Tuesday, June 03, 2008

American Competitiveness


I was privileged to be asked to participate recently in the 2008 National Summit on American Competitiveness in Chicago, put on by the US Department of Commerce. There were a number of “top shelf” presenters including: Secretary of Commerce Carlos Gutierrez; CNBC Anchor Maria Bartiromo (the “money honey”); YouTube Founder Steven Chen; Mayor Richard Daley; RUPRI Director Mark Drabenstott (formerly with KC Fed); Manufacturing Association head John Engler (former Governor of MI); Retired IBM CEO Louis Gerstner; John Deere CEO Bob Lane; Boeing CEO Jim McNerney; Governor Janet Napolitano (AZ); Caterpillar CEO Jim Owens; Secretary of Treasury Hank Paulson; Harvard Competiveness Guru Michael Porter (I was in his first class as a professor 30+ years ago); Governor Mark Sanford (SC); and several others.

I sat at a table with several interesting individuals who added insight to what they are seeing around the Midwest. Richard Wilkey, founder (1973) and CEO of Fisher Barton Inc from Watertown, WI, runs a number of businesses, one of which is exporting lawn mower blades to China. His company makes a lawn mower blade every 3 seconds. Adam Robinson is the founder and CEO of Illuma, a four year old business that helps high tech companies source workers. He told me, “We are not seeing any drop in the demand for skilled workers. There aren’t enough around to satisfy the demand that we are seeing.”

Secretary of Commerce Gutierrez had some interesting observations to start the conference, “The big advantage that we have in this country is our freedoms. It allows us the freedom to innovate, start new businesses and even gives us the freedom to fail. This innovation has to take place in the private sector and not be led by DC. Businesses that are less than five years of age create ½ of all of the new jobs in this country.”

He talked about the need for free trade, “Our exports last year were $1.6 trillion, up 12.5% from 2006 and we are estimating that they will be up another 18% in 2008. This is four years in a row that we’ve had double digit growth in exports. It is very unfortunate that there are those that want to try to tear down our free markets around the world and that we are today standing still on implementing new free trade agreements around the world.”

In a session entitled Roadmap to the Future, the heads of Boeing, IBM and Intel teamed up for a discussion with Michael Porter. The consensus of this group was that the USA needed to change their investments in order to make ourselves more competitive in the areas of education (falling behind the world in K-12 while universities are still world class); infrastructure investment (also falling WAY behind rest of world); Innovation (R & D) and the environment. Porter pointed out that last year Americans were granted 80,000 patents compared to 700 in China, 500 in India and only 200 in Russia.

All of the presenters decried our current immigration policies for high skilled workers, especially when you realize that by 2020, 80% of the worldwide consumers will reside outside of the USA and we must develop products and services for them.

The head of Intel drew the biggest laugh of the conference when he asked “how many of you think that doing away with the gas tax this summer will help us?” It is a short term fix, which Congress seems much too interested in rather than finding long term solutions.

The head of IBM cited a “1983 study that said if a foreign country had fostered our educational system upon us, we would have considered it an act of war and we haven’t done anything about it since then!” He drew loud applause when he added, “A great teacher makes as much as the worst teacher. We need a national will to fix these problems. It is not a money issue…we’re throwing lots of money at it. It’s not molecular biology, but we don’t have the political will in this country to fix it the way that it needs to be fixed.”

The head of Intel commented on the immigration issue, “You can see the consequences of the Law of Unintended Consequences. We can’t control the 13 million illegal immigrants in this country but we can control the 100,000 who want to come here legally. It is an inane policy! We bring in the best from around the world to the best universities here but then we tell them that they go home where they will compete with us, rather than encouraging them to stay here.”

In the area of innovation, Porter pointed out that we have a “mystical brew” that other countries haven’t figured out how to compete with, “Right now we are investing billions into energy research from hundreds of companies. Other countries can’t duplicate that environment. The old Soviet Union had the most scientists in the entire world but couldn’t innovate except on military products. We are being drug down by our high costs like medical insurance, our tax system and litigation.”

Tomorrow: Entrepreneurism in the USA as a Competitive Force

1 comment:

Steve said...

I find the information fascinating and frustrating at the same time. The challenges you put forth are strikingly similar to what we encounter....and it doesn't seem to matter whether we're meeting with a local community, a state organization, or attending a conference of national economic development leaders. It will take the collaboration of all who can influence to make significant changes in the systems you mention..but I'm hopeful.