"I have some good news," Helmuth Ludwig, CEO of Siemens Industries USA, told a crowd of young engineers and manufacturers last week. "We are on the path to recovery."
The U.S., he told them, added 600,000 manufacturing jobs in the last year. Which is important.
"But," he added, "Much more important is that we are on the verge of a complete new era for manufacturing."
This opening was much more than just a shot of optimism to warm up the crowd – though it certainly did that. These points define the central thesis that guides Ludwig, and his company, through the post-recession recovery and toward what Ludwig sees as the next manufacturing boom.
It is also the basic outline for the American manufacturing renaissance.
Manufacturing is officially on the rebound – jobs are returning, companies are reshoring and retooling, and the U.S. is slowly reclaiming its global position.
This hasn't been an easy – or much less steady – process. And what's more, the industry that is returning is not the same one that left.
Today's manufacturing is a digitally-infused, high-tech industry. It has different demands and different process than the manufacturing of the past, and it is producing a new breed of products by a whole new breed of savvy manufacturers.
This is the American renaissance: it's not just the return of manufacturing to the U.S., it is, as Ludwig said, an emergence of a new era of manufacturing.
There have been many voices singing this song over the last few years, but Helmuth Ludwig's has remained the loudest.
Since taking control at Siemens Industry in 2011, Ludwig has been tirelessly championing the progress of the American manufacturing renaissance both in his company and throughout the industry.
IW caught up with him recently to see what it takes to lead such a movement and where he is taking it next.
Q: You have been really leading the conversation in the industry about the "renaissance" for several years now. What do you see happening that is so exciting?
A: I believe there is an enormous opportunity in the U.S.
That's based on lower energy cost, it's based on labor costs that are more and more adjusting in other countries.
On top of this, and most importantly, is the software strength here in the U.S. that manufacturing will take up and will lead the world economy.
In my conversations, I always go back to this statistic: When you add up the revenue for the 100 largest software companies in the world, 79% of it comes from U.S.-headquartered software companies.
That means 21% includes everything out of Germany Israel, China, India, France, you name it. But 79% is from here in the U.S. That's a deep cultural strength.
Coincidentally, when you look today at manufacturing, the real innovation that is happening is all driven by software. It is driven by software on the manufacturing floor, and most importantly, when you connect the manufacturing floor up into the design part of the company. To bring those two worlds consistently together, it can only be done by software.
And there, I believe the U.S. is in an incredible position.
My point is, we talk about energy efficiency, the low cost of energy in the U.S., this is all true, but there is something else.
There is a deep, cultural element of software development here. The 79% says how strong it is.
It is now only a matter of using that strength to help grow and develop manufacturing.
Taking on the Skills Gap
Q: When you talk about a new kind of manufacturing, you're also talking about a new kind of manufacturer. For a software-based industry, you don't need laborers so much as highly trained technicians. If that is what the American manufacturing renaissance means, what should we be doing about the skills gap it creates?
A: First off, I don't believe it is a skills gap so much as it is a training gap.
It’s not 15, 16, 17 year olds' responsibility to develop these skills. It's your responsibility, it's my responsibility. It's our responsibility.
The burden is on us.
Q: How do you take on that burden? What should manufacturers be doing?
A: Well, one way that we support this is we work very actively together with the advanced manufacturing partnership organizations.
This last year alone, we gave software grants of about $3 billion to high schools and universities around the U.S.
It's not just the software.
Afterwards we work with these institutions. There is a lot of work on both sides. On the sides of the educational institutions, but also on our side to be really sure that the software gets implemented and that the professors can teach their students with this software.
It's a real partnership.
That is really our strategy forward.
Also, let me tell you about our North Carolina plant. Recently, we doubled practically the capacity of our manufacturing facility in North Carolina where we produce gas turbines.
We had many highly motivated people that applied for about 1,000 job offers. But we did not have the right quality.
There are two possibilities here: You can say fine, let's look somewhere else. Or you can say, let's not do the investment at all.
Here were very lucky in this case. The Piedmont Community college had already started an excellent program, so we joined forces and together helped educate the workforce of the future, guaranteeing them a job at Siemens at the completion of the program.
That is the way we all can help. We all are part of this.
Q: I don't expect that you will Siemens will be able to hand out $3 billion of license grants every year or take such a major role in training the whole next generation. So, what should other companies and other executives be doing to help extend this work?
The first step is to walk out to your office, go into your manufacturing facility. Go out on the floor. Open eyes. There are brilliant CEOs in this country with open eyes where they will see a lot of opportunity where they can person engaged.
This will be very, very different company by company.
One CEO that impresses me again and again is Andrew Liveris [CEO of Dow Chemical]. He wrote a book about the American renaissance. He is close to his people, he is close to his manufacturing facilities and he is very close to his customers. That helps usually to identify the opportunities his company can take.