Rockwell Collins CEO says U.S. competitiveness at risk in globalized economy

Globalization has urgent implications for Iowa and the United States, Rockwell Collins chairman and CEO Clay Jones said Tuesday, including a need to boost education standards in Iowa.

Globalization has exploded in the last two decades due to increased global connectivity, Jones told an audience of 300 at Mount Mercy University, making Iowans economic neighbors with the people in China, Indonesia and elsewhere.

"We've gone from connectivity to connectivity on steroids," said Jones, describing a global workplace in which outsourcing and collaboration on a global scale is becoming commonplace.

The consequence of that connectivity is that "The stability of our work in America is no longer safe due simply to geographic distance or national borders," Jones said.

Rockwell Collins' main product category are aerospace and defense electronics. Over the past 10 years, its international revenues have grown 63 percent to about one-third of its $4.8 billion total annual revenue, Jones said. By 2020, the company expects international sales to reach 40 percent of its total sales.

The accelerated pace of globalization has both positive and negative implications, Jones said. They include systemic threats such as rising energy demand and prices due to increased consumer spending in emerging economies, and supply chain disruptions such as those caused by the 2011 tsunami in Japan. Little is known about how to manage those threats, Jones said.

An Economic Policy Institute study estimates that 2.8 million American jobs have been lost due to the trade imbalance with China since 2001, according to the Economic Policy Institute.

"Debate over outsourcing and insourcing rages in America, the rest of the world moves on," Jones said.

Jones alluded repeatedly to Apple Inc.'s outsourcing of contracts to Chinese manufacturers. He said Chinese contractors have demonstrated they have the speed, flexibility and employee skills to meet Apple's needs.

Apple's growth has created 700,000 jobs with global companies that contract to supply it, Jone said, versus only 43,000 Apple employees in the United States and 20,000 overseas.

On the positive side of the globalization ledger, Jones listed greater consumer product choice and lower prices.

Direct foreign investment has benefitted the United States more than any other country, Jones said.

"During the last decade, foreign direct investment in the United States jumped 82 percent from $179 billion to over $325 billion, resulting in insourcing of 5.3 million American jobs or close to 5 percent of the total U.S. work force," Jones said.

Improvements in the educational level and work force skills of emerging economies are a primary area of concern for United States competitiveness, Jones said. He made it clear where he stands in the "grand debate" going on in Des Moines about education reform in Iowa.

"The education system that got us here today is insufficient," Jones said. "The standards we today are not high enough."

Students need to spend more time in the classroom and teachers quality needs to improve, Jones said. He stressed the need for more curriculum emphasis on science, math and reading.

Perhaps the biggest challenge to remaining globally competitive is willingness to accept change, Jones said.

"I can assure you it will be messy, uncomfortable, risky and very exciting," he said.

About 300 attended the speech, which was the final installment of three in Mount Mercy's President's Lecture Series for the current academic year.