The Future of U.S. Manufacturing Is Optimistic: Exclusive Interview with Michelin's Pete Selleck
Q: Today’s U.S. manufacturing industry does not resemble what it was just three decades ago. In your opinion, what are the most significant differences and what economic/political events are most responsible for this evolution?
A: The world has changed dramatically over the last 30 years—China is no longer cut off from the rest of the world, the Soviet Union no longer exists, and the Berlin Wall no longer divides Europe. At the same time, we’ve seen technological advances that were unimaginable decades ago, and they’ve had a tremendous impact on communication and transportation. As a result, the world has become much smaller and the dominant position the United States once enjoyed from a manufacturing standpoint has been reduced as other parts of the world have become more competitive. The end result is that U.S. manufacturing has been, and continues to be, under pressure.
During my 31 years with Michelin, I’ve seen how our company and other U.S. manufacturers have adapted and evolved within this framework by becoming more modern, automated and competitive. New technologies have allowed manufacturers to become more flexible and more productive over the years. In fact, 75 percent of the industries that existed in the U.S. three decades ago still exist today, and they are going strong. However, they are much leaner and the manufacturing output is higher than it was back then because we have learned to operate with fewer people, and all the people who work in manufacturing today are highly skilled.
Q: Advances in manufacturing have drastically changed jobs in manufacturing. What does it take to be successful in today’s manufacturing workforce, and what is Michelin doing to help?
A: As manufacturing has advanced, so has the workforce. Thirty years ago, we would hire a large number of our people and train them for assembly-line-type jobs that were repetitive. Today, most of those jobs are automated, and the production employees that we do hire must possess higher skill levels in mathematics, reading and problem solving, for example. Also, they have to be able to work effectively in a team environment.
Beyond that, the number of people needed to install and maintain our highly automated and sophisticated equipment drives tremendous need for automation and reliability technicians who are primarily coming out of technical schools. Because of the critical importance in these positions and skills, Michelin has several formal partnerships with technical schools to ensure we are maintaining a strong pipeline of talent for our workforce.
Our focus on talent, however, starts well before the technical school level.
One of the greatest challenges we have is that most young people today don’t aspire to work in manufacturing, despite very attractive career opportunities throughout the field. This leads us to place an emphasis on reaching students early so that we can show them what a career in manufacturing looks like today.
Through our Michelin Challenge Education program, we send our employees and retirees into elementary schools to volunteer and tutor students. We also sponsor a program called Dream Connectors, which gives seventh graders the opportunity to go inside manufacturing facilities and experience first-hand the types of job opportunities that exist. At the high school level, we focus on creating student interest in STEM (Science, Technology, Engineering and Mathematics) subjects and demonstrate how an education in those fields can be applied in our industry.
Q: Manufacturing technology is getting more and more sophisticated by the day. Describe the advantages and challenges this phenomenon creates for today’s manufacturers.
A: At Michelin, our ability to innovate and push the boundaries with new tire technologies leads our customers and consumers to constantly have higher expectations for our products. They also expect that we conduct our business in a responsible and sustainable way. The sophisticated technology used in manufacturing today enables us to do both.
We understand that we have the responsibility to efficiently use energy resources and minimize the impact our operations have on the environment. This sustainable mindset, coupled with today’s advanced manufacturing technologies, has led us to improve our manufacturing environmental efficiency by one-third over the past six years. From the choice of materials to tire architecture, and through manufacturing processes and services, all of our solutions are designed with a constant focus on safeguarding the health of our planet.
Advances in manufacturing not only help us to operate in a more sustainable way, they enable us to develop more environmentally conscious products as well.
Tires have a considerable impact on a vehicle’s fuel consumption. In the case of a car, up to 25 percent of fuel consumption is attributed to tires, and up to 30 percent for trucks.
Understanding this, Michelin has been developing low rolling resistance technology—a green tire technology that saves energy—for over 20 years. Our tires have helped to save billions of gallons of fuel and contributed to a tremendous reduction of CO2 emissions. Today’s advancements in manufacturing empower us to drive even greater innovation in this area and meet the expectations that our customers and consumers have for more fuel-efficient tires.
Q: The natural gas industry is booming in the U.S. What impact, if any, is this having on rubber/tire manufacturing in the U.S.?
A: The recent energy resurgence throughout North America has led most major tire manufacturers to establish or increase their manufacturing operations here, especially in the Southeastern U.S. For example, Michelin was the first tire company to plant roots in South Carolina nearly 40 years ago. Today, there are multiple tire producers in the state, which will soon become the No. 1 tire-producing state in the nation. These manufacturers are all focused on producing brand-name, higher-priced products that both consumers and original equipment manufacturers are demanding. So, the ability of companies to increase their manufacturing presence in the U.S.—driven by factors such as lower energy costs, skilled labor and sound transportation infrastructures—only increases the level of competition within the industry.
Q: What are your predictions for the manufacturing industry in 2014? Will the upswing continue? Will continuing gridlock in Washington impact the manufacturing industry in any way?
A: I believe manufacturing will continue its upswing in the coming years. Economic growth in North America in 2014 is predicted to be about one percentage point higher than in 2013; and, economic growth drives production activity. What’s more, manufacturing companies recognize the need to have a strong, competitive industrial base located within the markets where their products are sold. With continued strengthening of the U.S. economy, I predict we will see even more investment announcements and expansions, all of which leads to a further strengthening of the manufacturing based here.
The gridlock in Washington has been frustrating to watch from a job-creation standpoint. But I strongly believe that our political leaders have in front of them a tremendous opportunity to stop their manage-by-crisis approach of late, and put our country on a more responsible path forward. But that means they need to set aside partisan showmanship and put the national interest ahead of special interests.
This will require Congress and the President to display courage and use their political capital to do what is right for the country, long term. If that is done successfully, it will set the U.S. economy on an upward trajectory of growth and job creation for decades to come. The limiting factor is Congress’s ability to organize itself, but I remain optimistic that this can happen.
Q: Describe how you imagine the state of the U.S. manufacturing industry in 50 years. Is it healthy or struggling? Will it ever return to its glory days?
A: I like the phrase from a Carly Simon song: “these are the good old days.” I simply don’t subscribe to the idea that there was a previous time that was better than today. There is much today that is so much better than in the past, and we need not take our standard of living today for granted. In particular, the geopolitical changes we have seen over the past 20 years have lifted hundreds of millions of people out of abject poverty around the world, led in large part by the positive global influence of the United States.
Fifty years from now, our world will likely be even better than it is now. The United States has always demonstrated an incredible ability to adapt—it’s the strength of our culture. Americans are not afraid to evolve, to destroy business models and jobs not suited for the long-term future. People yearn for security and want to avoid change. But they hope even more for opportunity. As long as that dynamic continues, we will continue to drive progress and provide an improving standard of living for even more people. An important factor to expanding the number of people who enjoy success will be ensuring that children are prepared to take advantage of the opportunities by being properly educated.