MFG Women

Q&A: Siemens' CEO Barbara Humptom sees a skills gap in the U.S. -- Politico

  • 1.  Q&A: Siemens' CEO Barbara Humptom sees a skills gap in the U.S. -- Politico

    Posted 01-18-2019 10:05
    Q&A: Siemens' CEO sees a skills gap in the U.S.
    The Agenda remove preview
    Q&A: Siemens' CEO sees a skills gap in the U.S.
    When the German industrial conglomerate Siemens wanted to open a gas turbine plant in Charlotte, N.C., in 2011 the company needed to fill 1,500 new jobs-but quickly realized that despite more than 10,000 applicants, it wasn't finding enough people with the right skills. So Barbara Humpton, chief of the company's U.S.
    View this on The Agenda >


    Barbara Humpton, CEO of Siemens USA, says it's time for American companies to invest in worker training.

     

    When the German industrial conglomerate Siemens wanted to open a gas turbine plant in Charlotte, N.C., in 2011 the company needed to fill 1,500 new jobs-but quickly realized that despite more than 10,000 applicants, it wasn't finding enough people with the right skills. So Barbara Humpton, chief of the company's U.S. operations, launched a program more familiar in Germany than America: a highly structured apprenticeship. To build the workforce it wanted to hire, Siemens would pay people to learn new skills at a local college, and eventually move them into full-time jobs at the factory.

    It worked. And today, with American companies complaining about a "skills gap" between their job openings and the applicants they're seeing, Humpton said she believes Siemens' approach could serve as a model. "I think it's where we need to focus as the economy shifts into this new digital era," she said in an interview.

    There's a lively debate among economists over how big the American skills gap really is, or whether it exists at all. A recent paper presented at the American Economics Association's annual conference argues that companies simply demand higher qualifications during periods of high unemployment, then become less picky when joblessness declines. Other critics of the skills-gap rhetoric argue that big companies simply use it as leverage to get the government to cover the costs of worker training.

    Humpton, 58, was previously an executive at consulting firm Booz Allen Hamilton and defense contractor Lockheed Martin, and she says the gap is real: "We see it. We're feeling it ourselves." But instead of waiting for government to act, she believes, companies need to be willing to invest their own money to solve the problem, especially given the large cut to corporate taxes enacted by the Trump administration and Republicans in Congress in 2017. Will it happen? She's hopeful. And despite all the talk of workers being left behind, she thinks a new philosophy of training could open doors for anyone who wants to commit to a change. "If they'll look into the digital future that's coming, they're going to find a boatload of new opportunities."

    This interview has been edited for length and clarity.

    Ben White: Germany has a long tradition of apprenticeships to train workers, but tell me how that works in the U.S.

    Barbara Humpton: We got into this out of necessity. We needed to hire 1,500 people pretty quickly … They needed to have hands-on capabilities, whether it was machinists, welders, the folks who would actually run the equipment on the manufacturing floor, or whether it was folks who were going to take supervisory roles, et cetera.

    What we really need for today's manufacturing environment is what we're calling middle skills, a combination of those hands-on traditional trades along with some higher-level school learning. And so what we did in Charlotte was team up with the community college and they created a course called "Mechatronics," and it gave people who were accepted into this apprenticeship program the opportunity to-unbelievably-be paid while they're going to school, be paid while they're working and then ultimately graduate from an apprenticeship program with full-time jobs that pay well - and no debt.

    So, it was born out of necessity, and I think that necessity is upon us again if you look across the nation. We've got dramatic change going on in manufacturing.

    White: Following the apprenticeship in Charlotte, were you able to fill all of those 1,500 jobs?

    Humpton: Oh yeah, absolutely. The folks there are thriving. We've expanded this now to other states. I was just down in Spartanburg, S.C., a couple weeks ago and had the chance to meet folks who were going to the community college there. Depending on their course schedules, they're either on a day shift or afternoon shift at our factory where we make the equipment that brings power into data centers. Those are some of the busiest factories we have across Siemens right now.

    What we're finding is that these students are really highly engaged and highly motivated to really drive success for themselves and, boy, a byproduct is real high productivity for us.

    White: I wonder why you think this playbook hasn't been more widely adopted. Is it because companies think they don't have the money to do it, or that it would hurt their bottom line?

    Humpton: I think there's a little bit of that. This idea that, hey, we're going to take folks, say, from high school, or find folks who have had a year or two of college, and we're going to put them through a more intensive program-there's that sense of, "Hey, can't we find that kind of talent already?"

    Last year, I was at a [Department of] Commerce-sponsored event-we had a roundtable with the secretary and staff about this concept. The thing I think that surprised me the most was, there are entrepreneurs putting together programs like this but that are not called apprenticeships. They're called alternative learning models.

    The other really fascinating thing was that four-year institutions are very interested in modifying their own offerings. A good example is President [Michael K.] Young from Texas A&M University-he was at the roundtable and talking about a transformation they're driving to have Texas A&M be more or less the hub for lifelong learning. So, I think what's going on is folks not necessarily wanting to label programs as "apprenticeships," but still trying to find ways to provide the same benefits, the combination of hands-on experience with some academic training as part of the program.

    White: I wonder what you think of how the Trump administration has changed the federal approach to this from the Obama administration, which was also very interested in promoting apprenticeships. It's been a little different under the current administration. Is it better? Is it worse?

    Humpton: Well, first of all, on the question of do we need people with the right kind of skills for a stronger manufacturing base-I think that's bipartisan, and from one administration to another, we haven't really seen a shift. Everybody wants to find new ways of educating Americans so they can be an effective workforce for the future, no question.

    We do have a Department of Commerce that has been really busy, obviously, on the trade front. But what a lot of people aren't seeing is ongoing work with respect to workforce development. So, that's where we're staying engaged and keeping our efforts focused.

    White: There's some debate among economists about whether the skills gap is kind of a fiction. It sounds like you see it as real.

    Humpton: We're looking for data scientists, but we're also looking for folks with some computer skills that they can bring into traditional jobs, as I've been describing to you. So, we see it, we're feeling it ourselves. We're also part of some industry associations, and we're seeing across the country, boy, about 500,000 open jobs in the manufacturing sector, the same kind of numbers available in digital jobs, the computer programing jobs that we've been talking about … What we're finding now is that a company like Siemens that has traditionally been in industrials and manufacturing, we're now competing for talent with the high-tech industry, as well.

    White: What do you think of the division of labor between schools, universities, vocational schools and employers in terms of who does job training? How do you decide who does the teaching and the training?

    Humpton: A great, great question. What should a four-year institution provide? I'll just give you my own feedback-I'm not looking to universities to get people ready for a job. I'm looking for universities to get people ready for a career. Because technology's changing so fast, there's no way you could come out of college or university and say, "Oh, I now understand the technology that I'm going to be using right away, and also be prepared to be agile and flex in the way that I'll need to over a whole career."

    I think four-year institutions can very happily focus on the kind of traditional things they've done, giving people a really well-rounded background, teaching the arts, teaching humanities, teaching people for context and appreciation. What we're looking to more is for the career-technical education system to get people ready for the next job.

    If you haven't participated in the labor force for the last 10 years, you might think, "I've missed the technology boat." And no, the fact is, you haven't. Nobody's missed the boat; the boat's being built around us at all times. And all you need to do is get on the boat, start learning, and you can reenter the workforce really at any stage.

    We recognize a huge responsibility to offer people learning opportunities as they go. Think about a $50 million-a-year budget here in the U.S. for our 50,000 employees. What we're finding is not everybody will reach out and take the initiative to take ongoing education, but for those who want it, it's there. And we're doing everything from our own online programs inside our own hands-on training inside, to offering people tuition reimbursement if they want to seek additional education outside. A good example of that is that if someone wants to really study cybersecurity in a deep way, we're happy to do tuition reimbursement programs for those things that are going to be really essential to our success in the future.

    White: Siemens has had three female CEOs in the Americas in the last few years, which is pretty remarkable. What has worked and what needs to be done to bring women into the workforce at a company like yours, and keep them?

    Humpton: If we think about the traditional way women entered the workforce, there was that question, "Did you study the right things in college?" We've had lower enrollment rates in computer science, electrical engineering, mechanical engineering among women. So, you might have thought, "Well, they're not even qualified to enter this world."

    But in order for someone to manage a concern or a company, do they have to have come up through the ranks? Do they have to be able to lift a steel I-beam? I'd argue that there are a lot of jobs you have to be able to do yourself, but in order to become a leader in some of these organizations, maybe you didn't have to be able to execute every physical skill ever required on the job.

    So, what we're seeing now is quite a few women rotating into this business. I came here mid-career from a career in IT serving the federal government, but discovered that my own skills in organization, communication, et cetera, were valued at this stage of the game. We've got a lot of different ways for women to make contributions in the organization, and actually, I think one of the really cool things that is happening right now is more and more people are recognizing different styles of leadership and being effective.

    White: Let's talk a little bit about people who are either midcareer or have gone out of the workforce. If you're looking at midcareer people or people who are out of the workforce who are not necessarily thrilled with the idea of having to do more schooling-how do apprenticeships apply to that segment of the workforce?

    Humpton: I think folks who are out of the workforce right now have a couple of choices. The first question is, what do they really want to do? If they have a role in the workforce that they particularly enjoy, a key question to ask now is, "How does that background knowledge support and enhance work that does need to be done today?"

    I'll give you an example. We know that worldwide the demand for large power plant construction has gone down. So, people who in the past were involved in the power industry, building gas turbines, etcetera, there's just not as much demand there as there used to be. However, there is a base of power plants already in existence. The question is, how can that know-how and skills be put to work in a new workspace, such as providing service for existing power plants? Today's digital tools are making it more possible for people to provide remote diagnostics, to be part of a team that helps service a network of power plants and can do it from literally almost anywhere. Think of it-telemedicine for industry, right?

    Displaced workers really do have to take some initiative, but it would be cool for folks to start to think about, how do their own interests and know-how apply to the new roles that are being created?

    I'm going to call it a myth, that as more automation comes in there will be fewer jobs. What we've found is that instead, what can happen is that more automation increases productivity, for sure, and it changes the roles that people play.

    We're witnessing real shifts. There are communities that have been terribly hurt by this shift in demand for the products they manufacture. I think folks really are having to ask some really hard questions right now. Is my future here? And in what way will I play in the economy that is changing as we speak?

    White: I wonder, as an example, in North Carolina and Charlotte, when you needed to find people for those jobs and set up this apprenticeship program, did you find that you were attracting people from industries that maybe didn't have demands for the skills anymore, like textiles, and who needed to gain some new skills? Or was it mainly young people coming out of high school and maybe in a junior college?

    Humpton: It was a real mix of both, and yes, I think we do appeal to folks early in their careers coming out. But I'm surprised at how many people I meet who are moving into our factories from careers with other manufacturers.

    White: If you were going to draw up a very short wish list of things that you wished that Washington was doing in this regard, in terms of apprenticeships and on-the-job training for workers, what would be helpful, either congressionally or from the administration?

    Humpton: I think that anything that they can do that supports what's going on at the state and local level with the creation of career technical education. I think that would be fantastic.

    I think publicizing the apprenticeship programs and getting behind advancing that in their districts would be a huge help. Reaching out to businesses, creating business roundtables where people have the opportunity to share their best practices and promote the concept.

    I don't know that there's a lot that we need in terms of new law or new regulation; I think we've got the framework that we need from a legal perspective.

    What I'm hoping we'll see-we haven't seen the statistics yet-but I'm hoping to see that the changes in [the corporate income] tax, first of all, stick, and that businesses are able to take some of that and invest tax savings on employee training. I've been looking for articles and opinions about that, but I don't know when we'll begin to see the real, the truth, the facts get represented.

    White: That's the real big hope, isn't it? That a lot of this money from tax reform will go into-not just worker training, but new technology to make existing workers more productive. I haven't seen that yet, either, but you remain hopeful that that's going to happen? I mean, despite the stock buybacks and the dividends that we've already seen?

    Humpton: I think other companies are like us, where we are seeing the opportunity to invest in innovation you're talking about.

    White: And are you more broadly optimistic at this point, given the structural issues we have, the number of job openings we have, versus the people we have to fill those jobs-that we are moving in the right direction on this front? Or, are we facing something of a skills crisis here? Where do you come down in terms of optimism versus trepidation about the future?

    Humpton: I'm a natural optimist, so yeah, I actually am optimistic on this. I mean, well, first of all, here in the U.S. we've got access to all this talent; we have access to educational institutions that are cutting-edge. The world comes here for its education. So, we have all of those ingredients here.

    And what I'm excited about is the amount of progress I'm seeing in this area. We started at the beginning of the discussion on the middle skills. This idea of recognizing that there's been a white collar/blue collar divide-now, we can really focus on the 'new collar,' the middle skills that we need that are going to give people-the middle class-a real leg up.

    Ben White is POLITICO's chief economics correspondent.




    ------------------------------
    Victoria Vaccari
    Director, Women's Engagement
    The Manufacturing Institute
    Washington DC
    202-637-3404
    vvaccari@nam.org
    ------------------------------