1 Digitalizing America’s Advanced Manufacturing SectorGet with the Program Digitalizing America’s Advanced Manufacturing Sector Mark Muro Brookings Metropolitan Policy Program NACFAM September 7, 2017 @MarkMuro1

2 1 2 3 Digitalization: What it is; why it mattersA new analysis and national trends 3 Digitalizing advanced manufacturing

3 1 2 3 Digitalization: What it is; why it mattersA new analysis and national trends 3 Digitalizing advanced manufacturing

4 Technological innovations are transforming our economyEdit economy overview slide with a more digital image (more guidance coming) Relentless pace of technological change Rapidly changing business models “Digitalization of everything”

5 A whole new world beckonsVirtual design and simulation Internet of Things Manufacturing as a service Big Data analytics Manufacturing “start-ups” Here we need a slide that prompts the group for discussion of the new digital technologies that are remaking the manufacturing now, including:                 Visualization and simulation software                 3-D printing                 Advanced robotics                 Internet of Things Can you help design a slide that fits into the format and look of the deck and perhaps:                 Depicts some of these techs                 Suggests change they are creating

6 What we mean by “digitalization”What is “digitization?”                 Digital as general purpose technology                 Pervasive, transformative—info from Brynjolffssen, McKinsey, Brandstetter coming Digitalization is the process of employing digital technology and data to transform business operations and create value

7 Opportunities include productivity gains and transformed industriesHeadline: An explosion of digital tools is transforming almost every industry Left (tools): (Can ask Dustin for photo or other research) Microsoft Office logo Salesforce logo Amazon Web Services image or logo Image of a phone running an app Image for artificial intelligence (small block of 0s and 1s?) Right: Images or logos for industry change Robotic mfg (Tesla factory) Amazon same-day delivery in retail (pic of Amazon truck) Ride-sharing (Uber) Health IT Education online (MOOCS)

8 Challenges include an IT skills gap and limited overall digital proficiencyworking-age Americans are unable to use , web search, or other basic online tools 100,000 60,000 Source: BLS Presentation, 2016 Source: OECD

9 1 2 3 Digitalization: What it is; why it mattersA new analysis and national trends 3 Digitalizing advanced manufacturing

10 Two categories of O*NET digitalization dataHow we studied digitalization Comprehensive digitization score from 1 to 100 Two categories of O*NET digitalization data 545 occupations Software Developers, 94 Computer Systems Analysts 79 Lawyers 58 Construction Supervisors 55 Registered Nurses Security Guards 31 Restaurant Cooks 18 Construction Laborers 17 Personal Care Aides 14 Knowledge of Computers and Electronics Interaction with Computers 91% of the U.S. labor force

11 We sorted occupations by high, medium, & low digital requirements(digital scores above 60) Medium (digital scores between 33 and 60) Low (digital scores below 33) Lawyers Registered Nurses Security Guards Restaurant Cooks Software Developers Financial Managers Computer Systems Analysts Automotive Services Technicians and Mechanics Construction Laborers Personal Care Aides Market Research Analysts Office Clerks

12 The share of jobs requiring high & medium digital skills has skyrocketedShare of U.S. employment by digital skill level Administrative support 39 64 National change over time Tool & die makers 3 51

13 Industry digitalization varies widelyShare of sector employment by digital score, 2016 Higher paying Lower paying

14 Digitalization drives industry productivity growthAnnualized Productivity Growth by Sector, Oil & Gas Extraction National change over time Information technology Advanced Manufacturing Media Wholesale trade Management Retail Trade Healthcare Services Finance Educational Services Mining (except Oil & Gas)

15 1 2 3 Digitalization: What it is; why it mattersA new analysis and national trends 3 Digitalizing advanced manufacturing

16 Digitalization is a defining trend in advanced manufacturing

17 24 39 The sector is rapidly digitalizing Digital score, 2002Employment in advanced manufacturing by digital skill level 21.                 Left panel:  Display 2002 and 2016 median digital scores with arrow pointing from 02 to 16                 Sub for “76th” the region’s ranking for score change and label as:                                 Upskilling rank among largest 100 metros Advanced Manufacturing Sector 24 Digital score, 2002 39 Digital score, 2016

18 Advanced manufacturing occupations are changingTech-oriented occupations are increasing their share of advanced manufacturing employment at the expense of routine occupations Occupation Name Job Change, Avg. Annual Growth Rate, Software developers, systems software +73,130 — * Software developers, applications +51,900 Operations research analysts +3,050 6.0% Graphic designers +6,720 5.6% Computer systems analysts +5,520 1.6% 25. Create new slide showing fast growth of key, larger, big changing occupations’ digital scores in auto along lines of existing good jobs slide                 Show me candidate occupations; want to reality test them against things I’ve heard them talk about and my own knowledge Advanced Manufacturing +190,360 0.3% Welders, cutters, solderers, and brazers -1,810 -0.1% Painters, transportation equipment -3,600 -1.7% Machine feeders and offbearers -18,550 -8.2% *No advanced manufacturing jobs in this occupation in 2002

19 Advanced manufacturing occupations are changingDigital skill ratings for occupations in advanced manufacturing 25. Create new slide showing fast growth of key, larger, big changing occupations’ digital scores in auto along lines of existing good jobs slide                 Show me candidate occupations; want to reality test them against things I’ve heard them talk about and my own knowledge

20 On-ramps to middle-class careers are rapidly upskillingDigital skill ratings for key “opportunity jobs” 28.   FIX                                 Supervisors of Production workers                                 Sales representative for technical and scientific products                                 Tool and die makers Plumbers Firefighters                                 Dental hygenists Computer numerically controlled machine programmers Telecom line installers                                 Radiologic technologists                                 Physical therapist assistants                                 Electrical and electronics technicians

21 The industry should adopt two digital workforce agendas1. Commit to digital transformation 2. Expand and widen the digital talent pipeline

22 The industry should adopt two digital workforce agendasExpand investment in digital-factory R&D and adoption Embrace new open or networked tech models Recognize the importance of young firms 1. Commit to digital transformation

23 The industry should adopt two digital workforce agendasInvest in upskilling incumbent workers Expand work-based learning Align and scale up education and tech training Provide top-flight career on-ramps 2. Expand and widen the digital talent pipeline

24 Finally: Cultivate what is “uniquely human”Emphasize adaptability, creativity, continuous learning, and social skills over rote information processing

25 For more information: Mark Muro Senior FellowMetropolitan Policy Program at Brookings @markmuro1

26 Digitalizing America’s Advanced Manufacturing SectorGet with the Program Digitalizing America’s Advanced Manufacturing Sector Mark Muro Brookings Metropolitan Policy Program NACFAM September 7, 2017 @MarkMuro1