localities and partnership with universities, firms, business associations, community colleges and others can do to take up the slack. and we've got two wonderful panelists here. dominic barton is the major domo of mckinzy, global managing director. obviously based in london. but also on the board as has been mentioned of the brookings institution. tom connelly is senior executive with dupont. and your boss was supposed to be here, but she was involved in a skiing accident. this is the problem with the winter holidays. but we really appreciate your taking the time. and i -- you know, frankly, i think secretary bryson set this up very well. i think he marched us through why manufacturing matters. why it's such an innovative

sector. why it has such a dramatic impact on wages and incomes. critical to the middle class. why it's important to the trade deficit, broader fiscal balance of the united states. why it interplays with environmental sustainability, the potential for clean tech. i -- i think he really set this up well, and i think the competes report coming out of the department of commerce does that in the same vein. what i like to do is -- is sort of really from your particular areas of expertise and focus, sort of drill down further. and dominic, i thought i'd start with you. because i think one of the most interesting piece of work coming out of mckinsey, daniel patchhog is here, michael park, other of your colleagues, is this focused on advanced industry. and the need for the united stat states to, as glen said, with a

clear, laserlike focus, to engage on -- or to understand that there are certain sectors of the american economy. aerospace. automotive. defense. medical devices. i mean, we could run through the list. i think we probably would have the same kind of conclusions. that are absolutely fundamental for us to stay at the cutting edge of innovation, at the vanguard of global competition. but that requires us to rethink what we do and the sort of coproduction between business, university and the public sector. i thought it might be helpful just as sort of a platform setter for you to describe why the mckinsey interested in advanced industry and why we need perhaps even to reframe the conversation about manufacturing in this way. >> thanks, bruce. it's a -- it's an honor to be here and also work with

broogings. mckinsey and brookings are working in sort of a close collaboration on this topic because we also think it's vital. you already mentioned i think just as a bit of background, the sector and the various companies or businesses that are in it. a couple of more facts, maybe just on why we think it's important. and then maybe some of the things that we've done and what we see as being some of the impartives. it's roughly those industries that you talked about, the automotive assembly, national -- the defense, medical devices and so forth, it is about 10% of the u.s. gdp. that's the size of it. but it's about 45% of our exports. and it accounts for about 4 million of what i would argue very, very high-skilled jobs. we talk about knowledge workers. you think about the whole chain. this is at the far, far end. so it's, we think, while it's 10%, it punches way above its weight. the secretary talked about the

amount of r & d that's actually been done by these players. most of that 67% is mostly done by the advance industry players in manufacturing. that's where the bulk of this -- this is where the engine is. actually, while we would argue that all of the trends are heading south, we heard about education. we've heard about the lack of long-term thinking. the trends are heading south, and we think south quite quickly. we actually do have quite a strong base, and we shouldn't forget that. i think we invest more than the next four countries combined. that's changing. we heard what china's doing and so forth. but we believe we're in kind of a case now of a use it or lose it type of thing where we've got to make some big shifts to -- to drive it. and one of the reasons why -- actually, it was about 18 months ago we decided to set up a sector called advanced industries, but to get the r & d, to be able to get the capabilities to serve these types of institutions. if you look at the big forces at work in the world moving ahead,

we've all heard about the rebalancing of the world towards asia and brazil and africa and so forth. we're talking about the technology grid, the speed of information, the amount of information that's moving, this repricing of the planet that's going on. the -- the demographic challenges with an ageing population. we're going to move from having basically, you know, three retirees for every worker, we're going to end up moving to a situation which doubles that by 2050. so there's all sorts of productivity issues that have come about, major shifts going on. if yu look at, for example, food, which we think will be one of the biggest industries of tomorrow, ag food, the way that we're going to get the ability to feed the 3 billion people and move it is actually through a lot of the advanced industries technology. it's going to be vital. if you look at what israel is doing right now in advanced industries in food, it's phenomenal. making -- helping cows produce

from 5,000 liters of milk to 11,000 liters of milk a year. this is, by the way, a big deal for china. they're looking at this saying how can we buy these professors and get them over here. i could go through countless examples of what's happening just in food, which you might think is low tech. it's high-tech. and we -- and the u.s. is in a wonderful position to kind of drive that all across the value chain. and i think dupont is doing a lot of that. you look at energy which is going to be a big sector. you've talked about this, bruce. the secretary talked about clean tech and so forth. that's a massive shift. health care. i mean, health care, fortunately or unfortunately, is going to be one of the biggest businesses of tomorrow given the demographics. a lot of the advanced industries is what's going to be there to make it productive. and we're seeing a lot happening on that side. and then logistics and transportation. this is the country that invented airline travel and travel -- you know, all this sort of thing. that whole sector itself is

moving forward. so with these forces at work that we see there, the amount of business opportunity which is going to be created and driven through this sector in particular is math oth. it's a different type of multiplier effect than we think. we all know the old stories of the tang from the moon mission type of thing. but we're going to see orders of magnitude, multiples of that. we can't predict what those are. we just know they're big. we think it's very important that we own that. >> right. >> so that's why we're very passionate about this area and we think there are a lot of things that -- that can actually be done. and we think it's -- while we have sort of the scale to be able to do it, all the forces are going in the wrong direction. and so we think a jolt, a pretty massive jolt, is needed to be able to shift the forces. >> one follow-up question. then i want to talk to tom. this is a conceptual narrative,

really, about what drives what in the economy. what's absolutely critically important. and obviously when mckinsey quarterly comes out, the germans read it, the french read it, the japanese read it, the british read it, the chinese read it. >> yep. >> do you get a sense that our competitors in the mature and developing economies have this clear sense about advanced industries and their strength, and therefore, moving to policy, the platform they need to set? are we alone in the world for -- by basically not understanding that sort of core insight? >> i -- i think we're quite far behind in the under -- understanding and actually the drive for doing it. and if i compare it -- i just look at recent travels. and drew levers talked a bit about this with germany. china, i know we always talk about china. i actually was asked to go and talk -- they have a special initiative in their 12th

five-year plan with seven strategic industries. they're all advanced industries. and the amount of money that they are going to put into that and how -- and they're on to immigration. they're talking about -- one of the big discussion points was, how come all of the -- we don't have any nobel prize winners. zero in terms of the sciences. except for those that go to the u.s. what's going on? how do we shift that? how do we move it? so you have china. you have, i'd say, a massive focus on that side with the resources and the planning and the time frame that goes on. the germans, the french, the amount of effort the french are putting into foreign direct investment and advanced industries is -- is incredible. there is a lot of push. the english with what's going on with -- with cambridge. so it's a -- i'd say that the -- the focus on it and the time frame and the resources and the desire to kind of cut through the blockage, to move it, i think is at a faster pace.

and i think we're -- we're slow. and -- and, again, we have an advantage. but over time that will -- that will disappear. >> that's a great context for the conversation with tom. and tom, you know, just for the audience and for everyone watching us in the websphere and twittersphere and the rest of it, something about dupont. sixth largest exporter in the united states. over two-thirds of your manufacturing base is in this country. over half of your workforce is in the united states. and 50% of them are in traditional manufacturing jobs. this is a large company in an advanced sector that has an enormous impact on people's lives and, obviously, on some of the broader economic indicators that we care about. what's your perspective and the company's perspective about the dialogue you've heard so far about do we have a manufacturing

moment? is there a potential for industrial revival? can we not just double exports within a certain period of time, but really have this focus on global engagement become more part of our dna in the u.s.? what's the perspective from a large company? >> okay. that's -- that's a lot of questions, bruce. so let me wade into it. yes, we are the sixth largest exporter. we run a balance of trade surplus from a u.s. perspective. we like the u.s. and our manufacturing base here, and we feel that we're able to compete with people anywhere in the world from a u.s. base. i kind of pushed back, though, on the notion of traditional manufacturing jobs. traditional manufacturing jobs are changing so quickly. i -- i -- there are no low-tech manufacturing industries left. there may be some low-tech producers, but they're not going to be around for long. so if you're in the manufacturing business, either the product you produce has a

distinct advantage or the -- the process by which you produce it or your logistics have an advantage. but if you don't have a high-tech advantage to your operation, you're not going to be in the manufacturing business for very long. i think we can do that from a u.s. base. but we need to change some things. we've talked about many of them already this morning. we see more and more consumers around the world. the u.s. is still the largest and most attractive consumer market in the world. but we've seen over the last few years, and really post financial crisis, the emergence of china not just as a producing nation, but as a significant consuming nation. we're seeing the same thing in india. these are vast markets for u.s. products that really didn't exist a decade ago. now, what do we need to do to be ready for that? certainly in the new world, the next economy, if you will, trade. open trade. free and fair trade agreements are critically important.

if we're going to have an innovation-based economy, ip protection takes on enormous -- we innovate. we need to protect it, whether it's a product or a process. whether it's -- it's via a patent, and the u.s. patent office is the gold standard for intellectual property around the world. we need to protect and enhance that. it's about pendency. we can't get the pendency get too long. it's about the quality of the examinations. we're the gold standard. we've got to maintain it. i think it's also about removing some barriers. we heard earlier from -- from andrew and clouse about that. there is some things about the regulatory approvals and how long it takes. i know dominic and i were both in asia. i come back here and i talk about asia clock speed. things move faster there. we will be at a disadvantage if we allow our processes to take . but we definitely have a strong future, and there is a bit of a moment right now given exchange

rates, et cetera. >> let me stay with you about the issue of workers. at various levels. because what you described to me the other day was a very large portion of your workforce eligible for retirement in a very short period of time. so my -- my sense is that you need workers with certain skills much more substantial than quote, unquote, traditional manufacturing. do you have the sense that our high schools, community colleges, intermediaries, labor or others, are able to produce these workers? and then, secondly, at the management scale, someone came up to me during the break and said a critical question. actually, there were about three or four of them in here. is for topnotch management talent coming out of the best business schools here and around the world, still an attraction to the financial sector. manufacturing sector, not as

attracted because of compensation issues and other issues. how do you think about the workforce challenge really at these multiple scales from your perspective? >> let's talk about the production level. clearly, again, we heard a bit about this this morning. there is a need for skilled crafts workers. people who are really good at being able to build and maintain plants. they are in short supply. we've been able to meet our needs, but as you say, our needs will be increasing in the next several years. and they need to be met locally. because most of our production workers are recruited in the area. at the plant operator level, it used to be the plants were 20 years ago manually controlled. it's now all computer-based distributed control system. the quantitative skills and the computer skills required of a -- of a plant operator in a chemical operation far exceed where we were a while back. i think it's at this level that

the community colleges can play a very significant role. and it's not about a general curriculum at the community college level. it's really about a crick lat designed for the local industry to provide skilled workers that we'll need. i will say, we have had great partnerships in areas where we manufacture. the communities, the counties, the states really do want to work with us in terms of developing those skilled workforces. at the -- at the professional level, i would say we recruit mostly scientists and engineers. over 70% of our professional staff have engineering ining d. we are concerned about the numbers of u.s. students, u.s.-born students who are interested in careers in science and technology. at the research level, we hire research scientists that are trained by u.s. research universities. the leading research universities. you look in their chemistry department or physics or biology department, you'll find that half of their graduate students

were born, again, outside the u.s. so immigration policy to allow us to attract and retain talent from around the world is important. at the management level, i'm an engineer by training, and i'm in a management role now. i am concerned that management talent may find the financial sector more -- more attractive, perhaps. but at this point we're a leading company in our field and we're able to pull in the talent that we need. >> dominic, what do you think about this workforce challenge at all levels? and whether we are able to essentially deal with it? not just with our sort of institutional arrangements, but with sort of our cultural norms in many respects? >> well, yeah. i think that's a -- it's a broad area. this may be a couple of angles on it. we've talked about the immigration before. i just would completely echo what clouse and andrew said, too. i think if you look at the statistics and you look at the -- where the source of the

talent's coming from, a big chunk of that is from foreign talent. if you see what's happening right now at the m.i.t.s and so forth, people who are graduating and, for example, we try and hire them. and we're probably going -- they probably should be going -- not to law school. we're probably part of that. i should be careful what i say. all of a sudden we'll bring them in. they can't get a job with us. they can't work in the u.s. so we send them to canada. we send them to germany. guess what -- guess where we start putting some of our center of competence for advanced -- it's ridiculous, this thing. i think we have to blow that cap. i don't know how much screaming -- i don't know whether we should camp out in tents. maybe that's the business. we should camp out in tents until something happens. but it is seriously a big issue just on that -- that dimension. i think a second one is the -- what i call around the polytechnics. there's kind of an image -- this is maybe when you get into the cultural -- there's a cultural

image -- you go to a polly tech anything, you haven't really quite made it. i think that's a very wrong-headed view of how things are. and we have some very good polytechnics in the u.s. and i think we've got to put more resources behind them and the community colleges. because, you know, in doing some of the work on the unemployment gap of what's going on, there are several million jobs that are not filled because there aren't the skills. it's the welders and so forth that are there. so i think we have to -- we have to change the image. this is a very good thing to do. and it creates terrific jobs and opportunities for people as they move forward and so forth. i think there is a cultural image very different from germany, very different from other parts, korea and so forth. interestingly enough, china hasn't figured this part out. the effort is on high-end universities. they're creating not only hundreds of thousands of engineers, which is one of

their -- they're they are creat hundreds and thousands of people that can't get jobs and i think they are finally going to get it that it's the polytechnics that matter. on a cultural side, we need to move that. on a third aspect, it's something that we found from the work that we did with brookings and in talking with some of our clients in this area. one other thing we worry about, i'll give an example, is risk culture. if you look at some of the defense companies, something that we've looked at, with the way that media works today, it's kind of like you're getting an x-ray exam through every development of your product. you are going to have mistakes made when you're doing product development. i go to the f-35. these are very complex devises that are being built and there's a sense out there now i think from young high-powered talent,

if you want to make a career and move ahead, you probably don't want to take that risky project because chance is there will be a screw up and you'll hear about it. we all mentioned how boeing -- it's like we've got a youtube version of what is happening. i'm not saying we shouldn't have trans pa transparency, i'm just saying how can we improve that in the future. there's something about a risk culture we've picked up with management, top talent deferring to the big established business units as opposed to doing new things. it's a very micro thing but something on the culture side. we are way too short-term in our thinking. i think that we are driven in our quarterly reports. i think the quarterly report focus has seeped into our r and

d and so forth in companies. i think from a cultural point of view, i think we have to shift. >> it sounds like both of what you're saying, particularly with regard to international comparisons, because i think the cartoon version of international comparisons is they get stepped on. you know, regulatory approvals expedited public sector does what it needs to do around infrastructure, et cetera, et cetera, et cetera. what you're describing, particularly with regard to the german model, is that there's an ecosystem where they interact with the research institutions and the skilling institutions and almost like a seamless way. am i right? are we reading too much into what other countries are doing or are they really perfecting this and we tend to be more come part mentalized, more segmented?

business separate? you've described some helpful alliances with the community colleges. is that the norm? is it the exception? >> from my standpoint, it's something that is developing here. >> right. >> the need has become more acute because of hiring needs. also because of the increased skills associated with those new manufacturing jobs, if you will. let me say that looking at models around the world, we mentioned germany. i've had experience with switzerland. there are vibrant manufacturing sectors and they all have very good skilling. i like that term. the skilling piece of it. it's hard to argue with the u.s. research establishment. but at that skilling, that crass, the community college, the polytechnic as you referred to them, that piece of the puzzle i think is done better in certain manufacturing-oriented economies, like germany, like switzerland, like korea, like

japan. >> the thing i would say is that on execution i would say many of the countries beat us and i was mentioning in the break an example from beijing where this was not to do with advanced industries. it was about start-ups of new businesses and meeting the mayor of beijing he wanted benchmarks. it takes six days singapore, obviously it can vary doing complex medical product versus setting up kentucky fried chicken. six days is the measure. and for beijing, the equivalent was 36 days and shanghai was 35 days. three months later, going to visit the mayor up on the wall, it was chinese letters that i couldn't understand but there were five numbers up there. 36, 35, 14, i can't remember the other one. i said, is that some new slogan? he said, no, that's how long it takes to start up a new

business. someone had -- i wish he had remembered that it was me -- and it's there. and i want people when they come into my -- you go into his office this way and then turn that way. that's what you saw. i'm sure it's a different thing there. but that's, to me, kind of this execution. what is not there -- and i completely agree, is the cultural dimension. the number of countries that have tried to develop a silicon valley, there is a long list. malaysia, the super corridor, russia is doing this right now, trying to build this. and i think that's very difficult to try and replicate. that's the magic, if you will, that we have. and that's why i go, why aren't we doing more of that? we have the brode institute of medical. we can talk about the complexities of getting m.i.t. and harvard to collaborate, which they did. if you're at the m.i.t. campus,

it's m.i.t./harvard/brode. but the point is, they are working with business and research and it's a very vibrant place. i think we have many opportunities like that here. we've talked about that before. we have cyber security. it's a very important and fortunately or unfortunately, a huge growth business or area and i think that's something where we could -- how do we put that together? we've talked about fracking. there are ways to build those centers. and by the way, we can get other people's money. not only can we get talent, this may seem strange, china, for example, has a lot of money obviously. they need to develop this for their own development. it's not a pride or a control -- they have to do energy-efficient

investment to be able to grow without melting the place. it's an imperative. what we've been suggesting to them is, why don't you spend some of that money in the u.s.? spend that money in the u.s. to get the technology. so i think if we can build those sorts of areas, we could actually not only attract the talent but also the money. but we need to get moving on it. >> i want to switch to policy and i think between the two panels that we've already had and looking at what the advanced manufacturing partnership has put out, there is really a common suite, a policy of forms that we need to undertake here. we've already mentioned on this panel, you know, trade, i.p., immigration, skilling. i mean, we could easily add infrastructure, tax, energy. there seems to be the common

seven to ten areas of policy. in the last year, what have we gotten done in this town? we've gotten the free trade deals done. and, you know, some advances on patenting modernization. but relatively speaking, not the kind of sea change that we seem to need to set a platform or what we're building on and retain it. so my question is, if you have to prioritize -- this assumes that there's a we have to get these two or three things done because of how you see the competitive threats, what would those be at the national scale and the second issue is sort of building on the last conversation with secretary bryson. if the national government goes on a frolic and detours for a

period of time, can we imagine the states, cities, metros, advanced research universities, major corporations doing what they can do to set the platform for advanced manufacturing and how would you prioritize that? we need national slugs. how do you prioritize in the near term and then assuming we are still in the polarization, can we push this out in some structured way to our laboratories of democracy. >> i think the education, whether it's k-12, university, community colleges, that's one