What Makes the U.S. Globally Competitive?

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Posted on March 2, 2016

Jeb Schrenk

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United States Assistant Secretary of Commerce Jay Williams recently visited Mobile and the University of South Alabama as part of a statewide tour. In southwest Alabama, Williams, chief administrator for the Economic Development Administration, received an update on the region’s Manufacturing Communities initiative. The U.S. Department of Commerce in 2014 awarded southwest Alabama that designation as part of a program designed to accelerate the resurgence of manufacturing by supporting the creation of long-term economic development strategies to attract and expand private investment and increase international trade and exports. During his campus visit, Williams took time to sit down with USA’s Office of Marketing and Communications and discuss topics such as the importance of universities in economic development, how the automotive industry is performing and why students need to pick up entrepreneurial skills to be globally competitive. Here is the discussion, edited for length and clarity:

Let’s start off with the role universities can play in economic development.  If you had to pinpoint the most important thing, what would it be?

They are catalytic and can help transform the communities that they are in, and certainly there is the research and development that occurs on campus and the ability to effectuate change in their respective communities.  Let me speak from my own experiences as the former mayor of Youngstown, Ohio. Youngstown State University is 100-plus years old, has existed in the city of Youngstown virtually for as long as the city has been around.  People who were no longer coming to Youngstown because of the manufacturing that dried up decades ago were still coming to Youngstown as a direct result of Youngstown State University.  So it’s really acting as a magnet to attract talent and then using the power of the research and activities that go on to help transform and plant seeds in the local community. Any community that is blessed to have a university in its immediate vicinity or close proximity and doesn’t take full advantage of those relationships is really missing out on a huge asset, and again speaking from personal experience of how transformative the Mahoney Valley has been by the Youngstown State University presence, and then coming here and seeing all throughout my travel in Alabama starting in Huntsville, going to Birmingham and then down here to Mobile, to see the critical catalytic roles the universities have played I think is the biggest asset that they bring to their communities.

As a former mayor, what does the perfect relationship between a university and a community look like? What are some of the qualities that you see?

It’s always a relationship in progress but one that recognizes that each institution recognizes the strengths of the other.  I’ve seen too many instances where city leaders and university leaders were competing in terms of who -- I don’t want to reduce it just down to egos, but to a certain extent that’s often what it came down to -- who is the driving force in the community, and I think where the relationship works best is understanding that the success of one is the success of the other and the failure of one is the failure of the other.  Allow the university to be that magnet that draws.  The best relationship is one where there’s a mutual respect for the needs and the opportunities and challenges that exist in the city, and the same thing in the university, and figure out where they can leverage the energies of both.  When they realize that they are better off  strategically linked, those communities I’ve seen have thrived or been able to better overcome the challenges as compared to those that either see one or the other as diminishing or being too much of a dominating factor in terms of the regional agenda.

The University of South Alabama was the lead applicant on the Manufacturing Communities’ initiative that is taking place here.  Some of the manufacturing communities include university partnerships. Others do not. Are you seeing any difference in the paths they take?

The most successful applicants and regions are those where the university was involved.  Now the university isn’t always the lead applicant, and that’s fine, but the university has to be a key player there and to the extent that in this regard, the University of South Alabama was a lead applicant, it obviously bode very well.  And I think it is consistent with what I’ve seen throughout my time here on the ground today is the breadth and the depth of the collaboration – the private sector, the philanthropic community, the public sector, the higher education community, the two-year community colleges here in the region. In my estimation, if you have university resources, you can’t have a competitive region and not have a university as a critical component of that approach.  

Southwest Alabama has seen notable growth in the manufacturing industry. A 2014 story in the Wall Street Journal spotlighted the area, calling it one of the winners for job growth in manufacturing. Much of the manufacturing is foreign-based.  How can universities support industry when many times the research and development arms are outside of the country?

Universities have a keen ability to help to create an advanced innovation ecosystem.  And although often times the R&D (research and development) and production are located in separate places, more and more corporations are realizing that the best outcomes happen when R&D and production facilities are co-located, located in very close proximity.  To the extent that we have seen over the last several  years both production that had been off-shore decades ago being returned to the U.S. and R&D that had gone elsewhere being returned, the university I think can play a role in helping to attract both of those things because of the R&D capacity that exists at universities. Certainly, as you pointed out, there has been a 33 percent increase in manufacturing here in this region over the past five years, and to the extent that can be supported by increased R&D that the University of South Alabama could be at the center of, that’s the new trend here, and it’s not rocket science. It’s not new as though we have never done it before, but we went through a period of separating production, and production went to the low-cost areas and R&D remained somewhere else, and it worked for a while. But the recognition of having R&D and production in close proximity so the changes can be immediately effected and the results and the outcomes can be real-time results, that is proving to be the trend that is undergirding this notion of the renaissance of  U.S. manufacturing and what we saw here, whether it’s Airbus, whether it’s Austal, whether it’s BAE Systems, whether it’s all the other manufacturing here that requires a significant amount of R&D, this university is positioned well to capitalize on the R&D that’s going be required to support that.

Prior to your current role, you had been informally the administration's “auto czar” as executive director of the Office of Recovery for Auto Communities and Workers. Alabama has a significant auto manufacturing industry, with companies including Hyundai, Honda, Toyota and Mercedes-Benz. What's the short- and medium-range outlook, and how’s Alabama doing?

Here we are seven years later in this administration after the decision to make the investments in Chrysler and GM (General Motors), and although the investment was made in those two domestic automotive producers, the benefit was accrued across the industry –to the Hyundais, to the Mercedes, to all the others, Hondas, that are investing here because the supply chain supports all of those industries. So now we have the U.S. automotive industry producing a record number of units in 2015, but sustained growth. What we saw before was growth that was not sustained, driven by rebates and a whole host of things that looked good on the surface, but when you began to peel back the layers, it wasn’t something that was going to be able to be sustained for any given period of time. So I guess the best testament that I can articulate is the North American International Auto Show that I’ve had a chance to attend for the last five years and to see where the auto show was five years ago to where it is now -- world class automobiles from certainly the domestic Big Three (General Motors, Ford and Chrysler) but all of the makers,  Hyundai, Mercedes, all of them, in terms of technological advancements, fuel efficiency --these vehicles are the envy of the world. An example that isn’t in Alabama but certainly speaks to the notion of foreign direct investment, the BMW plant in South Carolina is now the largest production facility in the BMW portfolio and is only getting larger. So the industry’s health now is sustainable. We have seen the reshoring of production capacity and we in the U.S. still remain the No. 1 destination for foreign direct investment. So I think any of those employers will say that the outlook continues to be bright, and overall the manufacturing industry punches above its weight, but the automotive industry, its importance now in its ability to be sustained, I think is not anything we’ve experienced in the past 20-25 years.

You were talking before this about how every student should be learning entrepreneurial skills and should learn to be an entrepreneur. Talk to me about why that’s important.

It’s important because even if a student decides that they don’t want to, in and of themselves, become an entrepreneur, they are going to then go and pursue a career at a manufacturer, at a law firm, or at a service industry. Thinking like an entrepreneur, ‘How can we better serve the customers? How can I make this process better?’ Those critical-thinking skills are invaluable, and that’s what companies are looking for and that will allow that individual who doesn’t want to be an entrepreneur but wants a gratifying career and perhaps, to move up in that organization, to add value to the company. Entrepreneurs have to be critical thinkers. They have to look at not just, ‘I’m on an assembly line and these are the steps that I have been instructed and trained to take, but, ‘Is there a way to make this process better?’ Or when something goes wrong, ‘Can I be thinking of a way to resolve it in a way that perhaps wasn’t a part of my formal training?’

Is that more important in today’s economy than it was decades ago?

Absolutely! If in Youngstown, Ohio, if you had, 50 years ago, a strong back and a strong work ethic, you were set for life. You could go work at the steel mill, and if you quit that job before lunch, by the end of the day you could have another job in the steel mill. And the same thing held true largely for automotive manufacturing. ‘Here’s what we trained you to do, and you just do it over and over and over, and if you do that, that’s fine. We’ll have someone else do the quality control.’ And we’ve seen that that produced inferior products, people were treated like robots, they didn’t want you to think or input, ‘We just want you to do what we’ve taught you to do.’ So now we’re saying, the fact that GM is saying, ‘You might not have to have a college degree, but we want you to have post-secondary training. Coming in here with your high school diploma is not enough. We want you to have a skill set that teaches you to look at what you’re doing and appreciate your part of this in a larger product of what we’re producing.’ So now they’re empowered to stop the line. Before, if you had stopped a manufacturing line, you were nuts. You were deathly afraid to stop production. Now there is this expectation, if you see something wrong, to stop the line. ‘If you see inferior quality or if you have a better way to do this, we want to hear that.’ The same thing holds true across segments of the economy because of automation, because of technology, we don’t need as many people doing the same things to make the same things that we did 20 years ago, but the people we need now, we want them thinking in a much more holistic approach. So those entrepreneur skills, that type of thinking, makes you as a potential employee that much more valuable. It’s really part of what is required to be competitive in terms of the job market, but it’s also what keeps us globally competitive, because a number of other countries that are smaller have been doing that for a very, very long time. So for us to remain globally competitive, that’s the type of thinking that we need. I’ve got a 5-year-old son, and I want him thinking entrepreneurially at 5 years old so that whatever field he goes into, that’s a part of the expectation. It’s really interesting to see that being permeated earlier and earlier into not just high school or junior high school, but now to middle school and to elementary schools. That’s going to be critical for our ongoing success.

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