Path Home Shows 2014 Show Archive February 2014 Show 1406 Nick Pinchuk - Growing a Highly Skilled Workforce

Nick Pinchuk - Growing a Highly Skilled Workforce

Snap-On Inc. CEO Nick Pinchuk says ideas and hard work must go together if we are to be successful.
Nick Pinchuk - Growing a Highly Skilled Workforce

Nick Pinchuk - Growing a Highly Skilled Workforce

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Show Details

Show 1406: Nick Pinchuk - Growing a Highly Skilled Workforce
Air Date: February 9, 2014

 

Transcript

Rob McClendon: Well, Nick Pinchuk is the Harvard-educated CEO and chairman of Snap-On Inc., an S&P 500 company valued at close to $3 billion. So it may come as a bit of a surprise that Pinchuk believes that as a society we’ve put too much emphasis on college degrees. Speaking to members of the governor’s business roundtable, he told state leaders the American dream is being threatened by the mistaken belief of what it means to be a success in today’s America.

Nick Pinchuk: We are not Americans because we have a common ancestry. We come from all over. Nor do we share a particular religion. All forms of worship are practiced here. Nor even a specific geography. The map of America has changed as many times as the stars on a state. America is America because we are based on ideas. Americans are Americans because we have certain beliefs, and among those most important is we hold these truths to be self evident that all men are created are equal and endowed by their creator with certain inalienable rights and among these are life, liberty and the pursuit of happiness. And I want you to concentrate on the last one, pursuit of happiness. And what the founders meant with that was prosperity, the middle class, the American dream. And so it was, the idea of America pursuing the American dream. Now why is it America, how has America become what it has been today? Well, David Landis, the Harvard professor who wrote “Wealth and Poverty of Nations” and talks about why is it that certain nations are ascended economically and in lifestyles over others, talks about America and says America was ascended because of our middle class who knew how to make things and do things and get things accomplished and create prosperity. More recently, Paul Kennedy talks about World War II and the engineers of victory and he says the soldiers created an important component of winning World War II. But there was another aspect of it. The people who were in the factories, people like Rose Hill Monroe came out of the hills of Kentucky and worked in a factory in Willow Run, Mich., and she and her sisters created the industrial base. She became known as, later, as Rosie the Riveter. And she created the industrial base that allowed us to win the one war we could not afford to lose, middle class Americans delivering us.

Rob McClendon: Mr. Pinchuk, where did we slip up in terms of our shrinking middle class?

Pinchuk: Well, I think that what happened in the middle class is that two things happened. We allowed people to change or reassess what they thought the American dream was. That is to redefine, the American dream had always been the idea of establishing yourself in America, getting a job that would create a great, a living that would create prosperity and stability for your family and pride and fulfillment for you. And over time we started to interpret that American dream as something like you had to achieve at the highest levels to be a TV anchor or to be a CEO or to be an attorney, to be a, an investment banker and to have gone to a very prestigious four-year college. That was, became, the American dream. But in fact the American dream always has been and what has been most powerful about America is so many people can participate in it. Everyone cannot be an investment banker or a TV anchor or a doctor. And so that, I think, is the fundamental basis for this. And then along those ways, it sort of associated with that. We started to lose respect for the dignity of the work done by the people in the middle; the people on the line; the people who did welding, even though welding is very difficult to do in a correct way; car mechanics, even though cars today are much more complicated than we’ve ever seen. In fact there are more lines of code on a car today than on some airplanes. And so the people who repair them have to be very, very skilled. And yet we have, maybe, we do some of the respect and the dignity we give to those people. That’s where we slipped up.

So this is my message, America is a great country. And it’s a great country because of the middle class and the achievement of the American dream. It has succeeded not only because of the brilliance of the few, but the efforts of the many. We are challenged today because we’re in a global competition, a conflict. And our No. 1, our No. 1 weapon in that conflict is career and technical education, which will upscale our workforce and allow them to differentiate them and win the competition to be the amplifiers for the ideas. Grow the middle class again, and to do that, and to do that, as businessmen, as educators, as government people, we need to cooperate to shape the curriculums to be demand-driven. Call in the airstrikes so what kids are studying is exactly what’s going to lead to a job. We need to change. We need to change the optical outlook on these jobs. We need to restore the respect for the dignity of work. We need to bring the American dream back to what made this great, that is prosperity and stability for a family in a great job, not necessarily a rock star job. And we need to change these consolation prizes to an American calling, a national calling. Career and technical education has a heck of a PR problem, a heck of a PR problem. You see, students, young people who go into these jobs often, or pursue these lines of study, often are seen to have settled for the consolation prize of our society. I said this in Washington and, in a think tank in Washington, and the audience pushed back and said it’s not true. And I said, “OK, how would you feel if your son or daughter told you he was going to be a car mechanic, a great job that delivers prosperity and stability and can’t be off-shored?” And the silence in the audience, you could hear a pin drop. And the face of the people confirmed the answer; these jobs are what other people’s kids do, you see. And the problem is, America has lost the respect for the dignity of work.

Rob: I’m struck every time I go into a manufacturing facility how technical, how modern and actually how clean they are. Do we have a misconception about what labor is today?

Pinchuk: Oh, of course, I mean that’s part of the problem. We think of labor, particularly in a factory, as being dirty and dark. And that’s not the way it is any more. Labor in a factory, most of the factories in the United States today are bright and clean, and you could eat off the floor in a lot of cases because this is just good quality. And the machines that are working on those floors are very, very technical. And it takes a skilled person to run them, particularly if you are running a complex product line. One of the reasons why Snap-On is able to manufacture in the United States is we run a complex product line. We manufacture 80 percent, 80 percent of what we sell off our vans here in America, we manufacture right here, even though labor is a large component of what that hand tool is made of. And the reason that is, is because complexity and flexibility are important components in our product line. We offer 65,000 SKUs. So the short runs, the customization, require tremendous knowledge to be able to manage those machines over all those different items. And that means that you need a considerable person in that place. And what it does is it allows you to defend American manufacturing to manufacture right here. We use, I suppose you could say, the one inalienable advantage that American manufacturers enjoy, that is, proximity to the world’s greatest market. And that proximity is an advantage for us because it’s very difficult to lob 65,000 SKUs of product line, which is both complex and needs to be delivered, which is complex and needs to be delivered with flexibility. It’s very difficult to create that and lob it 10,000 miles in 12 time zones from Asia. So therefore proximity is ascendant in this model. We need to restore the American dream to what it was. We need to raise again our respect for the dignity of work. And we need to change these jobs, these careers, from a consolation prize to an American calling because there is no path to American prosperity in the future without an expanded middle class and an expanded group of people who are enabled, upscaled and capable of doing things. This is the lesson of the last 250 years for America. We need to do it again.

Rob: You know it is widely accepted that we have a skills gap here in this country. You set out three areas that we need to address. The first one being career and technical education.

Pinchuk: Yes.

Rob: Tell me more.

Pinchuk: Well, I think actually I would suggest that all of it revolves around career and technical education. Career and technical education in that competition, in that conflict, is our greatest weapon. But there are three things, which, where business and education and government can cooperate. One is shaping the curriculum, making curriculum demand-driven so it matches the jobs that are actually out there. And business has to be active in doing this. But it takes the idea that the company needs to realize that it needs to be active in guiding the curriculum, otherwise the curriculum won’t match. The National Association of Manufacturers says that 600,000 jobs, just in manufacturing, are open simply because we can’t find a skill. And the National Association of Manufacturers also said, 75,000 members, two-thirds of them say the No. 1 criteria for selecting the site of a factory is having a exceptionally skilled workforce. Two is the fact that there’s a heck of a PR problem. People tend to view those young people who, or middle-age people or old people who participate in, in, certainly young people though, who participate in career and technical education pursue technical careers as having settled for the consolation prize of our day. They are, in Huxley terms, they are viewing them in some ways as the beta minuses of our society. And this, of course, is not true, because these jobs lead to great stability and capability and fulfillment and prosperity for a family. But we now view them as the consolation prize. We have lost the respect, as I said earlier, lost the respect for dignity of work. Because, technical work, those technical jobs have been the bulwark of the middle class and have created the American strength we enjoy today. There is no path to prosperity without having an enabled middle class and an upscaling of the American workforce. And that won’t happen unless we raise the profile and acceptability of those jobs and make them a national calling. Kennedy did this in 1960, when he said we’re going to the moon in 10 years, and every high school young person in America thought that becoming a scientist or an engineer was enlisting in a national calling, almost like they were going in the Army. This can be done here by leaders in business, by leaders in education and by people in government particularly, like, like the governor here in Oklahoma who does that.

Now there’s a third thing, which is priority, which is, we need to support it with government and with business. And what’s happening in government, I believe, is that for sure is that, Congress and the Senate will endorse technical education. They’ll say, “We endorse it,” but when push comes to shove, they will sacrifice the interest of technical education on the altar of other priorities. They’ll endorse it, but they won’t support it. They won’t prioritize it. So when other, when the time comes to allocate the money or decide where to spend political capital, they won’t do it on education. And we need to lean on them to recognize that education should be the No. 1 priority. Now, before business can effectively lean on them and before education can effectively lean on them, we have to actually act like it’s the No. 1 priority. And part of the problem is that business itself tends to like anything that will favor business. In other words, if there’s an issue that is favorable to business, we characterize it as essential. Well, that’s not really true. And so I’m willing to say for us, for me, that career and technical education is the No. 1 thing on my priority list for a national agenda, above any kind of trade changes, above changes in the corporate income tax. And we pay a high corporate income tax. And so an adjustment would favor us for sure. Yet I think education is more important. I’m willing to say that, and we need to say that directly to our leaders in both education and in government and lean on them to act the same. And that creates the priority that will help this. So three areas to enable this career and technical education to be the weapon it deserves to be: one is call in the airstrikes and shape the curriculum to be demand-driven so it fits what’s needed in industry; two, work on the PR problem and change what is a consolation prize now to a national calling and restore the respect for the dignity of work and restore the American dream to what it always was, that is the middle class, not some extraordinary job which can only be occupied by a very few number of Americans; and thirdly, to ask our government and our educators to prioritize this as their No. 1 priority and to act like it.

Rob: Nick Pinchuk, thank you for your insights.

Pinchuk: OK!

Rob: Appreciate it. Thank you.

Pinchuk: Sure.

Rob McClendon: Now if you would like to see my full conversation with Nick Pinchuk, we do have that streaming on our website, as well as his entire speech, which truly is one of the best I have ever heard on workforce and the economy. Just go to okhorizon.com and look under our value added section.