Retired Lockheed Martin CEO Still Sounding Alarm about Importance of Technology and Innovation for US Competitiveness

Retired aerospace executive Norm Augustine engineered the 1995 merger that created Lockheed Martin Corp. (IW 500/30). But creating the world's largest defense company pales in comparison with the challenge Augustine has taken on since retiring in 1997.

Augustine is on a mission to wake up lawmakers, business leaders and anyone else within earshot about the deterioration of American innovation and competitiveness -- and the critical role that science, technology, engineering and mathematics, or STEM, plays in getting the United States back on track.   

"I would ask that if you find yourself in agreement with most of it, that you try to share the circumstance that we find ourselves in with as many people as you can," Augustine implored attendees of Embry-Riddle's Aviation and Aerospace Manufacturing Summit in Fort Worth, Texas.

"Because we aren't going to have a Sputnik moment, a Pearl Harbor, a World Trade Center. This is a slowly impacting disease that we have --  more like a frog being boiled."

Armed with statistics and anecdotes that ran the gamut from sobering to jaw-dropping -- "China is now graduating more English-speaking engineers than the United States," for example, seems to fit in the latter category -- Augustine laid out an urgent case for America to rebuild its crumbling STEM knowledge base.

That, Augustine asserted, is key to supporting America's No. 1 competitive advantage: innovation.

"We most assuredly aren't going to compete based on the cost of labor in this country," Augustine said during his keynote address. "You can hire nine assembly workers in Mexico for the cost of one here. I visited a factory in Vietnam where you can hire 24 workers for the cost of one here.

"Labor costs in those countries are going to rise as their standard of living improves. But it's likely to be a long time before we overcome gaps of the magnitude that exist today."

He concluded: "Technological innovation, wherever its origin, is likely to become the driver of America's future economy."

A Deteriorating Outlook

Augustine outlined three fundamental ingredients of technological innovation:

• Knowledge capital -- "The creation of new knowledge, new ideas, through basic research."
• Human capital -- "Taking the results of that basic research and translating them into products and services through world-class engineering."
• A favorable innovation ecosystem -- "Taking those products and services and being first to the marketplace through world-class entrepreneurialism."

In the 2005 report "Rising Above the Gathering Storm: Energizing and Employing America for a Brighter Economic Future," a committee chaired by Augustine offered a grim assessment of the United States in all three categories. The committee's recommendations focused on improving the K-12 education system in science and math, increasing federal STEM research and creating a more favorable environment for business and innovation.

In a follow-up report in 2010 -- "Rising Above the Gathering Storm, Revisited: Rapidly Approaching Category 5" -- the committee concluded that "in spite of the efforts of both those in government and the private sector, the outlook for America to compete for quality jobs has further deteriorated over the past five years."

Augustine echoed that gloomy sentiment during his keynote address.

Augustine, who serves on the President's Council of Advisors on Science and Technology, cited numerous studies, surveys and even a few personal anecdotes that back up the committee's assertions.

"Why don't we produce more scientists and engineers?" Augustine asked. "One of the principle reasons is indicated by international tests in math and science of high school students around the world.

"U.S. students are firmly ensconced near the bottom of the class in those fields."

Augustine pointed to the Organization for Economic Cooperation and Development's most recent Program for International Student Assessment, in which 15-year-olds from the United States ranked 17th in reading, 17th in science and 25th in math among 33 OECD nations.

Not surprisingly, in a National Science Foundation study, the United States ranked 79th out of 93 nations in terms of the number of students earning bachelor's degrees in engineering.

According to the NSF study, the only countries with fewer engineering graduates than the United States included Bangladesh, Cambodia, Cameroon, Madagascar and Swaziland.

Cracking Down on Lemonade Stands

As far as the innovation ecosystem, Augustine reminded the audience that the United States now has the highest corporate tax rate in the world.

"That's backed by a 3.7 million-word, 17,000-page tax code that only an accountant could understand," he added.

And Augustine recently learned firsthand about the business and innovation climate in the United States.

In June 2011, Augustine's grandchildren and their friends set up a lemonade stand near the site of the U.S. Open golf tournament in Bethesda, Md. The kids, who intended to donate the profits to charity, quickly learned "about what it's like to do business in America."

"To my amazement, when I happened to drop by to buy a lemonade, I found the county enforcement officials there threatening to confiscate all the lemonade because the children didn't have a license to sell lemonade in the county," Augustine said.

"Because they were my grandchildren, and I just happened to be standing there, I wound up with a $500 fine and a mandatory court appearance."

Is it any wonder, Augustine continued, that the 35 largest U.S. companies are creating three times more jobs abroad than they are in the United States?

"During the ongoing election, as you may have noticed, it's popular among many politicians to blame China for our predicament, and indeed China does many things that are not terribly attractive," Augustine observed.

"But I would ask, is it China that runs our public schools? Or is it China that decides how much we should invest in research and engineering? Is it China who prevents or discourages our students from studying science and engineering?

"No, it's ourselves, and as the great philosopher Pogo Possum said, 'We have met the enemy, and it is us.'"