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Date:02/15/2007
Session:110th Congress (First Session)
Witness(es):Norman R. Augustine
Credentials:  Retired Chairman and Chief Executive Officer, Lockheed Martin Corporation, and Chair, Committee on Prospering in the Global Economy of the 21st Century, Committee on Science, Engineering, and Public Policy, Division on Policy and Global Affairs, The National Academies
Chamber:House
Committee:Labor, Health and Human Services, Education, and Related Agencies Subcommittee, Committee on Appropriations, U.S. House of Representatives
Subject:The Future of America's Workers and Education for the 21st Century

Statement of

Norman R. Augustine
Retired Chairman and Chief Executive Officer
Lockheed Martin Corporation
and
Chair, Committee on Prospering in the Global Economy of the 21st Century
Committee on Science, Engineering, and Public Policy
Division on Policy and Global Affairs
The National Academies

Before the

Subcommittee on Labor, Health and Human Services, Education and Related Agencies
Committee on Appropriations
U.S. House of Representatives

Washington, D. C.
February 15, 2007

Mr. Chairman and members of the Committee.

Thank you for the opportunity to participate in this hearing which addresses what I consider to be one of the most significant challenges facing America today: our ability to preserve, and hopefully enhance, the standard of living and quality of life enjoyed by Americans. There is, absent decisive action on the part of our nation’s leaders, a very real likelihood that today’s adult generation will leave to its children, perhaps for the first time in our nation’s history, a sustained, substantially lower standard of living than they themselves enjoyed.

I would like to request that, with the Committee’s permission, my formal statement be included in the record and that I might summarize it for the purpose of this hearing. Also, in keeping with the Committee’s policy, I should note that, insofar as I know, I have no conflicts of interest with the subject at hand – other than caring that my three grandchildren have the same, virtually unbounded opportunities in life that I received. I was the first in my family to attend college, the second to attend high school, and am acutely aware of the importance and impact of education and training.

As you may be aware, it was my privilege to serve as chair of the National Academies’ assessment of our nation’s future competitiveness, as well as to have previously chaired the Business Roundtable’s Task Force on Education and to have co-chaired the Council on Competitiveness’ advisory board overseeing its review of competitiveness. Nonetheless, I appear before you today as a private citizen, an “unemployed aerospace worker” if you will, who, like you, cares a great deal about America’s future.

The National Academies’ committee, whose report became known as the “Gathering Storm” report, has completed its assigned task and, in keeping with the Academies’ policy, been disbanded. Its 20-person membership consisted of former presidential appointees, CEO’s, Nobel Laureates, a State Superintendent of Schools, and several university presidents … one of whom has recently found new employment as Secretary of Defense. The above involvements notwithstanding, the views I will express today are entirely my own, although I would be surprised were they to differ substantially from those of my colleagues in the above activities. I should note that many other individuals and organizations have devoted enormous talent and energy to helping meet the challenges we face, including the National Association of Manufacturers, the American Association of University Presidents, the Chamber of Commerce, the National Association of State Universities and Land-Grant Colleges, the American Physical Society, and numerous others.

It was through the efforts of members of the Senate and House of Representatives that the National Academies’ effort was initiated. It would be difficult to cite a finer example of bi-partisan cooperation in addressing a problem of critical importance to America’s citizenry than that which took place, during an election year, involving the White House and Cabinet Officers, the House of Representatives, and the Senate, following the release of the National Academies’ “Gathering Storm” report. For example, the initial legislation to implement the Academies’ recommendations had 70 co-sponsors in the Senate – 35 Democrats and 35 Republicans. Substantial support was similarly offered in the House.

Having examined a great deal of evidence, the committee concluded that America’s ability to compete in the years ahead will heavily depend upon its ability to maintain a strong position in the fields of science and engineering. IT will be these fields that will underpin the innovations that will in turn create jobs for most Americans.

I have with me a collection of Editorials and Op/Eds from newspapers in every state, virtually all indicating support for the Academies’ findings and recommendations. I will, because of the document’s length, not request that it be included in the record, but if any of the Members would like a copy I would be pleased to arrange to have one delivered to your office.

And while a great deal has been accomplished, much more needs to be done. This is not a one-year competition in which we find ourselves – it is a seismic change, comparable to that the nation underwent when it saw a shift from 84 percent of its workers being involved in agriculture in the early 1800’s to less than 2 percent today. The transition to a globalized economy will be markedly faster, with three billion would-be capitalists having entered the global job market in the most recent two decades and the number of nations actively participating in that market suddenly increasing from 25 to 66. These job candidates are highly motivated, willing to work for a fraction of the compensation U.S. workers receive, and are increasingly well educated. They span the employment spectrum from laborers and assembly workers to medical doctors and engineers.

It has now been 16 months since the Academies’ report was issued and, while a great deal of preparatory work has been accomplished, little impact of this effort has yet been felt where it matters – in America’s factories, schools, and research laboratories. The next few months will be decisive in this regard, a period which one day may be looked back upon as a “tipping point,” one way or the other.

During that 16 months the world has unfortunately not been standing still waiting for us: an entire new generation of semiconductor integrated circuits, the mortar of the modern electronics revolution, has been introduced; Toyota now has six times the market capitalization of General Motors and Ford, combined; the remnants of what was once the world’s greatest industrial research lab, the legendary Bell Labs, the home of the transistor and the laser and numerous Nobel Laureates, have now been sold to a French firm; for the first time the most capable high-energy particle accelerator in the world does not reside in the United States; another $650 billion has been spent on our public schools which, according to standardized tests in science, was accompanied by a moderate improvement in performance in the lower grades and a further deterioration in 12th grade – suggesting that the longer our children are exposed to our schools, the worse they fare. U.S. investors put more new money into foreign stock funds than U.S. funds; 77 percent of the new research labs currently planned to be built in the world will reside in just two countries – neither of which is the United States; American firms spent more on litigation than on research and development; U.S. undergraduate engineering enrollment remained flat in the latest data released; nearly all the major Initial Public Offerings during the period took place outside the United States; the Academies’ recommendation to add $9 billion to the federal budget was debated as U.S. citizens gambled $7 billion on the Super Bowl; our children continued to spend more time watching television than in the classroom; the World Economic Forum in Geneva precipitously lowered its rating of U.S. competitiveness from first place to sixth; and I gave 29 speeches on competitiveness…during which I found broad concern over the long-term job outlook for America’s citizens.

Which brings us to a particularly troublesome aspect of the challenge we face: in this case there will be no sudden wake-up call – no Sputnik, no 9/11, no Pearl Harbor – rather, the situation is more analogous to the proverbial frog being slowly boiled. The economy is of course doing quite well, and it has to be considered a major positive that other nations are prospering. The challenge is for America to continue to be among those nations that prosper – and virtually all the warning trends are headed in the wrong direction.

As Tom Friedman concluded in The World is Flat, globalization has “accidentally made Beijing, Bangalore and Bethesda next door neighbors” – a neighborhood wherein able candidates for many jobs which have traditionally resided in the United States are now just a mouse-click away.

The National Academies has offered four recommendations and 20 specific implementing actions to begin the process of assuring America’s future competitiveness. The four recommendations address strengthening our K-12 public schools, significantly increasing the nation’s investment in basic research, encouraging more of the nation’s “best and brightest” to become engineers and scientists; and reconstituting the nation’s innovation ecosystem in such areas as patent policy, tax policy, litigation policy, and immigration policy. The Academies’ report proposes undertaking these tasks within an overall framework that focuses upon reducing the nation’s energy dependence, since that is a task of the utmost importance and is heavily coupled to the attainment of advancements in science and engineering.

The two highest priorities cited in the National Academies’ report were, first, to increase the number of K-12 teachers with university degrees in the physical sciences, math or engineering, and, second, to double the basic research budget in math, engineering and the physical sciences (while, at a very minimum, preserving the purchasing power of the nation’s on-going investment in the biosciences).

The urgency with which this challenge must be addressed was suggested by Bill Gates, who observed, “When I compare our high schools to what I see when I’m traveling abroad, I’m terrified for our workforce of tomorrow.” Similarly, speaking before an audience in our nation’s capital, GE CEO Jeff Immelt noted, “We had more sports exercise majors graduate than electrical engineering graduates last year. If you want to become the massage capital of the world, you’re well on your way.” And Alan Greenspan advises, “If you don’t solve (the K-12 education problem), nothing else is going to matter all that much.”

Absent decisive steps today’s business is almost certain to migrate to other, more competitive countries. America may well find itself with some of the world’s richest investors living in a sea of unemployment. As I have traveled around the world I have been struck by how familiar the leaders of other nations are with the National Academies’ “Gathering Storm” report. The bitterest irony of all would be if we have stirred them to further action while we do nothing.

Fortunately, it is not yet too late … but it is getting late.

Thank you again for permitting me to express my views on this important topic. I would be pleased to answer any questions you might have.

*****
Biographical Sketch

NORMAN R. AUGUSTINE was raised in Colorado and attended Princeton University where he graduated with a BSE in Aeronautical Engineering, magna cum laude, an MSE and was elected to Phi Beta Kappa, Tau Beta Pi and Sigma Xi.

IN 1958 he joined the Douglas Aircraft Company in California as Program Manager and then Chief Engineer. Beginning in 1965, he served in the Office of the Secretary of Defense as Assistant Director of Defense Research and Engineering. He joined LTV Missiles and Space Company in 1970, serving as Vice President, Advanced Programs and Marketing. In 1973 he returned to government as Assistant Secretary of the Army and in 1975 as Under Secretary of the Army, and later as Acting Secretary of the Army. Joining Martin Marietta Corporation in 1977, he served as Chairman and CEO from 1988 to 1987, respectively, until 1995, having previously been President and COO. He served as President of Lockheed Martin Corporation upon the formation of that company in 1995, and became its CEO in January 1996, and later Chairman. Upon retiring from Lockheed Martin in August 1997, he joined the faculty of the Princeton University School of Engineering and Applied Science where he served as Lecturer with the Rank of Professor until July, 1999.

Mr. Augustine served as Chairman and Principal Officer of the American Red Cross for nine years and as Chairman of the NAE, the AUSA, the AIA, and the Defense Science Board. HE is a former President of the AIAA and the Boy Scouts of America. HE is a current or former member of the Board of Directors of ConocoPhillips, Black & Decker, Procter & Gamble and Lockheed Martin and is a member of the Board of Trustees of Colonial Williamsburg, a Trustee Emeritus of Johns Hopkins and a former member of the Board of Trustees of Princeton and MIT. He is a member of the President’s Council of Advisors on Science and Technology and the Advisory Board to the Department of Homeland Security and was a member of the Hart/Rudman Commission on National Security. He is a member of the American Philosophical Society, the Council on Foreign Affairs, and a Fellow of the National Academy of Arts and Sciences.

Mr. Augustine has been presented the National Medal of Technology by the President of the United States and has five times been awarded the Department of Defense’s highest civilian decoration, the Distinguished Service Medal, and has received the Joint Chiefs of Staff Distinguished Public Service Award. He is co-author of The Defense Revolution and Shakespeare In Charge and author of Augustine’s Laws and Augustine’s Travels. He holds 20 honorary degrees and was selected by Who’s Who in America and the Library of Congress as one of the Fifty Great Americans on the occasion of Who’s Who’s fiftieth anniversary. He has traveled in over 100 countries and stood on both the North and South Poles.

(Rev. Jan. 2007)

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