Merck Chairman and CEO Ken Frazier is one of the few African American CEOs of a Fortune 100 company and a passionate advocate of manufacturing’s diversity and inclusion efforts. Recently, Manufacturing Institute Executive Director Carolyn Lee asked him a few questions by email about Merck’s approach. The condensed interview is below.
What advice do you have for CEOs looking to improve their organizations’ diversity and culture of inclusion?
Well, first things first—you must understand your own environment. What does the data tell you about the diversity of your organization? Do your employees believe they can bring their most authentic selves to work each day? What are people telling you? You should be having courageous conversations with them.
Once you figure out what your employees think, you can work on changing that environment. You should also plan on integrating your solutions into all your internal and external policies.
From there, you need to monitor progress and make sure your leadership is modeling the changes for all employees. Those leaders must be held accountable for your D&I goals.
How have you implemented such an approach at Merck?
We work hard to make our culture as inclusive as possible, so that all our workers feel empowered to fulfill our mission of saving and improving lives. We’ve made sure that our talent processes take unconscious bias into account, from hiring to reviews to succession planning. We’ve also created employee business resource groups, which not only support people at work, but have a meaningful say in our business practices.
Meanwhile, we weave D&I efforts into our day-to-day business activities. We work to get diverse patients into clinical trials, ensure our business strategies are relevant to patients all around the world and prioritize diversity among our suppliers.
Diverse employees are also a major asset for a company serving a diverse patient base around the globe. We need employees to bring their knowledge and experience to work so they can teach us how to serve our patients better.
And lastly, I strongly believe that we must learn from and be a role model to others, both in manufacturing and beyond. We have joined coalitions and organizations such as The CEO Pledge for Diversity and Inclusion, Paradigm for Parity and The Valuable 500, all of which do excellent work in the D&I sphere.
How can D&I efforts complement the industry’s work to close the “skills gap”?
We know there were around 12 million unfilled jobs in this country before the pandemic, and there are 5 million inner-city and other African American kids who want access to the economy. They want to be participants. They want to be citizens. They want to be leaders. What they lack is the education and the opportunity—and we business leaders can fix that.
Following the industry’s June “Pledge for Action,” the National Association of Manufacturers brought industry leaders together to focus on recommending bold next steps to increase equity and parity in our sector and increase opportunities for underrepresented communities in America. Click here to add your company to manufacturers’ combined efforts to make a difference—and make a Pledge for Action Commitment.
Residents of York, Pennsylvania, will proudly tell you about the role it played in the “Arsenal of Democracy” during World War II. Today, the town is drawing on that manufacturing heritage as it adapts to the digital age. And among the leaders of the transformation is the collaborative robotics startup York Exponential, which has partnered with Microsoft’s new skills initiative to help York residents get the education they need for high-tech manufacturing jobs.
The initiative: Microsoft’s global skills initiative is designed to help 25 million people worldwide gain digital skills by the end of the year. It is intended to offer rising and mid-career professionals the skills they need to succeed in a changing economy—both during and after COVID-19. The program also includes partnerships with local companies like York Exponential that seek to upskill workers.
“If there’s maximum digital transformation in the U.S. post-COVID, we believe there is capacity in the United States for the manufacturing sector to absorb more than a million new roles in technology,” said Microsoft Philanthropies General Manager of Digital Inclusion Naria Santa Lucia.
How it works: Microsoft uses LinkedIn data to identify jobs that are in demand, projected to grow in the future and accessible to applicants without a related degree. It offers free learning content to help people develop the skills those jobs require, including soft skills like virtual collaboration. The initiative also offers certifications and job-seeking tools to connect people with applicable jobs.
In practice: York Exponential is looking to add well-rounded employees—new workers proficient in digital skills as well as experienced workers who can gain new qualifications, said CEO John McElligott. The company is combining its own community outreach—including through its training school, the Fortress Academy—with Microsoft’s tools to help students and employees gain the qualifications they need to be successful.
Why partnerships matter: Partnerships like this one offer exponential benefits by joining large-scale training efforts and resources with local talent.
- From Microsoft: “The most important consideration is locally-based entities that are trusted by the community,” said Santa Lucia. “If we’re going to change this economy and who has access to it, it’s about the networks you’re introduced to and who is going to connect you where you need to go. The content is important, but it’s really about that personal connectivity. That’s how we get to jobs.”
- From York Exponential: “Communities like us are often overlooked,” said McElligott. “People go to major metropolitan areas and big cities. So the fact that we’re having these discussions with Microsoft means a lot—an initiative of this size could have an outsized impact on a community as small as us.”
The last word: “This generation growing up today is the superhero generation,” said McElligott. “They grew up watching the Avengers, in a world where everything is robotics and superpowers. They are primed to do amazing things with technology—and to build things for their families, their communities and their country.”
October is Manufacturing Month and a perfect time to check out the exciting careers and training opportunities available from companies like Microsoft and York Exponential. There are still many events left, including an October 28 capstone event presented by Microsoft and called “Creators Wanted: Empowering a Diverse and Sustainable Manufacturing Workforce.” You can find the list of events at creatorswanted.org.
The term “Symbiotic Simulation” might sound like a science fiction plot point, but in fact, it’s an incredibly useful framework that makes manufacturing processes more efficient by connecting digital tools with real-world facilities. Working with key partners, the Powertrain Manufacturing Engineering group at Ford Motor Company conceptualized and delivered this software solution. And this month, at the Manufacturing Leadership Council’s 2020 ML Awards, the MLC recognized the company’s work in developing it.
What it is: Symbiotic Simulation—or SymSim—is an evolution of discrete event simulation, which is when experts experiment on a computer model representing a facility in order to find improvement opportunities. Usually, that involves manually downloading data, reformatting it and pushing the data into a model ready for optimization.
SymSim shortens that process by making a direct connection to the data that is produced by facilities, pulling data out automatically to help the company understand what’s happening and how its goals can be accomplished more efficiently.
Why it matters: First, connecting the digital model more closely to the physical facility improves the quality of the simulation, which leads to better decisions and results. The second benefit is time. Traditionally, downloading the data, cleaning and processing it would take a week—but the SymSim process can do it almost instantaneously.
The long road: The idea was hatched in 2015, in a Ph.D. project by a member of the company’s PTME group. Once the Ph.D. project ended, the PTME group decided to build it out further, then added a few collaborators: software partner Lanner Group, as well as the University of East London and a team at sustainable manufacturing consultancy HSSMI.
The benefits: In general, the project has helped to improve efficiency and deliver savings by reducing overtime and eliminating costly delays. While Ford just launched the proof of concept in 2019, the project has already saved more than 1,000 hours of engineering time and around $2.7 million. In one Ford plant that was launching a brand-new engine assembly line, the company ran a daily meeting to show—in just 15 minutes—where the bottlenecks had been the day before.
The last word: “Sometimes it’s necessary to revolutionize,” said Ford Simulation & Process Optimization Leader Michael Higgins. “With these technologies, you can get stuck with making incremental changes. Sometimes you need to step back and ask how you can improve processes and leverage technological improvements on a grand scale. That’s exactly what we did.”
Along with many other leaders in manufacturing, Higgins will be one of the speakers at Rethink, the Manufacturing Leadership Council’s virtual summit on navigating disruption and seizing opportunities in the digital era. The summit will take place on October 27 to 29, 2020, and you can register here.
A coming tax change would make it more expensive for manufacturers to undertake cutting-edge innovation—but a bipartisan Senate bill championed by the NAM is set to change that.
Where we are: Right now, if you’re running a business and you invest in research and development, you can immediately deduct 100% of those expenses in the year in which they are incurred. However, beginning in 2022, businesses will be forced to spread their R&D deductions out over a period of years, making it more expensive for manufacturers to undertake R&D. If this change were to go into effect, the United States would also be the only industrialized country in the world with this policy, harming our ability to compete internationally and invest for growth.
The cavalry arrives: The American Innovation and Jobs Act, a bipartisan bill introduced on Tuesday by Sens. Maggie Hassan (D-NH) and Todd Young (R-IN) would repeal the looming change, allowing businesses to continue to deduct their R&D expenses immediately. The bill would also make the R&D tax credit more accessible and more generous for small businesses.
Why it matters: Manufacturers perform the vast majority—nearly two-thirds—of private-sector R&D in the United States. That work not only helps finance important new projects and technological advancements, but it also helps to create well-paying jobs and power economic growth. That’s why the NAM has been leading the business community in getting bipartisan legislation introduced in the House and now in the Senate to stop this harmful change from going into effect.
A word from the NAM: “Research and development is the lifeblood of manufacturing,” said NAM Senior Director of Tax Policy David Eiselsberg. “It is what drives innovation, competitiveness, economic growth and the creation of high-paying jobs. This legislation will ensure that the tax code continues to support the ability of manufacturers to undertake R&D that will help promote economic and job growth.”
Would you believe that one apprenticeship program could add $45,000 to its graduates’ salaries? It sounds incredible, but that figure is from a new study by Opportunity America and the Brookings Institution. And the program in question is Kentucky FAME, part of the wider FAME program that was originally founded by Toyota before its stewardship was transitioned to The Manufacturing Institute. FAME is now operating in 14 states.
As regular Input readers know, FAME students earn a two-year associate degree while working in their sponsor’s manufacturing facility as an Advanced Manufacturing Technician (AMT). This new study shows how much the students—and by extension their employers—get out of the deal.
Here are some highlights:
- The need for apprenticeships: “Today, two-thirds of jobs require some postsecondary education or training—not necessarily a four-year college degree, but some more specialized technical or nontechnical preparation for the world of work.”
- FAME’s effectiveness: “FAME participants were significantly more likely than non-FAME participants to complete their program of study—roughly 80 percent of FAME students graduated, compared with 29 percent of non-FAME students.”
- The results: “Five years after completion, FAME graduates were earning nearly $98,000, compared to roughly $52,783 for non-FAME participants—a difference of more than $45,000 a year.”
- The seal of approval: “Graduates’ reviews of the FAME experience were overwhelmingly positive. A total of 97 percent said they felt that enrolling in FAME was the right decision for them, and all but 3 percent said they would recommend it to a close friend or relative.”
The MI says: MI Vice President of Strategic Initiatives Gardner Carrick said of the study, “The results are amazing and confirm that FAME is a global-best program. We hope manufacturers will join us in expanding FAME to their community and offering people across the country the chance to see similar success.”
Publicity alert: Check out a story about the report in The Wall Street Journal (subscription). Meanwhile, Opportunity America hosted a webinar about the study yesterday, featuring Carrick among other speakers.
. . . and more: The MI and FAME are hosting a “FAME Live!” virtual event tomorrow, Oct. 21. Manufacturers with open skilled maintenance positions are invited to tune in here.
Many people who lost their jobs in the COVID-19 pandemic face a terrifying prospect: that they may not be able to pay for their lifesaving medications. Pharmaceutical manufacturer Eli Lilly and Company recognized that people with diabetes would be worried about affording insulin, so it stepped in to help all those in need—whether or not they have insurance.
The big idea: In April, the company introduced the Lilly Insulin Value Program $35 copay card to help people struggling financially—and while Lilly introduced it as a COVID-19 relief initiative, the company quickly decided to make it an ongoing program. In addition, starting January 2021, people enrolled in participating Medicare Part D plans will be able to access their Lilly insulin for no more than $35 per monthly prescription as part of the Senior Savings Model.
As a result, everyone—whether they have commercial insurance, Medicare Part D or no insurance at all—can opt in to receive their Lilly insulin for $35 per monthly prescription. For those who received the copay card in 2020, they simply need to re-enroll in the program in January 2021. For seniors, it’s important they enroll in a participating Medicare Part D plan during open enrollment (Oct. 15 – Dec. 7, 2020) to ensure they are eligible for this benefit.
A long record of affordability measures: Lilly has always been committed to making sure people get the insulin they need. In 2018, it unveiled the Lilly Diabetes Solution Center—a call center open Monday through Friday from 8:00 a.m. to 8:00 p.m. ET, with live operators fielding questions about insulin affordability and finding solutions for people who don’t know where to turn. The company has been able to drop pharmacy prices for some insulin users and has donated 100,000 insulin KwikPens® to nonprofits. And it is committed to solving even the largest challenges.
“If someone calls and says they’re desperate for insulin and they’re almost out, we’ll find a way to provide them with insulin,” said Lilly Diabetes Communications Senior Advisor Greg Kueterman. “We don’t want people rationing insulin. It’s not good for them, it’s not good for their health, and it’s not good for society.”
A new campaign: To get the message out about Lilly’s new initiative, the company is kicking off a program called “Insulin Affordability: Learn. Act. Share.”—encouraging people to learn about Lilly’s insulin affordability solutions, take action if they need the help and share information with friends and relatives.
The last word: “We want people to know that there’s now a solution out there for everybody,” said Kueterman. “No one needs to pay more than $35 per monthly prescription for their Lilly insulin if they take the right actions.”
You can learn more at insulinaffordability.com or by calling the Lilly Diabetes Solution Center at (1-833) 808-1234.
The Trump administration released a presidential memorandum this week aimed at stopping the flow of counterfeit goods—a big win for manufacturers, and a victory for the NAM, which has pushed aggressively for safeguards against fake products and intellectual property theft.
Why it matters: According to the NAM’s research, fake and counterfeit products cost the United States $131 billion and 325,000 jobs in 2019 alone. In the midst of the global pandemic, as American manufacturers work to deliver day-to-day necessities as well as medical products, therapeutics and treatments, it’s more important than ever to root out counterfeit items that can put lives and livelihoods at risk.
The groundwork: The move follows a report released by the NAM in July, titled “Countering Counterfeits,” which proposed solutions for Congress, the administration and the private sector, including:
- Requiring e-commerce platforms to reduce the availability of counterfeits;
- Modernizing enforcement laws and tactics to keep pace with counterfeiting technology;
- Streamlining government coordination to tackle counterfeit items;
- Improving private-sector collaboration; and
- Empowering consumers to avoid counterfeit goods.
The improvements: Many of the NAM’s proposed solutions made it into the memorandum, including a call for legislative action, a directive to focus on counterfeits sold online, a push for better government coordination and a focus on holding e-commerce platforms more directly accountable. The document also expanded the definition for “counterfeit goods” to “deceptive and misleading use in commerce of marks, including trademarks, goods that are trademarked and trade names”—a broader definition that will provide manufacturers more protection.
The last word: “Innovation and intellectual property are the backbone of the manufacturing industry, and America is a global leader on these issues,” said NAM Director of Innovation Policy Stephanie Hall. “This presidential memorandum represents a vital step in protecting the hard work of American manufacturers and strengthening our ability to compete and win around the world.”
The NAM is intervening in a lawsuit to help the Securities and Exchange Commission defend a hard-won SEC rule that protects manufacturers and increases oversight of proxy advisory firms.
The background: Investment advisers and fund managers can vote on the policies of companies in which their funds invest. These fund managers often turn for assistance to proxy advisory firms, which recommend which way to vote. The problem is that proxy advisory firms have never been subject to SEC oversight, and as a result, their work has relied on questionable methodologies and ignored conflicts of interest—often causing problems for manufacturers and their shareholders.
The win: After years of NAM advocacy, the SEC approved a landmark rule to regulate proxy advisory firms and increase transparency about the firms’ conflicts of interests and one-size-fits-all methodologies. This was a big victory for the NAM and for manufacturers nationwide.
The lawsuit: Now, proxy advisory firm Institutional Shareholder Services has sued the SEC to stop the rule from going into effect—and the NAM is stepping in to protect the progress it’s made.
- What we’re doing: The NAM is filing a motion to intervene in the case—which essentially means that, if the motion is granted, it will become a party to the lawsuit, mounting its own defense of the rule in court and participating on the same schedule as the SEC. By taking on the role of intervenor, the NAM will be better able to protect members’ interests and ensure the court understands why the rule is vital to manufacturers.
The bottom line: “The SEC’s rule on proxy advisory firms wasn’t just a victory for the NAM; it was a victory for accountability and transparency, and a victory for manufacturers across the country,” said NAM Senior Litigation Counsel Erica Klenicki. “We are committed to defending this rule in court to ensure that manufacturers’ voices are heard and that manufacturers and manufacturing workers have the protection and support they deserve.”
Manufacturing is a key driver of the American economy—but how does manufacturing in the United States stack up against the rest of the world?
Recently, The Manufacturing Institute and KPMG—a professional services firms providing innovative business solutions and audit, tax, and advisory services—released a new assessment of the cost of doing business in the manufacturing sector for the United States and 16 other major manufacturing exporting nations around the globe.
High costs, but high value: The study found that primary costs (compensation, property, utilities, taxes and interest rates) in the U.S. are on average 16% higher than in the other markets—yet the U.S. ranks fairly high on the list overall at #5.
- Another number bears that out: over the past decade, foreign direct investment in U.S. manufacturing has jumped from $569.3 billion in 2006 to a record $1,785.7 billion in 2019.
The benefits of tax reform: Tax reform made the U.S. a more desirable location for manufacturers, the study found. It compared how the U.S. would have ranked with its pre-reform corporate tax rate of 40% (the combined federal and state tax rate) instead of the post-reform corporate rate of 27%. With the old rate, the U.S. would have ranked only 11th.
The benefits of skilled workers: A major U.S. advantage is its supply of high-skilled workers. According to the study, the U.S. ranks at the top of the list for real value added per employee, along with Ireland and Switzerland. As manufacturing has become increasingly advanced, the need for sophisticated employees keeps growing.
While it’s true that American manufacturing requires more skilled workers, as The Manufacturing Institute has previously shown, the existing workforce is still a big draw due to its productivity.
The bottom line: The United States is an attractive location for manufacturers, despite relatively high costs, because of high worker productivity and the overall business environment.
The last word: “We need to continue to push the envelope of technological innovation and workforce development and recruitment in the manufacturing sector,” said Chad Moutray, chief economist for the National Association of Manufacturers and director of the Center for Manufacturing Research at The Manufacturing Institute. “These efforts will serve to strengthen the sector overall, but also help to maintain the nation’s global competitiveness.”
Last night, the 2020 Manufacturing Leadership Awards Gala recognized some of the most innovative manufacturers in the country, at a virtual event hosted by the NAM’s Manufacturing Leadership Council. The MLC is a global business leadership network dedicated to preparing manufacturers for the opportunities and challenges posed by digitization, automation and technical advancement.
The winners: Presented to individuals and companies in 12 categories, including Sustainability Leadership and Artificial Intelligence and Analytics Leadership, the awards honor world-class manufacturing achievements. You can find the full list of honorees here.
The word from the MLC: “Creativity. Innovation. Excellence. Enlightened leadership. These are the qualities that drive the people of manufacturing to create a better future,” said MLC Co-Founder and Executive Director David Brousell in his opening remarks. “In doing so, they help themselves, their companies and our collective industry improve the quality of life for everyone. . . . All across this country, innovation in manufacturing is on the march.”
Manufacturer of the Year: The MLC honored two manufacturers with Manufacturer of the Year awards: agricultural chemical and seed company Corteva Agriscience, and Humtown Products, which was honored for its work to popularize 3D printing in sand cores. You can check out our profile of Humtown here.
Manufacturing Leader of the Year: This award went to Gerald Johnson, executive vice president, global manufacturing at GM, for his leadership in GM’s pivot to ventilator production in a partnership with Ventec Life Systems, code named Project V.
High Achiever Award Winners: The judges also presented high achiever awards to one winner in each category. Here’s the list:
- Lockheed Martin Corporation in the Artificial Intelligence and Advanced Analytics Leadership category for F-35 Augmented Reality Shop Floor Mobility
- Merck & Co., Inc., in the Collaborative Innovation Leadership category for Digital Fingerprinting
- Humtown Products in the Engineering and Production Technology Leadership category for Commercialization of 3D Printing in the Metal Casting Industry
- IBM in the Enterprise Integration Technology Leadership category for Migrating Supply Chain Quality Workload to Cloud
- Cooley Group in the Industrial Internet of Things Leadership category for Transforming Legacy Machinery into Smart Tech
- Hologic Inc. in the Operational Excellence category for Building a Culture of Operational Excellence
- Starkey Hearing Technologies in the Supply Chain Leadership category for Supply Chain Management Transformation
- The Boeing Company in the Sustainability Leadership category for Diverting Waste to Landfill While Upcycling Excess Airplane Carbon Fiber
- Nexteer Automotive in the Talent Management category for the Manufacturing Engineering Global Talent Management and Training Program