What Keeps Pratt’s Leduc Up at Night?
Things are going well these days at Pratt & Whitney, company president Robert Leduc said April 26 at CBIA’s Connecticut Economic Update in Plantsville.
Sales at the jet engine maker, already at a record $19 billion in 2018, are expected to hit $30 billion annually in the next decade.
Employment is up to 42,000 worldwide, including 5,600 new hires in Connecticut since 2015.
And most of the $1 billion Pratt invests annually in research and development is spent in Connecticut.
But when Pratt has a problem, it ripples across its supply chain, which includes 92 Connecticut companies.
And one of Pratt’s biggest problems, Leduc told a crowd of more than 300 business leaders, is finding trained workers.
Lack of Skilled Workers
“What we have begun to see here in Connecticut is that there is fundamentally a lack of skilled people available,” he said.
Between retirements and growth, Pratt will need 8,000 new hires in Connecticut in the next 10 years, 30% of them in manufacturing
“It’s the one thing that keeps me up at night,” Leduc said.
“My biggest concern is people. Am I going to be able to find enough qualified people to grow this business and thrive in this state?
“When I talk to some of our suppliers, they express the exact same concern.”
It takes Pratt 90 days to train a skilled hire. But with its massive hiring needs, the company often hires unskilled people based on “attitude and aptitude” then spends nine months training them.
“This does not make us cost competitive,” Leduc said.
Pratt has apprenticeship programs with community colleges that produce some, but not enough, high-caliber workers.
Pratt employees also volunteer in grammar, middle, and high schools to help students hone their STEM skills.
What Connecticut lacks, Leduc said, is a coordinated effort to provide its manufacturers with the skilled workers they need.
“We don’t see a common approach to STEM in the school systems,” he said.
“We don’t see a common approach to how these kids are indoctrinated.
“We need a common approach across the state.”
Leduc suggested having a combination of industries, including the major defense companies and their suppliers, divide up the state to determine which schools they will help to further students’ STEM involvement.
“We believe we have to cast this net for STEM and we need to do it very early,” he said.
Different Skills Set
They must also convince guidance counselors to have students consider manufacturing careers.
“A lot of high school guidance counselors have no idea what a modern manufacturing facility looks like,” Leduc said.
He said manufacturers will need workers with different skills in 10 years, and companies and state educators must prepare for that together.
While automation can close 25% of the hiring gap, Leduc predicts “the large bulk” of work on the manufacturing floor will still require people but with “a completely different skills set.”
“So it’s our responsibility to work with the state and the school system to say, ‘Here is the skills set we need,'” he said.
“We need you to be literate, we need you to have these numerical skills, we need you to have the ability to code.
“We believe a statewide, cohesive, coordinated response to that with industry is how we start to get it done.”
Nationwide Apprenticeship Program
CBIA president and CEO Joe Brennan agreed.
“We’re looking forward to partnering with you and others around this concept of really attacking STEM in a different way and having a cohesive, statewide plan around that,” Brennan told Leduc.
Aerospace and manufacturing aren’t the only industries that lack skilled workers, Leduc said.
“Try to get your car into a dealership to get it serviced,” he said.
“You’re likely on a waiting list because there are not enough technicians at those automobile dealerships.”
Leduc proposed a nationwide apprenticeship program modeled after one in Britain with different levels for different skills sets.
“At Level 1, you could go work at a car dealership, do simple machining, do some simple coding,” he said.
“And then there’s various levels that go higher and higher.”
Higher levels target the aerospace and medical industries.
“It’s a nationally recognized apprenticeship certificate, and that would give us some flexibility,” he said.
The second problem that hampers Pratt and other manufacturers is the state’s sluggish economy.
“Most of the nation has returned to pre-recession employment levels, but here in Connecticut, we’re only at 80%,” Leduc said.
Despite that, he noted, Connecticut ranks fifth in the nation in aerospace “because of UTC, because of Lockheed, because of General Dynamics, and because of our supply chains.”
He urged every business person in the room to work with their lawmakers to ensure workforce development needs are met and that business taxes don’t increase.
“We know that Connecticut is not an inexpensive place to do business,” Leduc said.
“But Connecticut is top 10 in terms of productivity, Connecticut is top five in terms of school systems, and Connecticut is top four in terms of innovation.
“That’s what we have to build on, but we have to build on that in a cost base that’s competitive.”
Connecticut ‘Our Home’
Leduc said the business community must “work hand-in-hand with the legislature” to keep the “tax burden on businesses no worse” than it is today.
“I ask that you join us in having your voice heard and that we rally around some of these concepts that I’ve thrown out this morning because I truly believe that is what’s going to make Connecticut maybe number one or number two in aerospace employment in the coming years,” he said.
Despite Connecticut’s challenges, Leduc said Pratt remains committed to the state where Frederick Rentschler founded it 94 years ago.
Of Pratt’s $19 billion in revenue last year, $7 billion was generated in Connecticut.
“Connecticut is clearly our home, and we know we mean a lot to the state of Connecticut, and the state of Connecticut means a lot to us,” Leduc said.
He noted Pratt’s partnership with the state on the company’s new $180 million engineering and technology center in East Hartford.
It’s home to Pratt’s all-important R&D program but also serves as a great recruiting tool.
“Because of that [building], we’re able to retain our engineering talent, and for us, that’s paramount,” Leduc said.
Leduc is also proud of the cultural turnaround at Pratt.
When he returned to helm Pratt from a different UTC division in 2016, he didn’t recognize the place.
“I was actually shocked…I found a company where people were afraid to say the truth, people were afraid to bring forth bad news, people were very siloed,” he said.
Leduc learned of the Thayer Leader Development Group at West Point and sent 2,500 executives and senior and middle managers there for training.
“The army is about connecting people and making sure everyone understands what his or her obligation is in terms of accomplishing the mission,” Leduc said.
Although it’s not perfect, Pratt’s culture has changed, he said.
He points to Raquel Rivera, general manager of the Middletown facility, who sat down for hours with each of three shifts of hourly workers at the plant, heard their concerns, then made changes that enabled the plant to nearly quadruple production.
In 2016, the Middletown facility produced about 500 commercial and military engines. Next year, it’s expected to produce about 1,800 engines.
“The power of your workforce when they believe that you’re in it with them, and they trust you, and they know you’re going to tell the truth, and you’re willing to hear the truth, and react to it—that’s the magic,” Leduc said.
“We’re changing the nature of the place, and for those of you who are suppliers to us, I hope you see that each and every day.”
The conference also featured opening remarks by David Lehman, commissioner of the state Department of Economic and Community Development; an analysis of the state and national economic outlook by Tom Kennedy, senior global fixed income strategist at JPMorgan Chase; an update on the 2019 state legislative session from prominent Connecticut political reporters; and a panel discussion on the impact of startups on Connecticut’s economy.
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