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2015

 

If a company plans to attract engineering graduates, it must be perceived as an innovative company that offers the most exciting products on the market, according to the results of a new survey.

 

Universum, a global research and advisory firm specializing in employer branding, recently polled engineering graduates interested in manufacturing throughout 13 countries—including Brazil, China, UK, U.S. and the United Arab Emirates. The intent was to identify which attributes engineering students find most attractive in a potential employer.

 

Engineers have spent years in school and have generated large amounts of debt to learn how to make things better, Universum notes. These engineers want to continue that path of learning and exploring in their professional lives. Companies that are innovative and build exciting products are the most likely to offer the opportunities that engineers value, and therefore can easily attract young engineers, a Universum report explains.

 

I was interested in those survey results because they reminded me of the fourth annual Millennial Survey, released by Deloitte Global earlier this year. That survey found that to attract Millennials, businesses should focus on people and purpose, not just products and profits.

 

Deloitte Global’s survey of Millennials (ages 18-34) from 29 countries, asked questions about effective leadership, how business operates and impacts society. Interestingly, Millennials (75 percent of the respondents) believe businesses are focused on their own agenda rather than helping to improve society, according to the report.

 

“The message is clear: when looking at their career goals, today’s Millennials are just as interested in how a business develops its people and how it contributes to society as they are in its products and profits,” says Barry Salzberg, CEO of Deloitte Global. “These findings should be viewed as a wake-up call to the business community, particularly in developed markets, that they need to change the way they engage Millennial talent or risk being left behind.”

 

Two of the survey’s findings in particular caught my attention. The first is that for six in 10 Millennials, a “sense of purpose,” is part of the reason they chose to work for their current employers. Furthermore, among Millennials who are relatively high users of social networking tools (the “super-connected Millennials”), there appears to be even greater focus on business purpose. Indeed, 77 percent of this group report their company’s purpose was part of the reason they chose to work there. On the other hand, just 46 percent of those who are the “least connected” report that a company’s purpose was part of what made the company appealing.

 

I was also interested to read about the participants’ views of leadership. The survey found that Millennials place less value on visible leaders (cited by 19 percent of the respondents), well-networked leaders (17 percent) and technically-skilled (17 percent) leaders. Instead, the surveyed Millennials define true leaders as strategic thinkers (cited by 39 percent of respondents), inspirational (37 percent), personable (34 percent) and visionary (31 percent).

 

What do you think about your employer? Would Millennials be attracted by its business purpose or innovative products?

 

 

The fallout from news about Volkswagen’s diesel engine emissions cheating scandal brings new implications for the company itself, as well as others. For instance, Volkswagen itself faces increasing trouble ranging from criminal investigations and threats for fines to rapidly falling stock prices and considerable damage to its reputation. Furthermore, the U.S. Environmental Protection Agency has announced planned changes in its emissions testing will impact all diesel automotive companies. Finally, critical Volkswagen auto suppliers have also seen their own stocks fall.

 

Last week, the EPA announced it will significantly change the way it tests for diesel emissions after being tricked by the software in Volkswagen cars for seven years. In a letter to car manufacturers, the EPA said it will add on-road testing to its regimen, “using driving cycles and conditions that may reasonably be expected to be encountered in normal operation and use, for the purposes of investigating a potential defeat device” similar to the one used by Volkswagen. The testing will be in addition to the standard emissions test cycles already in place, the EPA said.

 

“We’re actually making sure that this is a one-off,” EPA Administrator Gina McCarthy said. The agency is going to “look at all of the other models aggressively and do the testing we need to make sure there aren’t any hidden software devices or other ways they could defeat the emission system.”

 

It didn’t take long for auto-parts makers to begin to feel the heat either. Indeed, shares of parts makers such as Tenneco, BorgWarner, Delphi Automotive PLC and Continental AG all fell noticeably last week.

 

Shares of Honeywell, a major supplier of the turbochargers often used in diesel-powered engines, are down roughly five percent since the day the Volkswagen news broke, the Wall Street Journal reports. What’s more, shares of Tenneco, which makes emissions systems and gets eight percent of its revenue from Volkswagen, sank almost eight percent last week; and shares of BorgWarner, which generates 17 percent of its revenue from the auto maker, fell six percent last week. Stock at Continental, a German supplier of engine components, also lost nearly six percent of its market value last week, the Wall Street Journal article reports.

 

“You can’t have an event like this without questions being raised, but that doesn’t mean the technology doesn’t work,” Terrence Hahn, chief executive of Honeywell International Inc.’s Transportation Systems unit, says in the WSJ article. “We have seen proven results around clean-diesel technology, and we don’t want what one auto maker has done to tarnish the industry or the technology.”

 

Not everyone shares that perspective, however. Whatever specifics emerge from a Volkswagen investigation, Barclays strongly believes that the emissions scandal will heighten the pressure on diesel in Europe, Barclays analyst Brian Johnson wrote in a research note last week.

 

“The end result of the [Volkswagen] issues will be to accelerate a move away from diesel in the European mass market, pressuring suppliers leveraged to diesel,” Johnson wrote.

 

Considering the spotlight now on diesel engines and increased scrutiny of their performance, not to mention increasing consumer skepticism, some industry observers believe auto makers may now need to accelerate development efforts of electric vehicles, hybrid and more-efficient gasoline engines. That could help parts makers, since many of the same companies will have to supply those components. If the industry consequently shifts away from diesel-powered cars in favor of those other alternatives, one must wonder what will happen to companies’ investments in diesel engines.

 

What are your thoughts on the diesel engine supply chain? Will all of these events spur greater interest in electric vehicles and hybrids?

 

 

It has been estimated that nearly 70 percent of all freight tonnage moved in the U.S. does so via trucks. Consequently, the growing driver shortage presents challenges for supply chains. New research shows there also are significant labor shortages in some warehouses.

 

Analysis of the State of Logistics report from the Council of Supply Chain Management Professionals shows that by 2017, supply chain organizers in the U.S. will be more concerned with being able to find trucking container space available to haul their freight, than with the need to pay higher trucking rates, an Industrial Distribution article reports. Indeed, one of the primary challenges is that new regulatory changes include implementation of electronic logging instruments, speed-limiting and other equipment; more stringent alcohol and drug testing for drivers; and other increases in Compliance, Safety, Accountability restrictions. The stricter regulations most likely will effectively diminish the number of available drivers and trucks, and available time for turns, according to the article.

 

There already is a driver shortage, and new drivers aren’t entering the industry to replace retiring drivers, which makes the situation worse. Furthermore, as a result of the new regulations, Noel Perry, economist and trucking industry expert, predicts a reduction in the nation’s trucking force by 700,000 drivers, the Industrial Distribution article reports.

 

In the past, according to Perry, trucking capacity has been generally maintained at about 90 percent. In 2014, utilization was 100 percent of capacity, which was a crisis, Perry says. Currently, the U.S. is running at approximately 95 percent of trucking capacity. However, based on Perry’s estimates, utilization is likely to reach near 100 percent of capacity by 2016. These indicators mean that customers will be unable to get service in many cases, unless the trucking capacity shortage is offset by reduced demand due to a downturn in the economy, the article notes.

 

Trucking capacity isn’t the only field suffering from a critical labor shortage. Retailers are already planning for the busy holiday season, but as the unemployment rate drops, stores are having a hard time finding workers for their warehouses, a Marketplace article notes. So these companies may have shipments on the way—or already arriving—but they may be stuck in the warehouse.

 

If companies struggle right now to bring goods into the warehouse, then they’re definitely going to have a problem when it comes to getting them out of the warehouse, Frank Layo, a partner and retail strategist at Kurt Salmon, says in the article.

 

Layo says he’s heard from a couple dozen major retailers, who all are searching for warehouse workers. These companies will need to double or even quadruple their warehouse staff over the next few months so they can send products to stores, and also ship online orders, he says. The trouble, Layo adds, is that retailers say they are competing for workers who have lots of other job options, like Uber.

 

“The younger workforce is more interested in working on their terms, doing something that they find to be more interesting than packing boxes in a warehouse,” Layo says in the article.

 

Recent research from Staffing Industry Analysts, a global advisor on contingent labor, found that the issue may not be limited to warehouses, but extend to all temporary jobs created for the holiday season, a CNBC article reports. Through a monthly survey the firm issues to temporary staffing firms, it found in July that temporary roles have been harder to fill across all industries. This trend was even more pronounced in the industrial segment, which covers warehouse jobs, the firm found.

 

One of the largest challenges, if not the largest challenge, in recruiting both drivers and temporary warehouse labor is to offer attractive compensation. A growing number of companies say they have already increased wages, and are now considering other benefit options. There is no quick fix, but it seems both wages and benefits will need to increase to effectively recruit employees.

 

 

The story of Volkswagen’s strategy of cheating on vehicle emissions testing by programming some diesel-fueled cars to turn on emission controls when being tested continues to unfold quickly. As more details emerge, what remains uncertain is what the news really means to consumers, as well as what the long-term consequences—if any—will be for the auto industry.

 

Last week, the U.S. Environmental Protection Agency accused Volkswagen of installing the so-called “defeat device” in 482,000 cars sold in the U.S., which violates the Clean Air Act. VW, the world’s largest automaker by sales, later acknowledged that similar software exists in 11 million diesel cars worldwide. The vehicles in question include the Volkswagen Passat, Jetta, Golf and Beetle, as well as the Audi3.

 

“The vehicles [with this software] would run 10 to 40 times more emissions than show in the test,” says Andrew Lee, an automotive specialist at Frost & Sullivan, says in an article on CNN Money.

 

Regulators have ordered Volkswagen to recall the vehicles, and the company announced it is halting sales of some cars in the U.S. The automaker could face fines of up to $18 billion—or $37,500 for each car that did not comply with legal standards. Volkswagen also announced it is setting aside $7.3 billion in provisions for the third quarter to cover the potential costs of the scandal.

 

The growing scandal has led to France calling for a Europe-wide probe into the revelations, South Korea summoning Volkswagen officials, and the U.S. Justice Department reportedly launching a criminal investigation. What’s more, some law firms have already filed class-action suits on behalf of customers.

 

As would be expected, there was an immediate impact on company stock: VW’s stocks fell 20 percent on Monday—or more than 20 billion euros. However, other automobile stocks also suffered. In particular, Daimler shares were down 7.03 percent and BMW stock fell 7.17 percent on Tuesday. French carmakers Peugeot Citroen and Renault also suffered, down 2.6 percent and 2.3 percent respectively.

 

In a move that was surprising only in its quickness, Volkswagen CEO Martin Winterkorn resigned Wednesday. While he took responsibility for the “irregularities” found by U.S. inspectors in VW’s diesel engines, he insisted he had personally done nothing wrong.

 

“I am doing this in the interests of the company even though I am not aware of any wrongdoing on my part,” his statement said. “Volkswagen needs a fresh start ... I am clearing the way for this fresh start with my resignation.”

 

For Volkswagen, there remain more questions than answers. Matthias Mueller, CEO of German carmaker Porsche, is now expected to be named the new leader of Volkswagen. Nevertheless, all of the news does cast doubt on the integrity of Volkswagen, and the company has yet to reveal who developed, wrote and tested the code, under whose direction, and why.

 

In the meantime, consumer confidence is shaken. For instance, auto owners now worry how the emissions scandal will effect vehicles’ performance, resale value and compliance with clean-air standards.

 

A larger, unanswered question is whether Volkswagen was alone in trying to outwit emissions testers or whether wider malpractices are the norm. Shares in BMW fell sharply after Auto Bild reported that emissions from a BMW diesel model were 11 times higher than European Union norms. BMW officials said the company had not cheated in pollution tests.

 

In light of Volkswagen’s actions, one must wonder whether industry emissions testing protocols will ultimately change in Europe, the U.S., or perhaps worldwide. It will be interesting to watch the story continue to unfold, and to see what--if any--ramifications there are for other automakers.

 

 

The Department of Energy announced up to $70 million in funding for the next Clean Energy Manufacturing Innovation Institute, which will focus on smart manufacturing. As the Department explained last week, this investment—which is expected to be matched by private investing—will support research and development advancements to reduce the cost of deployment for technologies such as advanced sensors, controls, platforms and modeling for manufacturing by as much as 50 percent.

 

As part of President Obama’s National Network for Manufacturing Innovation (NNMI), the new institute will develop these technologies in manufacturing processes with a goal to increase energy efficiency by at least 15 percent and improve energy productivity by at least 50 percent. With increased deployment and reduced costs, these smart technologies can transform American manufacturing, enabling businesses to manufacture more while using less energy and spending less, according to the Department of Energy (DoE).

 

“Smart Manufacturing is a key information technology approach to unlocking energy efficiency in manufacturing,” says Secretary Ernest Moniz in a statement. “These technologies will make industries from oil and gas to aerospace and food production more competitive with intelligent communications systems, real-time energy savings and increased energy productivity. Energy intensive industries, such as steelmaking, could see a 10 to 20 percent reduction in the cost of production, making products such as solar panels and chemical materials, such as plastics, as well as the cars and other products they go into, more affordable for American consumers.”

 

Each NNMI institute is a private-public partnership that serves as a regional hub that spans the gap between applied research and product development by bringing together federal agencies, companies, universities and other academic and training institutions to co-invest in key technology areas that encourage investment and production in the U.S. Together, the institutes share common goals but have unique technological concentrations. Each institute is created to accelerate U.S. advanced manufacturing through the development of new technologies, educational competencies, production processes and products via shared contributions from the public and private sectors and academia. Perhaps most importantly, the Institutes for Manufacturing Innovation provide shared facilities to local start-ups and small manufacturers to help them scale up new technologies, accelerate technology transfer to the marketplace, and facilitate the adoption of innovation workforce skills at multiple levels, as well as to strengthen business capabilities in large and small companies, according to DoE.

 

The Innovation Institute on Smart Manufacturing will be the third Energy Department-funded facility. One is called PowerAmerica, located at North Carolina State University, where work is done to develop advanced manufacturing processes for the large-scale production of wide bandgap (WBG) semiconductors, which enable electronic components to be smaller, faster and more efficient than semiconductors made from silicon.

 

The second facility is the Institute of Advanced Composites Manufacturing Innovation, at the University of Tennessee, Knoxville, where researchers work to develop lower-cost, higher-speed, and more efficient manufacturing and recycling processes for advanced composites. The institute will focus on lowering the overall manufacturing costs of advanced composites by 50 percent, reducing the energy used to make composites by 75 percent and increasing the recyclability of composites to over 95 percent within the next decade so the materials may be used in diverse industries.

 

It will be interesting to see how quickly progress is made at the new institute. A savings of 10 percent to 20 percent in the cost of production would indeed have a significant impact on energy intensive industries.

 

 

The proliferation of devices in the Internet of Things creates more entry points that are vulnerable to cyberattack. When evaluating cyber risk, however, it’s important to understand the risk stemming from people and behaviors, not just technology.

 

In “Cybersecurity: Building an arsenal to defend against invisible enemies,” which recently ran on IHS Quarterly, Thomas Lynch, Dennis Murphy and Christoforos Papachristou from IHS wrote that “cyberattacks are increasingly sophisticated as their destructive incursions seek new ways to breach security and inflict damage.” This is a particular challenge for the Internet of things (IoT) because, in the coming years, billions of new devices will be fitted with computer chips that enable interconnectivity with the internet. Some experts estimate there will be nearly 50 billion connected devices by 2020, the authors report.

 

The underlying problem is that the interconnected nature of such a massive system significantly raises cybersecurity risk factors. IoT devices are designed for connectivity and not security, which makes them vulnerable to malware attacks. Essentially, each device is a potential portal through which a cyberattack can gain entry, and then proliferate throughout the chain, according to the authors.

 

On the other hand, it can be argued that the weakest link in a cybersecurity chain actually is the employees and a lack of awareness of cyber risk. Brian Contos, CISSP, VP Threat Intelligence & Security Strategy, explains in a recent CSO article that employees—including executive leadership and management—must be actively involved in an organization’s cybersecurity apparatus, because they will likely have access to many of the business’s computers, systems and networks, and often will serve as the first line of defense in their protection. Executives are targets for their potential access to sensitive information, while frontline workers are targets for attackers to gain access into the network and elevate privileges so they can move laterally to find such information. Both types of employees represent access roads to the same destination, he writes.

 

It follows then, that security training is best approached collectively. It’s common for an organization to require employees to undergo annual user awareness training. However, such training is often viewed as a compulsory necessity rather than an opportunity to inform and educate. Frequent interactive training will better prepare employees for the current threat trends, highlighting the tactics, techniques and procedures used by hostile actors to gain unauthorized access into targeted systems, Contos writes on CSO.

 

It’s also vital for this type of training to include all employees—including executives—in the same room so they can share their experiences and educate each other about the types of threats they’ve personally experienced, Contos writes. This type of transparent dialogue connects the workforce as a unifying whole and provides insights into where there are strengths and weaknesses in security awareness, he explains.

 

One down fall to avoid, is that accountability and responsibility are sometimes seen as burdens that punish employees or risk impeding business operations for the sake of compliance. Instead, Contos explains that accountability and responsibility must be communicated as opportunities to strengthen an organization’s commitment to protecting information and accesses that support the goals of the business. After all, a savvy and alert employee can proactively prevent a cyberattack simply by not clicking on a malware-embedded link in an e-mail, he writes.

 

Do you agree employees and their behaviors are a greater risk than device vulnerability? Secondly, do all employees, including executives, receive the same training?

 

 

President Barack Obama announced last week that the federal government will distribute $175 million in grants to create apprenticeship programs. Speaking at Macomb Community College in Warren, Mich., the President explained that the American Apprenticeship Grants, administered through the Department of Labor, were awarded to 46 public-private partnerships among employers, organized labor, non-profits, local governments and educational institutions to help create 34,000 apprenticeships.

 

As parents and students think about the escalating costs of attending college, the idea of an alternative path to a career that may not require high levels of student debt is gaining more traction. Typically, apprentices get paid while participating in a mix of on-the-job training and classroom-based learning, which often allows them to begin a decent paying career without first earning a college degree.

 

Hands-on apprenticeships provide a win-win situation for corporations and workers. According to federal research, 87 percent of apprentices are employed after completing their programs, with an average starting wage above $50,000. The return on investment for employers is also impressive. Studies show that for every dollar spent on apprenticeship, employers get an average of $1.47 back in increased productivity, reduced waste and greater front-line innovation.

 

The grantees to receive the American Apprenticeship Grants will hire new apprentices in high-growth and high-tech industries as diverse as health care, IT and advanced manufacturing over the next five years. However, a significant amount of that funding is tied to the advanced manufacturing sector, such as $2.2 million for a community-college-run consortium updating the skills of Tesla Motors and Panasonic workers, and $4 million to train mechatronics and industrial maintenance technicians and CNC Operators in Pennsylvania.

 

Among the other grants, $5 million will go to Los Rios Community College District in Sacramento, Calif., “to establish an apprenticeship model in Northern, Calif., where none currently exists,” and improve advanced manufacturing coursework at the college. Partners include Siemens USA and TriTool.

 

Another $5 million will go to the UAW-Labor Employment and Training Corp. in Cerritos, Calif., to fund a UAW apprenticeship initiative to train 500 job seekers and 975 current workers in advanced manufacturing jobs.

 

Macomb Community College will receive $3.9 million for 600 IT and manufacturing apprenticeships, including a new apprenticeship in digital sculpting for the automotive industry. Partners include Atlas Tool, Formtech and Autocam Precision Components Group.

 

The Milwaukee Area Workforce Investment Board will also receive $10 million to create a cross-section of apprenticeships, including in the manufacturing industry. Partners include General Motors and Emerson.

 

Considering both high unemployment among young people and a manufacturing skills gap, it would seem apprenticeships can go a long way toward solving two key issues. Interestingly, Democratic presidential candidate Hillary Clinton has called for tax credits for businesses that hire and train apprentices, as a means to both raise wages and boost youth employment. Her proposal calls for a $1,500 tax credit per apprentice, which would make apprenticeships even more appealing to businesses.

 

While federal grants and possible tax credits may entice businesses to create apprenticeship programs, one must wonder what young adults think. Do they believe apprenticeships are a good idea, or do they have a perception that apprenticeships are for trades and students who failed to go to college? If so, is that necessarily bad?

 

What are your thoughts on apprenticeships?

 

 

There has been a great deal of discussion and press coverage lately about working conditions at Amazon. What’s most interesting, is trying to identify the fine line between highly competitive and an environment where workers are miserable.

 

As you probably saw, a New York Times article last month painted a pretty bleak picture of the alleged workplace environment at Amazon for professional employees. Essentially, it included a litany of difficult-to-read stories about a hyper-competitive culture where health or family emergencies are seen as inconvenient. The anecdotes get worse from there.

 

“At Amazon, workers are encouraged to tear apart one another’s ideas in meetings, work long hours and then again in the evening (emails arrive past midnight, followed by text messages asking why they were not answered), and are held to standards that the company boasts are ‘unreasonably high,’” according to the New York Times article. “The internal phone directory instructs colleagues on how to send secret feedback to one another’s bosses. Employees say it is frequently used to sabotage others.”

 

Jeff Bezos, founder, chairman, president and chief executive of Amazon, issued a company-wide memo in response. I saw it carried in the Wall Street Journal, but you may have seen the memo elsewhere. Here is one excerpt:

 

  The NYT article prominently features anecdotes describing shockingly callous management practices, including people being treated without empathy while enduring family tragedies and serious health problems. The article doesn’t describe the Amazon I know or the caring Amazonians I work with every day. But if you know of any stories like those reported, I want you to escalate to HR. You can also email me directly …. Even if it’s rare or isolated, our tolerance for any such lack of empathy needs to be zero.”

 

The allegations and Bezos’ reply have in turn sparked an interesting discussion about hyper-competitiveness, employee morale and productivity. For example, on The New York Times: Room for Debate page yesterday, Guy Kawasaki, chief evangelist of Canva, an online graphic design tool, wrote that “work isn’t supposed to be fun.”

 

“In the best case scenario, it’s rewarding in financial and psychological ways but it’s not like going to Disneyland,” Kawasaki wrote. “Everybody doesn’t win. Trying hard isn’t enough. It’s not always the happiest place on earth. This is why people get paid to go to work.”

 

The flip side of the coin, as explained on the opinion page by Judith Rodin, president of The Rockefeller Foundation, is that not only can companies do well by treating employees fairly, the company’s long-term success and competitiveness depend on it.

 

“Misery at work leads to high turnover, which leads to high costs. The Center for American Progress estimates that turnover costs employers 20 percent of the departing worker’s salary—significantly more than the cost of preventing that turnover with benefits such as paid sick days,” Rodin wrote on the opinion page. “By accounting for and investing in the well-being of employees, companies can greatly increase retention and save money. For example, employers that have used The Source, a service providing support for employees in addressing challenges outside of work, saw a return on investment of almost 300 percent due to significant reductions in turn-over and increased productivity.”

 

As for Amazon, Jeff Bezos himself wrote, “I don’t think any company adopting the approach portrayed could survive, much less thrive, in today’s highly competitive tech hiring market.” But regardless of where, exactly, the cutthroat competitiveness and high expectations come from, the result is many employees burn out quickly and leave the company. While the culture does produce results, one must wonder if it will eventually become difficult for the company to attract top talent, even if they may work on so-called “world-changing projects.”

 

What I’d like to know is what you think. What are the consequences of such a competitive workplace? Also, will it eventually become difficult for such a company to attract talent?