Excerpt
Illinois Manufacturers' Association
Annual Luncheon Keynote Speech
President B. Joseph White delivered the keynote speech to the members of the
Illinois Manufacturers' Association on December 5, 2008. Below is excerpted portions of
the speech that related to the economy.
...
We are meeting at time of real crisis in the U.S. and Illinois economies. I am well
aware that most of your companies, having successfully weathered many challenges in
the last quarter century, are once again going through a profoundly difficult period.
Twenty-eight years ago I left the security of a tenured faculty job at the
University of Michigan and joined Cummins Engine Company in Columbus, Indiana.
As such things go, business literally peaked the day I arrived in mid-1981 and
then began a 30-month slide into the deepest recession since the Great Depression.
I grew up fast.
In those months, I had the terribly difficult experiences many of you have had
and are going through now.
I headed human resources and was responsible for laying off about 5,000 people
out of a work force of 12,000 in a town of 45,000.
I learned a lot — like doing what you have to do but doing it well and with compassion.
I also learned what a horrible disservice it is to let people's pay outgrow their skills,
so when they lose their jobs they also lose their middle-class standard of living,
many permanently.
...
I was walking through our Cummins headquarters building one day. Business
was in free fall.
As I recall, we went from building 500 big engines a day in Columbus
to fewer than 150 over just a few months.
I was, frankly, feeling a little sorry for myself — overseeing big layoffs, implementing
a pay reduction plan, immersed in misery.
I felt a firm hand on my shoulder and I was steered directly by and into the office
of Henry Schacht, Cummins chairman and a great man.
"Joe," he said, "You look like you have the weight of the world on your shoulders.
That's a problem. Because you're an officer of this company. We've made a big bet on you,
and people are watching. So here are two things I want you to remember. First, business
will get better. And second, worry on your own time. One of your responsibilities is to
inspire confidence in others. So put your shoulders back and be a leader."
It was good advice. And, of course, it's what we all need to do in these hard times.
By the way, Henry was right. Just two years later, in 1984, we were going nuts at
Cummins as business soared. We were chasing demand, reopening closed operations,
trying to keep up in a boomer year. That's manufacturing, at least capital goods manufacturing.
...
Manufacturing's Future in Illinois
...
These days, it's fashionable — but superficial and, frankly, stupid — to
regard manufacturing as somehow yesterday, unimportant, largely gone
from the American economic scene.
It's all about the service economy, and finance (at least it used to
be finance), or maybe health care.
This view is dead wrong.
Contrary to popular opinion, the U.S. today remains the world's most prolific
manufacturer — accounting for a fifth of world manufacturing value-added and
producing two and a half times more output than those much celebrated Chinese factories.
In Illinois, despite the loss of a quarter-million manufacturing jobs since 1998,
manufacturing remains the single largest contributing sector in Illinois's economy
at 13% of GDP.
....
Manufacturing jobs are good jobs, paying on average $55,000 per year
plus health-care and retirement benefits. And each manufacturing job in
Illinois creates more than 3.5 additional jobs.
Why is there so much confusion about the continued importance of manufacturing in
America and Illinois? I can think of at least two reasons.
First, people equate manufacturing with job loss.
But they don't distinguish between jobs lost for a good reason — specifically,
productivity improvement — with jobs lost for regrettable reasons, like
loss of market share and international outsourcing.
American manufacturing, like American agriculture, is fundamentally a
long-arc story of astounding improvements in productivity and quality, something
to be celebrated.
I spent years consulting on quality with the senior management of Whirlpool Corporation,
most of whose products are still produced here in America. We Americans take for granted
that fewer than 30 hours of work are required to purchase a new refrigerator, a product
that provides at least 20 years of usually flawless service at rock bottom operating costs.
The home appliance industry is emblematic of the miracles of modern American manufacturing.
There is a second reason for the confusion about manufacturing role in America.
It is that troubled companies — like GM, Ford and Chrysler these days — grab the
headlines while thousands of truly great manufacturing companies — including household
names like Cat, Deere, Boeing, and Kraft, and successfully reborn companies, like those
in the steel industry — just quietly go about their business.
...
My point is that in general, American manufacturing is an incredible success
story —
for consumers, employees and shareholders. More Americans need to understand
this. And take pride in it.
...
As both Forbes magazine and Rahm Emanuel have said recently, "Never waste a crisis."
That certainly applies to the situation in the domestic auto industry.
We also shouldn't waste this crisis when it comes to the work we face in Illinois
to make it attractive for you and your companies to remain and expand here in our state.
I did site location work for Cummins. I know what you look for: hospitable communities,
reasonable taxes with competitive incentives, an educated and motivated work force,
a sensible litigation environment and supportive public leaders and legislators.
There is an awful lot to do on this checklist in Illinois. Whether we can get it done,
and done soon, is my biggest concern about manufacturing's future in our state.
Properly Educating our People
I want to turn now to one of the things you look for — an educated work
force —
for which I have a special passion.
A well educated work force is vital for manufacturers.
You need employees with reading, math and problem-solving skills as well as
integrity and good judgment.
We know that the returns on education for the individual and society
are enormous. There is a high positive correlation between education level
and lifetime earnings and a strong negative correlation between education
level and lifetime unemployment.
The process of creative destruction in capitalism is brutal — you know, you've
experienced it. It's hard on companies and it's hard on individuals. But it's
produced the highest standards of living the world has ever known. So, it's worth it.
...
For every 100 kids who start school, only about 70 graduate from high
school the conventional way and another 15 eventually earn a GED. Fifteen
percent, millions of young people, don't even finish high school.
Then, among high school graduates, two-thirds continue on in school,
but only half end up earning a college degree.
It dismays me — and I expect you — that America, which was forever #1 globally
in the college graduation rate of our citizens, has fallen to #8 in the world
in the last ten years and we're sinking fast.
This is disastrous for America's future, including the manufacturing sector.
And I haven't even talked about how much worse these numbers are for
African-American and Latino kids or uneven educational quality or the inadequate
interest of young Americans in engineering, math and science. In other words,
the hard stuff on which a developed economy depends for global competitiveness.
Properly educating our children and young adults is a big subject. I think
America's future depends on it.
I know many of you share this passion. I'm grateful to you and your companies for
urging and supporting more and better education at all levels.
The University of Illinois plays a big role in properly educating talented
people, primarily from and for Illinois.
We have 70,000 students on three campuses and more than half a million
alumni, half of them within 50 miles of where we are sitting — and
hopefully a few seated in this room.
All this is good — but the Board of Trustees and I have decided it isn't good enough.
We are deeply concerned that a college education on our residential campuses —
and all of the state's public university campuses — costs at least $75,000, often much more.
With median annual family income less than $50,000 — and in a city like Rockford
just $35,000 — a college education, even with financial aid, costs too much for many people.
So it's not in their game plan. And that's why most college graduates come from families in
America's top two income quintiles.
So we have launched an online University of Illinois Global Campus that will partner
with community colleges to enable well-qualified people across Illinois and beyond to
earn a quality college education for less than $30,000 while staying in their communities,
holding down jobs and meeting family and other responsibilities. We intend to launch three
such baccalaureate completion programs in September 2009.
...
Let me end now with a question.
How deep is our commitment to manufacturing at the University of Illinois?
Well, it's fair to say that it's in our DNA. When Lincoln signed the Morrill Act in 1862,
he gave rise to America's land-grant universities, including the University of Illinois in 1867.
Our purpose from the beginning was to educate, conduct research and do outreach for the
benefit of two key industries in our state: manufacturing and agriculture.
One hundred forty years later, we do much more. But, as you've seen, our core mission continues.
Thank you again for the opportunity to speak with you today. Thank you for the tremendous
value you bring to the state of Illinois.
And let's all hang in there — better days lie ahead.
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