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2016

To be sure, the Internet of Things (IoT) is growing at an exponential rate. Various estimates predict that by 2020, some 50 billion devices will connect to the Internet—and the economic value created by IoT could be worth as much as $11.1 trillion. Correspondingly, the threat of cyberattack is also quickly growing. Researchers at AT&T report a 458 percent increase in the number of times attackers scanned IoT devices for vulnerabilities over the past two years.

 

Interestingly, 85 percent of the respondents to an AT&T survey indicated their company is considering, exploring or implementing IoT, but just 14 percent report the company has a formal audit process in place to understand how many devices they have and whether these devices are secure, according to AT&T’s second Cybersecurity Insights report, “The CEO’s Guide to Securing the Internet of Things.” I was also interested to read that 88 percent of the respondents said they lack full confidence in the security of their business partners’ IoT devices.

 

“The Internet of Things is advancing the future of business, bringing new capabilities and efficiencies to companies to help them stay ahead,” says Ralph de la Vega, vice chairman of AT&T, and CEO of AT&T Business Solutions & AT&T International. “However, it’s essential to approach IoT with security in mind to effectively protect your business.”

 

It’s easy to feel overwhelmed by the scope and complexity of the fast-evolving IoT era, says de la Vega. CEOs can, however, begin to reduce that complexity by first understanding the security implications introduced by connected devices, and then by building a framework for securing the IoT ecosystem, he says.

 

Toward that end, the AT&T report includes questions its authors believe every CEO should ask his or her team about securing the IoT. The first question to ask is, Have we done an all-inclusive risk assessment that considers the IoT as a part of our overall risk? This step requires identifying the types of risks—data and physical/operational—that every IoT deployment introduces. This will, in turn, help determine how to apply security controls that are commensurate with each level of risk, the report explains. Regardless of the device type, every connected device should meet baseline security requirements.

 

The report also recommends CEOs ask, Are our data and connected devices secure when deploying new IoT solutions? Whenever possible, companies must isolate IoT data and networks from existing IT systems, which will help reduce an attacker’s ability to launch broader cyberattacks on mission-critical systems. Given the significant increase in connected devices and data volumes, it’s also worth considering adding automated processes to monitor data and identify threats.

 

The next question to ask is, Are we aligned, from leadership to the front line, on IoT security and strategy? Communicating often with the board of directors will help ensure that corporate leaders clearly understand the opportunities and risks of IoT deployments, the AT&T report notes. It’s also important for every business unit to understand the unique security considerations that IoT devices introduce.

 

Finally, CEO’s should ask, Have we defined legal and regulatory guidelines covering new IoT devices and deployments? It’s important to evaluate the security capabilities and responsibilities of your business partners, customers and IoT product and service providers. Secondly, the report also notes that establishing clear security protocols—and lines of accountability—is vital to minimizing weak-link scenarios.

 

What are your thoughts on security of IoT? Does your company have a formal audit process in place to understand how many devices are used and whether or not they are secure? Also, does risk assessment consider the IoT?

New developments show robotics will continue to change manufacturing practices, although it may be in novel ways. In some cases, the robotics may be used to support human workers, rather than replace them. It may be premature, however, to tell how other robotic technology will eventually be used.

 

The Mercedes-Benz S-Class sedan features a growing number of options such as carbon-fiber trim, heated and cooled cup holders and four types of caps for the tire valves. That level of customization places a premium on the flexibility and dexterity of human workers on Mercedes’s assembly lines because while robots are good at reliably and repeatedly performing defined tasks, they’re not good at adapting, say Mercedes executives in a Bloomberg article.

 

“Robots can’t deal with the degree of individualization and the many variants that we have today,” Markus Schaefer, the automaker’s head of production, said at its factory in Sindelfingen, the anchor of the Daimler AG unit’s global manufacturing network. “The variety is too much to take on for the machines. They can’t work with all the different options and keep pace with changes.”

 

By focusing manufacturing around a skilled crew of workers at the Sindelfingen plant, Mercedes can shift a production line in one weekend instead of the weeks needed in the past to reprogram robots and shift assembly patterns, Schaefer says in the Bloomberg article. During that downtime, production would be at a standstill.

 

The revamped Mercedes E-Class, which goes on sale in March, is an example of how the company increasingly relies on human dexterity. To align the car’s head-up display, which projects speed and navigation instructions onto the windshield, the carmaker will replace two permanently installed assembly robots with either one movable, lightweight machine or a worker.

 

Other automakers also are investigating the use of smaller and more flexible robots. BMW AG and Volkswagen AG’s Audi, for instance, are currently testing lightweight robots equipped with sensors to allow them to safely work alongside humans.

 

At the other end of the spectrum, you may have seen video of a new robot walking in the snow and picking itself up after being knocked down. Atlas—a five-foot-nine, 180-pound biped—was designed by Boston Dynamics, the robotics company Google acquired two years ago.

 

The new-and-improved robot is “designed to operate outdoors and inside buildings,” Boston Dynamics wrote in a description of the video posted on YouTube. “It is specialized for mobile manipulation. It is electrically powered and hydraulically actuated. It uses sensors in its body and legs to balance and LIDAR and stereo sensors in its head to avoid obstacles, assess the terrain, help with navigation and manipulate objects.”

 

The video shows Atlas bending down to pick up 10-pound boxes and pivoting its torso to put each package on a shelf. In another instance, a human handler uses a hockey stick to push Atlas off balance. The robot stumbles backwards but regains its balance.

 

The Atlas robot is a game changer, not just for companies, but for society, Insider.com CEO Jason Calacanis told CNBC last week.

 

“This is really the end of manual labor,” Calacanis said on CNBC’s “Squawk Alley.” “Manual labor is going to end in our lifetime, and in this video you can see how close we really are. It’s a huge societal issue with jobs, but it’s going to be a huge lift in terms of efficiency of companies that nobody expected.”

 

On the CNBC show, Calacanis said he believes this type of robot will be walking down the street delivering pizzas and working in offices in 10 to 15 years. I’d like to know if you agree with that prediction. At the same time, do you think companies like Mercedes will place more emphasis on human dexterity for some tasks but continue to augment that performance with new smaller, lightweight robots?

Mexico is the seventh largest car manufacturer in the world—and the second largest automotive exporter to the U.S. That position is expected to grow as well. Some estimates note that by 2020, one in four cars in the U.S. will have been manufactured in Mexico. That’s possible because U.S. auto production continues to shift to Mexico.

 

Indeed, by 2019, the Big Three U.S. automakers will have added an estimated 320,000 vehicles worth of production in Mexico and cut U.S. output by a collective 120,000 vehicles, according to a forecast from research firm IHS Automotive. Ford will add the most production, according to IHS research.

 

Ford already has plans to accelerate its vehicle production in Mexico by 2018, an article in the Wall Street Journal reports. In April 2015, Ford expanded production in Mexico, investing $2.5 billion in new engine and transmission plants to create 3,800 jobs. According to the WSJ story, which cited unnamed insiders, Ford plans to add 500,000 units of capacity in Mexico by expanding an existing plant near Mexico City and building a new plant in San Luis Potosi.

 

Those plans call for an investment of slightly more than $1.5 billion in the San Luis Potosi plant, which should produce around 350,000 cars annually, two government officials familiar with company plans told Reuters. Ford announced in November that it will stop building Focus compact cars at a factory in Wayne, Mich., in 2018. Additionally, officials at the UAW have said the replacement for the current Focus will be made in Mexico, the Reuters article notes.

 

Much of the growth in Mexican auto production over the past 20 years stems in part from the North American Free Trade Agreement and the elimination of tariffs. Today, Mexico has favorable trade agreements with 45 countries, which rivals that of almost any Western nation.

 

Another attractive advantage for Mexico is that its middle class is growing. Today, Mexican consumers who previously purchased used American vehicles—or didn’t even consider buying a car at all—now buy new cars made in Mexico, Daniel Miranda, segment manager for the automotive industry at UPS Mexico, writes in a UPS blog. Auto companies such as Audi, Ford, General Motors and others looking to expand markets have been quick to seize on this, and, consequently, many of Mexico’s fastest-growing cities have become learning laboratories for companies boosting their Mexican presence, Miranda writes.

 

All of that said, the low cost of labor in Mexico clearly is appealing to some U.S. manufacturers. The combination of low wages and close proximity to U.S. borders—and in some cases, other plants or supply chain partners—is advantageous for some organizations.

 

For example, Cardone, a supplier of automotive replacement parts that calls itself Philadelphia’s largest remaining manufacturing company, will move its brake caliper production from plants in Philadelphia to a plant in Matamoros, Mexico, just south of Cardone’s warehouses in Brownsville, Texas, over the next two years. Kevin Feeley, a spokesman for the company, says the company is moving the work to Mexico because the “entry level” manufacturing work is “particularly sensitive” to cheap foreign competition.

 

Secondly, while not an automotive company, Carrier, an Indianapolis-based heating, ventilation and air conditioning company owned by United Technologies, recently made news when it announced that its Indianapolis plant would undergo a three-year relocation to Monterrey, Mexico, starting in 2017. As WIBC radio Indianapolis and other news outlets reported, the announcement was met with jeering from the plant’s employees. It’s worth noting that union workers at Carrier’s Indianapolis plant make about $34 per hour while workers in Mexico make an average of $6 an hour, which illustrates just how significant the wage difference is.

 

Considering Mexico’s free trade agreements, growing consumer demand for U.S. autos and workers’ significantly lower wages than that of U.S. workers, it certainly seems U.S. auto production will continue shifting to Mexico. Furthermore, the government in Mexico is committed to improving infrastructure, which also is appealing to U.S. auto manufactures.

 

What are your thoughts? Do you agree U.S. auto production will continue shifting to Mexico?

Considering how important it is to know suppliers, especially in highly regulated industries, some recent research on food manufacturers surprised me. Almost one in five (19 percent) of the respondents from large food manufacturers taking part in a survey admitted they don’t have a way of finding out even the name and address of suppliers in their supply chain.

 

The survey of 42 large food manufacturers across the UK, U.S., Spain, Brazil, Asia, Australia, South Africa and the Middle East was carried out by independent research agency IFF and commissioned by global supplier risk management company Achilles. More than half of the survey respondents from large firms (53 percent) admitted they don’t have a plan in place to find out in the future who is in their supply chain. Furthermore, 12 percent of the respondents also admitted their company doesn’t put in place corporate standards that suppliers must follow concerning issues such as ethics, and health and safety.

 

Thousands of UK and international businesses whose global revenues total more than 36 million pounds are now considering how they address modern slavery, as they approach the first deadline for making “slavery and human trafficking” statements under the UK’s Modern Slavery Act 2015. The Act is concerned with toughening the criminal law on trafficking and keeping people in slave-like conditions, and requires companies “to give an annual disclosure detailing efforts to root out slavery and human trafficking in their global supply chains.” Businesses found to be using unethical labor in supply chains face hefty fines under the Modern Slavery Act.

 

What’s interesting is that knowing the name and address of suppliers in the supply chain is a basic first step for identifying and ending abuses, so an inability to do so puts these food companies at risk. Indeed, 40 percent of the survey respondents said they believe it is “likely or very likely” they will be exposed to mounting legislation. Almost a third (29 percent) of the respondents also said they believe it is “likely or very likely” their company will be exposed to reputational damage.

 

“Without knowing who is in the supply chain, or having basic information about how contractors do business, food manufacturers put themselves at risk of using ‘hidden’ slave labor, child labor or unethical working practices,” says Luis Olivie, Global Business Development Director for Achilles. “To prevent a ticking time bomb of risk, we recommend large businesses map their supply chains through all tiers to identify and tackle potential risks. With a clear picture of who is in the supply chain, businesses can implement clear standards on ethics, which suppliers must adhere to before they are even considered to provide goods and services.”

 

I suppose the survey results of large food manufacturers shouldn’t be startling. After all, despite all the talk of increased supply-chain risk, nearly one in 10 organizations don’t even know who their key suppliers are, according to the Supply Chain Resilience Report, published last year by Business Continuity Institute and supported by Zurich Insurance Group.

 

As for slavery in the supply chain, the International Labor Organization explains that forced labor takes different forms, including debt bondage, trafficking and other forms of modern slavery. The organization further notes that almost 21 million people are victims of forced labor, mostly in the domestic work, agriculture, construction, manufacturing and entertainment industries. Finally, this labor in the private economy generates $150 billion U.S. in illegal profits per year.

 

Let’s hope that as more legislature forces companies to identify suppliers and add more transparency to their supply chains, it in turn helps to begin to put an end to slavery and human trafficking. However, one must also ask if such efforts go far enough?

Nearly 30 percent of the respondents to a recent poll about crisis management believe that employees may be the most overlooked stakeholder when their organization is dealing with a crisis. As crises become a more frequent occurrence, executives need to acknowledge that maximizing the potential resources of their employees may have a significant impact on their ability to anticipate, prepare for and respond to an incident, according to Deloitte’s report.

 

Employees are a valuable asset to an organization at all times, but especially when dealing with customers and aiding the company in the overall recovery process after a crisis. To create a good crisis response plan, organizations should proactively take steps to outline employees’ roles, responsibilities and the critical part they play in successful crisis management. Companies must also have a documented plan to provide accurate, up-to-date and authoritative information during the crisis, says Rhoda Woo, principal in Deloitte Advisory strategic risk services, Deloitte & Touche LLP, and national leader for crisis management solutions.

 

“When a crisis arises in an organization, it can be extremely chaotic. Responding to the crisis and coordinating with regulators, law enforcement and customers is imperative, but leadership must also have a plan to inform and utilize employees,” says Woo. “Employees need to be recognized and informed in a reasonable timeframe during a crisis, but companies also need to consider human factors. There may be instances where employees may not be willing or able to help.”

 

The Deloitte report offers a number of suggestions detailing how an organization can better make use of its employees during a crisis. One key step is to build a culture of trust and confidence to set the solid foundation required to maintain an honest and open relationship between employees and the organization, according to Deloitte. Having a culture that promotes transparency empowers employees to escalate issues and encourages communication.

 

It’s also vital to challenge assumptions about availability, according to Deloitte. For example, if a contingency plan relies on employees showing up to work, then it’s important for everyone to understand the types of crises in which they are likely or unlikely to report to the office.

 

As Woo explains, it’s also imperative for employees to be informed—and stay informed—during a crisis. That means companies must communicate accurate information early and often to best manage misperceptions and misinformation. Furthermore, executives must give authoritative direction on the risks involved, the impact on the company and the staff, and instructions on how to move forward.

 

Finally, executives should remember that the organization needs to provide continuing support, and leaders must demonstrate empathy. If remote access is part of the contingency plan, then managers and executives must ensure that employees are taking home the necessary equipment each day. However, as the report explains, management must also consider employees’ requirements for medical, psychological and logistical support when it’s time to return to the workplace—and those requirements must be included in the organization’s response plan.

 

Frankly, I’m a little surprised that only 30 percent of the survey respondents cited employees as the most overlooked stakeholder during a crisis. On the other hand, when asked how well equipped the organization is to handle a crisis, only 16 percent said their organization invests in planning and prevention, and processes and tools are tested and effective. All of which shows that there is much room for improvement when it comes to crisis management plans.

 

What about your organization? Do you think it is adequately prepared to manage a crisis?

Most employed adults believe men and women should be paid equally for equal work, however only 60 percent of U.S. women believe men and women at their company are paid equally, according to the results of a new survey.

 

Conducted in the U.S., Canada, UK, France, Germany, The Netherlands and Switzerland, the survey—for job review site Glassdoor—asked more than 8,000 employed adults about salary inequity between men and women. Of those surveyed, 2,000 workers are from the U.S.

 

Most of the survey respondents (89 percent) believe that men and women should be paid equally for equal work. The number is a little higher in the U.S., where 93 percent of those surveyed are in favor of equal compensation.

 

While the respondents are in favor of equal pay, many don’t see it happening. Only 70 percent of those surveyed believe men and women are paid equally for equal work at their employer. What’s worse though, is that when broken out by gender and country, the survey shows fewer U.S. women (60 percent) than men (78 percent) believe men and women at their company are compensated equally for the same work.

 

When people are able to evaluate a company based on employees’ ratings, one of the consequences of unequal pay is that potential candidates may be leery of working at a company where a gender-based pay gap is well known. Indeed, in the U.S., more than two-thirds (67 percent) of the survey respondents said they are not likely to apply for a job at a company where they believe a pay gap exists between men and women doing similar work. What’s more striking is that when comparing by gender, 81 percent of the U.S. women and 55 percent of the men responding to the survey said they are not likely to apply for a job at a company where they believe a pay gap exists.

 

With these numbers in mind, the question then becomes, What can be done to fix gender-based pay gaps? Interestingly, nearly half (45 percent) of U.S. employees who say there is a pay gap at their employer believe new company policies around pay and compensation will help close the inequality. Furthermore, 34 percent of the American respondents and 27 percent of respondents across all countries stated they believe greater internal pay transparency such as HR sharing salary figures for all roles is the way to improve the gap.

 

What’s also of note is that last month, President Barack Obama proposed a federal rule requiring employers with more than 100 workers to break down pay data according to gender, race and ethnicity—a disclosure previously only demanded of federal contractors. The measure aims to highlight pay discrimination across industries and occupations, as well as give the Equal Employment Opportunity Commission additional enforcement data. Obama specifically called out gender pay disparity in his remarks on the proposal, noting that women working full-time earn 79 cents to men’s $1.

 

It will be interesting to see if this new federal rule has any impact on the gender pay gap, and if so, what the impact is. In the meantime, what are your thoughts? Do you believe men and women are paid equally for the same work at your employer?

Politicians are out on the trail having town hall meetings, but they aren’t alone. Jay Timmons, President and CEO of the National Association of Manufacturers (NAM), is making appearances as well, presenting his own 2016 State of Manufacturing address.

 

The tour began in Manchester, N.H., on January 28, and made stops last week at Trident Technical College in Charleston, S.C., and in Illinois at Harper College’s new FMA Metal Fabrication Lab. It will continue through Florida, Pennsylvania, Texas and Maryland. Along the way, Timmons is meeting with local manufacturers, employees, students, business and community leaders and elected officials to highlight what he calls, “the real-world solutions” needed to allow the U.S. economy and manufacturers to thrive.

 

“Today’s modern manufacturing doesn’t always look like yesterday’s. We are sleek, high-tech and innovative, and manufacturers continue to drive economic growth in the U.S. The manufacturing industry is leading an innovation revolution that will win jobs for America, raise standards of living and restore our nation’s standing around the world,” Timmons says. “Modern manufacturing touches every aspect of our lives, and it’s the backbone of our economy. Our industry is about the men and women who make things in America; it’s about their creativity and the potential we can unleash. Now is the time to embrace a manufacturing resurgence to protect and promote American Exceptionalism.”

 

Manufacturing supports an estimated 18.5 million jobs in the U.S. and contributes $2.17 trillion to the economy. However, American manufacturers’ ability to compete successfully is hampered by a wide range of public policy issues that must be addressed if the U.S. is to maintain its “mantle of economic leadership,” Timmons says.

 

That’s why Timmons is out talking about NAM’s “Competing to Win: Manufacturers’ Agenda for Economic Growth and American Exceptionalism”—a guide for manufacturing voters and political candidates in advance of the upcoming elections. The agenda outlines the challenges manufacturers face as well as what NAM considers to be much-needed public policy solutions to address key issues. Those issues include tax; trade; energy; environment; transportation and infrastructure; labor; immigration; workforce; health care; research, innovation and technology; and regulatory and legal reform.

 

The intent is to give political candidates a blueprint that will “ensure the manufacturing sector continues to strengthen and positions us well for the future,” Timmons says.

 

“It’s encouraging to hear candidates on the campaign trail talk about manufacturing, but we want more than just talk,” Timmons says. “We must ensure the next president understands what a real manufacturing agenda looks like. Members of Congress and candidates for office need to know what policies to pursue. We want voters to see what solutions a candidate who truly supports manufacturing and is focused on growth will embrace.”

 

The challenge for politicians isn’t too difficult, Timmons says. He explains that members of congress have already figured out that lower taxes, more effective and balanced regulation, a modern infrastructure and stronger trade agreements all open up markets, the challenge is to move forward on these actions.

 

What are your thoughts on the future of manufacturing in the U.S.? Would you like to see political candidates discuss the state of manufacturing and the supply chain?

The World Health Organization has declared the Zika virus—transmitted by mosquitoes—a “global public emergency,” and has called on different governments and medical communities to combat the spread of the disease and develop a vaccine. The U.S. National Institutes of Health, the Public Health Agency of Canada and the Butantan Institute in Brazil have all started work on potential candidates for a Zika vaccine, and several biotech firms are similarly at work. The question then becomes: How quickly can they develop such a vaccine?

 

Most people with a Zika infection may not even present symptoms. However, there is a growing body of evidence linking Zika infection in pregnant women with an increased risk of their babies being born with microcephaly. This condition results in an abnormally small head impairing brain development.

 

The front-runner in Zika virus vaccine development may well be French company Sanofi Pasteur, which announced it has launched a vaccine research and development project targeting the prevention of Zika virus infection and disease. The company is the vaccines division of Sanofi, and has previously developed licensed vaccines against Yellow Fever, Japanese Encephalitis and, most recently, Dengue. That’s important because Zika is closely related to Dengue: they belong to the same Flavivirus genus, are spread by the same species of mosquito and have a similar acute clinical presentation. Consequently, the company’s experience, established R&D and industrial infrastructure for the newly licensed vaccine for Dengue, Dengvaxia, can be leveraged to help understand the spread of Zika—and, potentially, speed identification of a vaccine candidate for further clinical development, says Dr. Nicholas Jackson, Global Head of Research for Sanofi Pasteur.

 

“We really hope to significantly reduce that timeline and cut years off the typical amount of time it takes to develop a vaccine,” Dr. Jackson says. “We have a jump start here because we have an infrastructure that we’ve put in place around our Dengue vaccine that we can tap into very quickly.”

 

In theory, creating a vaccine to generate an immune response against Zika virus shouldn’t be too difficult. Practically, however, there are numerous significant challenges.

 

“To be useful, a Zika vaccine would need to be effective and safe, but it's difficult to do both,” Ben Neuman, an expert on viruses at Britain’s University of Reading, says in a Reuters story. “It’s a balancing act.”

 

Vaccines work by provoking a person’s immune system into creating a strong response, but no so strong as to make them sick. The crucial target group for a possible Zika vaccine is women who are, or may become, pregnant. The largest challenge for a possible vaccine is that pregnant women are typically excluded from clinical trials until the safety of new drugs or vaccines is well-established in other population groups. It also makes for an uncertain, and potentially limited, market for any Zika vaccine.

 

On the other hand, although pregnant women are the focus of concern due to the virus’ association with a possible birth defect, Dr. William Schaffner, an infectious disease expert at Vanderbilt University, says in an ABC News report that they would probably not be the first ones to get the vaccine.

 

“Although we’re interested in protecting pregnant women, I think the actual strategy would be able to give vaccine to as many people in the population as possible,” Dr. Schaffner says. “It would reduce the risk of the mosquito becoming infected,” and spreading the disease to pregnant women.

 

That approach makes sense, not only to minimize the number of infected people that mosquitoes could bite, but also to prevent the spread of the Zika virus by other means. Investigators have been exploring the possibility the virus also can be spread through sex because there are reports of a patient in Texas and another in Colorado who acquired the Zika virus through sexual contact with an ill person who returned from a country where Zika was present.

 

What other challenges do you see for companies or consortia working on a Zika vaccine?