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2003 Speeches
Jim Albaugh

James F. Albaugh


Chief Executive

Boeing Integrated Defense Systems

"The Engines of Economic Growth: Why a Skilled and Job-Ready Workforce Is Critical for a Knowledge-Based Economy"

The Council of State Governments

34th Annual Midwestern Governors' Conference

St. Louis, Missouri

November 07, 2003

Thank you, Governor Holden.

Governors, ladies and gentlemen, thank you for that warm welcome. It is a pleasure to join you. And an honor. I'm well aware that I am, in effect, speaking to the Heads of State of one of the world's major economies. A region with a $2.3 trillion GDP (gross domestic product) and an impact on global events that few countries can match. I haven't been around this much firepower since our company's last missile test - It was successful, too, by the way.

The Midwest is not just a huge economy, it is also home to more than 28,000 Boeing employees, as well as thousands of great people who work with us. We have more than 3,700 suppliers and vendors in your states - from the North Dakota folks who make cargo compartments, to a vinyl fabric manufacturer in Ohio.

And right now, in your classrooms, from kindergarten through graduate school, I know there are many future Boeing men and women.

For all of us, the work of your conference - creating an economically strong, job-healthy future for this region - is tremendously important. So it is a special privilege to be here. And I very much appreciate the opportunity to participate.

I'm joining you toward the end of your meetings. You've heard the experts; you've discussed the issues; the working groups have reported, you've made your recommendations and we've had this great lunch. If I had to guess, I'd say there is probably only one outstanding question on your minds - How long is this guy going to talk?

What I do want to do is talk about how the knowledge economy intersects with my industry - the aerospace and defense industry - and what that means for this region and our future.

An early title for these remarks was, Why a Skilled and Job-Ready Workforce Is Critical for the Knowledge-Based Economy. But that's a bit of a misnomer. A talented, able workforce isn't critical for the knowledge economy. It is the knowledge economy.

Revolutionary technologies transformed the economy of the United States in the 20th Century but human creativity has remained the driver.

Economic growth depends on people who can use technology to its best advantage, imagine and create new technologies, and even more important, people who can network our capabilities, to create more effective, more powerful systems to meet society's needs.

In defense, that need is to deter and defeat global threats, even as those threats shift and evolve. At one time, this might have meant manufacturing military platforms - ships, tanks, and aircraft - and constantly improving them to keep America's edge. In the Cold War, the U.S. and our allies faced one major adversary, what some call a peer competitor.

Today we face a far different threat. Our enemies may be hostile governments or they may be non-state actors like Al-Qaeda. Their forces can be highly mobile. They can compensate for weakness by quickly changing strategies and tactics. Their goal is to disrupt and destroy the global system - the confidence and security - that supports American freedom and prosperity.

We are talking about a wide spectrum of threats and sources. And we lose if we think only in terms of military platforms - the nouns of defense. We have to think about the verbs of defense - actions and behaviors that guarantee success.

That means a new focus on capabilities, and a new effort to maximize them. We do that by using new communications and information technologies to network soldiers, tanks, aircraft, ships, satellites and more. Each becomes a link in a global grid of information and action.

The result is a dynamic array of people, platforms and data. In the future, troops on the front lines, and commanders over the hill, will be able to call up the information they need - whether it's from a satellite or an unmanned aerial vehicle or a passive sensor. Huge amounts of data can be gathered, turned into information and analyzed, sifted for relevancy, and acted on, fast. That gives our people what's called "global situational awareness" - information and insight about every player on the chessboard, now and five or ten moves ahead.

We call this kind of system, "network-centric operations." Instead of having different units working separately, they are working together, and far more effectively.

You know, we just passed the 20th anniversary of the Grenada operation. Well, some of you may remember the phone card story. Navy SEALs were pinned down under fire. They could hear Air Force gunships overhead, but they couldn't reach them; their radios were not compatible.

One of our guys finally figured out he could get to a regular phone and use his long-distance calling card. He placed a call to Fort Bragg, North Carolina. The operations commander eventually radioed the gunship to provide fire-support.

True story - And a big embarrassment at the time. Although, I think that SEAL should get a little credit for initiative. But, this and other failures were a wake-up call. And the solution was never just about getting new radios. The solution was to think in an entirely new way about how our people should work together.

There's no question - network-centric operations are still a goal, not a reality. However, we are making progress. Compare the Grenada story to our recent experience in Afghanistan, where giant Air Force B-52 bombers, using GPS-guided smart weapons, performed close air support to special forces on horseback.

You could really see the changes when our troops went into Iraq last spring. The speed and precision of the combat phase was unprecedented. Networked weapons and information systems, and integrated command and control, played a significant part.

All this is bringing a new vision into the defense industry as well. Our customer is in transformation - and we are as well. At Boeing, we've brought our aircraft, missile, space and communications units into one organization, Integrated Defense Systems, which is headquartered here in St. Louis.

At Boeing, we are working to make every aircraft, satellite, weapons system and other product "network ready," to be able to be interconnected, to be able to share information and capabilities across a network with every other platform and soldier that might be in the battlespace. In fact, we think this is so important that we're developing a common open communications architecture for all defense systems and platforms, whether we build them or not.

And this year, we became the lead systems integrator for the Army's Future Combat Systems, based here in St. Louis which will transform how the Army conducts their missions in the century ahead. We expect this and other programs to increase jobs here by at least 1,000 within five years.

But defense programs are just part of the picture. Because I think the same kind of approach that is re-energizing our defense systems can benefit our homeland security as well.

Consider the sheer size of the Homeland Security challenge. Each year, 330 million non-U.S. citizens enter our country. Eleven million trucks and two million rail cars cross the border from Canada or Mexico. And 7,500 foreign-flag ships make 51,000 calls at U.S. ports. They bring more than six million containers into our country every year.

We have an extraordinarily open society but we are dealing with an enemy that will not hesitate to use any weapon; to strike anywhere. And by the way, they know the power of networking, and they use computers to attack our country and our infrastructure.

The question is, "How do we protect our people?"

We won't get the job done just by hiring more inspectors and guards, and installing more sensors and equipment. Instead, we have to leverage these capabilities. That means networking our data bases and systems to create a whole new level of situational awareness - a whole new picture of the chessboard that shows us where the terrorists are and allows us to penetrate their networks and disrupt their plans.

This kind of systems thinking can also help us respond in a time of crisis. Networking our information systems would speed critical knowledge to first responders, helping them identify threats and save lives. Integrating our communications, and making equipment interoperable, would also help responders from different jurisdictions work together.

Let me show you a video which I hope explains what I mean.


So what does all this have to do with the workforce? Everything.

The old defense industry was all about building missiles, bullets and bombs. Now it's about building knowledge and integrating large-scale systems. This is certainly also true for Homeland Security. We still need to bend metal - but a bigger, more difficult part of the job is building the networks that put that metal to work.

We can't succeed without people who are trained to think differently. People who have access to and an understanding of technology and, who keep learning and adapting as technology changes.

When I studied engineering in college, the PC had yet to be invented, a calculator was a major student investment, the space systems I would later work on hadn't even been imagined, and the knowledge networks that drive today's economy were decades away. I haven't met a single Boeing employee who can't tell similar stories of change. And their ability to learn and adapt has been critical to our company.

Today, the great universities of the Midwest are graduating students on the cutting edge of today's science and technology. At high schools and technical schools, kids are learning computer skills and advanced production techniques.

But I can guarantee you that when they reach mid-career, the state of knowledge will be in a much different place and their ability to compete - our ability to compete, as a region and a nation - will depend on how well Americans can re-create their knowledge and keep learning.

Federal Reserve Board Chairman Alan Greenspan, has called the challenge "transforming knowledge into economic value." It's what built your states and our nation. And it's what will sustain American economic security - powering good-paying jobs and a strong tax base. But that won't happen without our continued investment in education, at all levels and all ages.

One critical area is engineering and technology. Statistics show that not enough young people are entering the workforce in these areas. The three largest aerospace companies today have about 10,000 job openings. Some 60 percent of those jobs have "engineering" in the job description. Eighty percent mention "systems." And it's not just aerospace. If you take a look at Department of Labor statistics, you'll find that nationwide, eight out of ten of the fastest growing jobs involve computers and systems.

The problem isn't a labor shortage, it's a skills shortage. And that's an issue that concerns all American businesses. There is not a major corporation today that isn't concerned about education and their future workforce.

In your states alone, Boeing contributes almost 14 million dollars a year to philanthropic initiatives, with education as a priority. We support virtually every major Midwest university. We have a lifelong learning program for our employees.

So education is critical. But it would be misleading to imply that education can solve the workforce development challenge. Getting the right skills for the right jobs, attracting and keeping employees and industries, competing on a global basis - these and other issues present a complex, multi-dimensional problem. And it's one that involves multiple stakeholders: industry, employees and families; government at many levels; education professionals; the media; and others.

Let me suggest that what we're looking at is a large-scale systems integration issue. Just as Boeing and the DoD and the Department of Homeland Security have to ensure the integration and interoperability of systems to guarantee our country's defensive capabilities, states and local governments are faced with similar challenges.

How do they align their approach to education, communications, transportation, taxation and social services to maximize their competitiveness? Optimizing only one or two will only sub-optimize the overall solution. To be successful we must think strategically, develop new ways to share information, develop a common vision and work together. It means bringing this region's vast capabilities together to maximize our impact. And it means involving all stakeholders in the process.

Can we do it? One of the great Midwesterners said, "I have never seen pessimists make anything work, or contribute anything of lasting value." That was Harry Truman. I guess I'm a Harry-Truman kind of optimist. So I'm here to tell you that we at Boeing want to help.

The fact is, circumstances have put our industry on the frontline of the issues we've been talking about here. And compelling business reasons put us in the Midwest. Boeing knows the potential of this region. We believe in the place and the people and the values. And we hope we can participate and contribute to a great future. Together, I know we can succeed.

I understand that some of you will be going to our St. Louis facility this afternoon. I hope you'll enjoy the visit. And I hope all of you will have an opportunity to talk to us at Boeing in the days ahead.

Thank you very much.