Sigma, etc.) Industry/Workforce Needs Assessment Aerospace Programs in the Schools KSA Maintenance KSA Enhancement KSA Utilization KSA Acquisition Source: MIT’s Labor Aerospace Research Agenda

6. 6 Potential Topics for Dialogue Dialogue on Challenges: –Skills and capability –Competitive challenges Dialogue on Opportunities: –Priorities from industry and labor for proposed Inter-Agency Task Force on the Aerospace Workforce –Elements of success for potential Aerospace Capability Network –Opportunities for Aerospace Industry Promotion and Development For more information on aerospace workforce research at MIT, see the publications presented by MIT’s Labor Aerospace Research Agenda http://mit.edu/ctpid/lara and MIT’s Lean Aerospace Initiative http://web.mit.edu/lean. For more information on the IAM and High Performance Work Organizations, see http://www.goiam.org under “visit IAM Headquarters.”http://mit.edu/ctpid/larahttp://web.mit.edu/leanhttp://www.goiam.org

7. 7 Concluding Comment All of the above options require substantial contributions from public and private sectors – not just contributions of funds, but of leadership time and attention We call for a deep commitment to fundamental cultural change in this industry – valuing human capital as the key to future success.

8. 8 Appendix Apprenticeship data Global footprint data National employment and sales data

9. 9 US DoL and Other Apprenticeship Programs: 2002 Survey The vast majority (85%) of aerospace facilities do not have apprenticeship programs and of those that do, approximately 2/3 have had no graduates over the past three years and have no one in the programs.

10. 10 Percent of US Respondents Reporting Suppliers in Each Location US: 95% Canada, Mexico: 23% Japan, China, Korea: 22% Europe: 35% Russia, CIS: 4% South America: 3% Other: 3% Key: Blue: Under 25%; Red: 25-50%; Green: Over 50%

11. 11 Percent of US Respondents Reporting Customers in Each Location US: 98% Canada, Mexico: 56% Japan, China, Korea: 50% Europe: 75% Russia, CIS: 5% South America: 29% Other: 18% Key: Blue: Under 25%; Red: 25-50%; Green: Over 50%

12. 12 Percent of US Respondents Reporting Joint Ventures in Each Location US: 40% Canada, Mexico: 7% Japan, China, Korea: 11% Europe: 18% Russia, CIS: 1% South America: 1% Other: 3% Key: Blue: Under 25%; Red: 25-50%; Green: Over 50%

13. 13 Percent of US Respondents Reporting Strategic Partners in Each Location US: 50% Canada, Mexico: 10% Japan, China, Korea: 11% Europe: 22% Russia, CIS: 6% South America: 1% Other: 5% Key: Blue: Under 25%; Red: 25-50%; Green: Over 50%

14. 14 Percent of US Respondents Reporting Current Competitors in Each Location US: 92% Canada, Mexico: 25% Japan, China, Korea: 31% Europe: 66% Russia, CIS: 6% South America: 5% Other: 5% Key: Blue: Under 25%; Red: 25-50%; Green: Over 50%

15. 15 Percent of US Respondents Projecting Future Competitors in Each Location US: 73% Canada, Mexico: 33% Japan, China, Korea: 68% Europe: 58% Russia, CIS: 20% South America: 13% Other: 10% Key: Blue: Under 25%; Red: 25-50%; Green: Over 50%

16. 16 Selected Written Comments on Surveys September 11 has had a severe impact on our industry which has influenced this survey. Airlines have received government support, however none of these funds have provided GSE manufacturers stability or longevity. Over the last two years we have been working very hard on upgrading Quality Systems (AS9000), implementing LEAN manufacturing, training, while at the same time diversifying the business and trying to penetrate new markets. Our products (cargo systems) are installed on older aircraft and those were affected heavily by the down turn in the economy as well as the events of sept. 11. Can't get domestic labor - skilled or otherwise. HELP! Since September 11, 2001, there has been a significant downturn in the volume of our business. I know for a fact that our facility and at least three of our most valued suppliers face an almost insurmountable challenge to stay afloat over the next 90 - 120 days if something doesn't change. We withdrew from the aerospace markets in 1997 and moved our manufacturing capabilities to the energy equipment markets. OEM's are using DOD funding to develop new technologies, practices & procedures and then turnaround and subcontract work overseas to the lowest bidder. They also utilize these advances on their commercial products which are primarily subcontracted to Asia & Mexico under the guise of mandatory offsets.

17. 17 Chart 1: US and EU Aerospace Employment since 1980

18. 18 Chart 2: Major Non-U.S. Aerospace Employer Countries since 1980 ( > 30,000 employees with time series data available)

19. 19 Chart 3: Sales and Employment for U.S. Aerospace Industry (SIC 372 and 376) since 1980

20. 20 Chart 4: Sales and Employment SIC 372 - Aircraft and Part since 1980

21. 21 Chart 5: Sales and Employment SIC 376 - Guided Missiles, Space Vehicles, and Parts since 1980

22. 22 Chart 6: Sales and Employment for EU Aerospace Industry since 1980

23. 23 Chart 7: Sales and Employment for Canadian Aerospace Industry since 1984

24. 24 Chart 8: Sales and Employment for Brazilian Aerospace Industry since 1995

25. 25 Chart 9: Sales and Employment for Japanese Aerospace Industry since 1988

26. 26 Chart 10: Sales and Employment SIC 49 - Electric, Gas, and Sanitary Services

27. 27 Chart 11: Sales and Employment SIC 80 - Health Services

28. 28 Chart 12: Sales and Employment SIC 371 - Motor Vehicles and Equipment

29. 29 Chart 13: Sales and Employment SIC 373 - Ship and Boat Building and Repair

30. 30 Chart 14: Sales and Employment SIC 374 - Rail Equipment