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2023 Automotive Insights Symposium Day 2 What's at Stake Transcript

SARA MILLER: Welcome back. My name is Sara Miller. I'm with the Federal Reserve Bank of Atlanta. I work on workforce issues, and I have been honored to come here and facilitate this fantastic panel with experts that know way more about this sector and these issues than I ever will. I'm simply here just to help to facilitate the conversation, hopefully with some of your support, too.

So thank you to the Chicago Fed for putting on this summit. I hope you all enjoyed the last speaker. I found that fascinating, with the Canadian Union talking about what they have on deck for this coming year. And we're here to talk about what's at stake for the sector. So with the future of electrification of these vehicles, what is it that we should be thinking about? And what are the big issues that we need to keep in mind?

But like I said, I'm not the expert. My friends to my left are, and I want to introduce them quickly. They're going to go over some of their thoughts on the topic, and then we'll jump into some questions. So I guess I'm here to also pitch, again, the Pigeonhole app. Please do make sure that you're adding your questions to that. I have a ton myself, but I'm sure you have better questions even than I have ready for this panel. So please, as they're presenting, add those on there.

But let me get right into introducing the experts that I have here today. Immediately to my left is Adam Hersh. Adam is a senior economist at the Economic Policy Institute, or EPI. He focuses on international trade, industrial, climate, China, and macroeconomic policies. He publishes and is cited frequently in both peer reviewed and popular media outlets, regularly provides expert congressional testimony, and advises US and international policymakers and civil society leaders. So welcome, Adam.

ADAM HERSH: Thank you.

SARA MILLER: Also with us today is Turner Carman, PhD. He's currently with McKinsey and Company, but he's going to talk some about his research that he's done in prior roles, which explores energy, climate, labor implications of low carbon transitions within the electricity sector and automotive industry. Previously, he gained experience with power system operations and universal energy access planning. So welcome, Turner.

TURER COTTERMAN: Thank you.

SARA MILLER: Also with us is Karla Walter. She is a senior director of employment policy at the Center for American Progress. She focuses primarily on improving economic security of American workers by increasing their wages, benefits, promoting workplace protections, advancing worker rights.

Prior to joining CAP, she was a research analyst at Good Jobs First, providing support to officials, policy, research organizations, and grassroot advocacy groups striving to make state and local economic development subsidies more accountable and effective. Thank you for that, Karla.

Also with us today is Professor Anna Stephanopoulou. She is in mechanical engineering with the William Clay Ford professor of technology at the University of Michigan. She is an ASME and an IEEE, fellow the inaugural chair of the ASME DSCD energy systems technical committee, and a member of the SAE dynamic systems modeling standards committee, and a member of the US National Academies Committee on vehicle fuel economy standards.

It's amazing you had time to join us today, Professor, so thank you for coming. I'm going to turn it over to my panelists to talk, and then we'll jump into some questions. So Adam, over to you.

ADAM HERSH: Thank you, Sara, and I just want to start out by thanking Kristen and the Chicago Fed for inviting me to participate in your forum today. It's been a really valuable event. I learned a lot yesterday and this morning. And this is my first time here. Hopefully I'll get invited back, so we'll see how this panel goes.

But given the discussions yesterday in the programming, as well as in the coffee breaks, I thought it would be useful if I took a step back and took a big picture look at the economics and the political economy of this electric vehicle transition and why it's so important that we get it right. And here's my main point.

The green transition will not be possible, it will not happen, without strong and sustained political support. It will not happen without the political support. That's why it's so important that we're focusing on the quality and the quantity of the jobs that can be created in this opportunity.

The policies to support this have to be crafted in mind-- with sustaining and building the political support for this transition. Otherwise, it is not going to happen. And we're not just talking about labor policy. We need all aspects of policy to be working in coordination to be able to achieve this. So that's labor policy. It's education and workforce development, but it's also fiscal policy, as we've done in the IRA, but more will be needed. And it's also monetary policy.

I think it's important to point that out, given where we're sitting, and I'll come back to that towards the end. Now, I hope we're going to start from a point of consensus that climate change is the ultimate economic externality. We know that continuing down the path of the status quo that we're on is untenable. We don't really fully what the consequences of doing that will be, but we know it will be quite dire, bad enough that we need to be focusing all this attention and energy on it right now.

And electric vehicles and transportation are a critical piece of this transition. Not just for the environmental impact, not just for the jobs that we hope to create, but these things are essential for our national economic prosperity, as well as for national security. It's critical to reinvigorating the US industrial base. These activities have some of the highest economic multipliers of anything we do in the economy.

So for every job created or dollar spent in the industries, it supports multiple, multiple more jobs and activity throughout the rest of the economy. And it's a key source of productivity growth and innovation spillovers. And if it's so important we might be asking ourselves, why are we only talking about this transition now?

After all, from where we're sitting today, our perspective, the internal combustion engine car and the electric car were basically invented at the same time, about 130 years ago. The answer why we're dominated by internal combustion engine is not a technological reason. It's a political reason, and it's political constraints.

There are powerful special interests out there that organize to establish the dominance of fossil fuel internal combustion engine economy, and now they're working to obstruct this transition. So without creating and sustaining that broad political support, we're unlikely to overcome this political resistance.

But that's not the only challenge that the transition faces. Number one, we have layer upon layer of market failures in getting to the technology and the investments in place that we need to be doing this. These coordination failures happen on the supply and the demand side.

On the supply side, there's a big engineering challenge to develop the technologies and deploy them. We have challenges in material supply chains, which were talked about yesterday and this morning. We also have challenges on the demand side. How do we convince the consumers that electric vehicles are the thing that they should be changing over to?

And we're not there yet in meeting the preferences of consumers. We also have challenges that go outside the auto industry to have the complementary infrastructure that will be needed to attract consumers into this building the charging infrastructure networks, and so on.

The free market is not going to solve any of these problems. And we're not the only ones that are having this conversation about transition to electric vehicles. It's happening everywhere-- in Europe, in Japan, Korea, China, India. Everyone thinks that they're going to be leading the transition to EVs, and not one of them believes that they should allow the market forces to dictate how these industries developed. They are going to be very active in supporting the development of these industries.

And it's clear that if we take away the policy supports that we have now, there is going to be no green transition. There is going to be no green transition, period, without the policy supports. We cannot get there. Another challenge we have is trends in management strategies, which have created short term biases in management and viewed workers as a cost to be minimized, rather than as an asset that is a source of innovation and productivity within the firm.

Now, historically, we think of auto jobs as good jobs, but increasingly, that's no longer necessarily the case. Historically, they were good jobs because there was high unionization in the auto manufacturing industry, and that industry was situated in economy with broad union density that was working to push up wages.

We also had high public investment. And this was in an era before there was widespread deregulation of labor market institutions. First we saw a trend towards outsourcing in migration of production, first to the US South, then south more to Mexico, then overseas to China and elsewhere. And now we're seeing reshoring domestic greenfield investment, as well as foreign direct investment, into the industry in the US.

And it's all going-- not all. The majority of it is going to the South and what, in many cases, look like American maquiladora development zones in these places. From pre-NAFTA to now, employment in the South in auto sector has doubled. It's now roughly one third of overall employment. Before NAFTA, we had about 50% unionization in the auto industry. Today we're at 16%.

And if you look just in the Southern states, it's less than 4%. And I don't need to tell you that the labor markets are infected with some not very nice racialized characteristics down there. Auto wages in the South are about 15% lower than the overall wages in the industry for the United States.

And even though we think about these as good jobs, actually, the wage penalty for auto workers in the South is higher than for other similar jobs in the South relative to the rest of the country. So we shouldn't have any expectations that any new jobs created here are going to automatically be good jobs, especially because our legacy areas of the auto industry have all become right to work states in recent years.

Now, the labor policies that some of my copanelists are going to talk about are just one essential component of making sure that we are creating good jobs. Strong labor policies are necessary, but they're not a sufficient condition. We also have to have policies that support strategic investments in new technologies, where we're riddled with obstacles and market failures.

We have to have policies to support building advanced manufacturing capacity and revitalizing the industrial base. We have to have better and more enforceable trade agreements. We need better education and workforce development. And overall, we need to manage aggregate demand in the economy so that there's demand for these products and for manufacturers so we can keep capacity utilization high and keep the incentives for investment high.

We also need monetary policy to do its part. Monetary policy is not just working for inflation. And currently, our monetary policy is actively undermining the transition to electric vehicles and the green transition more broadly. The incentives for purchasing electric vehicles from the Inflation Reduction Act that we've been talking about, these are all designed to leverage consumer and investor choices in order to make this transition.

But who wants to buy a new car or make a business investment or refinance their house in order to fund a startup when interest rates are so high? Not many people want to or have the capacity to. Secondly, the rate hikes directly relate to the international competitiveness of the US dollar. So as interest rates go up, the value of the dollar goes up.

And since the Fed began tightening in February '22, overall, the dollar has appreciated by about 6%. This makes imports of vehicles and auto parts cheaper relative to domestic produced ones. It also makes US exports less competitive abroad. So that's up 6% overall. But relative to the Chinese RMB, the dollar is up 8.4%, and the Japanese yen-- relative to yen, the dollar is up 15%.

Now, if you consider what the subsidy is for the lowest cost car under the IRA, the subsidy amounts to about 14% of the sticker price. So what fiscal policy has been giving to try to incentivize this industry the Fed has been taking away and propping up foreign production. I think I'm going to stop there and wait till we get to the discussion to elaborate on some of these. Thank you.

SARA MILLER: Thanks, Adam. No, that's great. We'll get back to a lot of that, indeed. Turner, over to you, though.

TURER COTTERMAN: Great. I should have a set of slides here. Good morning, everyone. My name is Turner Cotterman. I work for McKinsey & Company, and most of my work is around energy and automotive topics. But today, I'll be presenting on work that I completed during my PhD.

This past spring, I graduated from Carnegie Mellon University. And I did a PhD looking at the labor impacts of automotive manufacturing. And we published some papers alongside co-authors Erica Fuchs and Katie Whitefoot. I'll be presenting our results. And I've been trying to remember to say that everything I present here in this presentation are not necessarily representative of McKinsey's views. They are all my own.

So then this work that I'll present-- I'm going to try and make this presentation as concise as possible, but I do know this is a dissertation. And I've got it separated into two papers that I'll move through sequentially. In the first paper, I investigate the labor demand impacts of auto manufacturing. And then the second one, I look at worker skill differences.

So in this first paper, I start by looking at the landscape, the existing landscape, what the claims are being made about in terms of the labor content and producing an internal combustion engine vehicle versus a battery electric vehicle. The majority of claims floating out there are that ICEs require more labor inputs, and a large number of these claims are based on the basis or the argument that there are more moving parts within the powertrain of an ICE.

There's a few claims floating out there that BEVs require more labor, and a lot of these assertions are based on the fact that there's more electronics, semiconductor, battery content embedded within BEVs. And there's a few studies that fall right about in between and find that they're similar.

So this is our starting point. This is our motivation for the research. And we propose to understand what the labor demand difference is between producing an ICE versus a BEV measured in units of hours is. The method or the approach that we use in this research is called process-based cost modeling. It's an engineering approach. It's a type of technical cost modeling that's been around for a number of decades. I didn't invent this.

But the aim of process-based cost modeling is it decomposes manufacturing steps into their individual steps, and then it looks at the implications of each step, as well as the interactions across all the different process steps within a process flow. You have to feed it pretty granular information. So for each process step, it's necessary to know cycle times, equipment prices, number of laborers involved.

But one of the advantages of this approach, then, is it allows us to understand how different configurations, different technologies, different materials will affect the final production costs prior to large scale investment. I drew my system boundary-- rather than looking at entire vehicles, I drew my system boundary around the powertrain between each of the vehicle types.

The powertrain are all those components that essentially provide the kinetic energy to move a vehicle forward. I chose the powertrain because it represents the most fundamentally dissimilar system between an ICE and a BEV. So if I'm looking at my ICE on the left hand side in the blue color, I picked out a number of the most critical components within the ICE powertrain that most primarily impact production cost and labor. And I did the same for the BEV on the right hand side in these green colors.

I started my modeling and my simulation using publicly available data, using data that I found from the public domain. But we weren't terribly impressed with the results that we were able to gather. So then I next turned to collecting my own data through industry engagements. I ended up collecting granular, process step level data for 300 different process steps all related to the manufacture of powertrain components.

And to do this, I worked alongside four OEMs, three suppliers, two battery manufacturers, the UAW, MEMA, and the National Alliance for Advanced Technology Batteries. And along the, way I traveled all around the country, and I ended up personally visiting five different production facilities, which provided me really, really appreciate the perspective that it gave me, understanding the shop floor production environment.

I'm going to go ahead and jump now to the main conclusion is work. And it's easiest if you just look at the right-most graphic in this panel here. We found that in all the scenarios that we modeled that there is greater labor hour demand to manufacture a BEV over an ICE. And the BEV manufacturing is primarily driven by its high battery labor requirements. That's that large green bar on the right hand side.

So then if we want to extend this conclusion and think about some of the implications in terms of public policy making or setting, there are a lot of gigafactories going up all across North America right now. And our work demonstrates that there is the potential ability-- or, BEVs have potentially more labor hours available in their manufacture than ICEs.

So there's potentially more labor hour content available for the manufacturing workforce. But one thing that we note that's on this graphic on the right hand side-- it's probably a bit difficult to read on this page here. But we note that when we decompose the battery manufacturing steps into their individual process steps, we see that the majority of the labor content is contained within cell manufacturing, and less so within module and pack assembling.

So if we want to maximize the amount of available labor hours for the manufacturing workforce, it's important that these gigafactories going up not only do module and pack assembly, but also do cell manufacturing. Otherwise, we risk leaving on the table a number of labor hours that might be performed by plants or by countries that have the existing production or expertise in terms of cell production.

Right now, that's currently contained primarily in South Korea, Japan, China. All right. And I'm going to move quickly, then, into my second paper. And then the second paper paper, it's going to be a bit of a quicker explanation than the first paper. Again, I look at the differences between manufacturing in ICE and a BEV, but this time in terms of the worker score requirement differences.

What does it need for a shop floor worker who's actually manufacturing these systems? What kind of skills do they use? And how do they differ between the production environments? So for this, I ended up looking at seven different skills. I picked the skills from the Department of Labor's O*NET skill taxonomy.

And these skills represent a set of physical, cognitive, and social skills that shop floor workers use on a regular basis. And the skills, I rate them on an empirical 1 to 7 basis through a set of 48 interviews that I conducted. So I worked alongside operators, technicians, supervisors, those roles that are closest to the production line facilities.

And I think I forgot to include the slide of the high-level results here. So I'll just speak on it. We found in our comparison between BEV and ICE skills that it seems that BEV manufacturing increases the demand or requires higher level of skills for select physical, social, and cognitive skills.

But we find that the range of skills needed in BEV manufacturing, it's more homogeneous. It's more narrowly distributed than the range needed in ICE manufacturing. And that range of bev skills falls within the range of ICE skills, meaning that as we think about the transition or transitioning workers from ICE to BEV environments, it's likely that some level of upskilling or retraining will be required, but that the level required is not outside the bands of what's currently used.

So this is a positive. This is promising. And then we also looked at the correlations between the set of skills that we interviewed, and we noted a higher interdependency or higher level of interdependency among BEV skills than ICE skills, meaning that it seems like in BEV manufacturing facilities, they prefer candidates or workers who are more well-rounded.

So think a more well-rounded athlete who has a bit of a broader set of skills. And we note that it seems that softer skills-- being able to work in a team environment, for example-- is as influential or similar influential as the technical expertise and knowledge that you need to use to work on a production line.

And then I'll end my presentation here just with kind of a summary or recap of the high level findings that we produced. We find that vehicle electrification could lead to potentially more labor hours, at least in terms of powertrain manufacturing. But this takeaway is dependent on being able to capture the full value of labor hours available within battery manufacturing, in particular, cell manufacturing.

We think it's likely that there will be a shift in the location of jobs as we move from ICE to BEV manufacturing. And it's likely that the traditional roles held by OEMs are going to begin shifting towards third party suppliers. Think battery manufacturers. And then alongside the changes in production technologies as we move from ICE to BEV, we note that there will likely be changes in worker skills, that there will be a higher level of skills required, but that that skill requirement lies within the range that we see already in ICE environments, and that it seems that BEV operators and workers need to be more well-rounded in these production facilities than their ICE counterparts. So I'll end here. Happy to dig into any of these points in more detail on the panel, and I look forward to our discussion. Thank you.

SARA MILLER: Indeed. Thanks, Turner, and congrats on that. That's an impressive dissertation. You got some sympathy from folks in the crowd when you mentioned the unimpressiveness of some of the public data available, that you had to go to create your primary data source yourself. So thank you that. Also, for those in the audience, we're going to have another presentation in just a moment.

All sides will be made available to you on the website after the fact. So please take copious notes and do what you need to do, but know that you will get a copy of that afterwards. But I'm going to shift now to Karla to talk a little bit about her work.

KARLA WALTER: Well, thank you for having me. This is a really exciting panel to be on. I love that we all are covering a little bit of a different part of the waterfront. And I am also going to remain seated because in addition to this being great content, this is the most comfortable chairs I've ever been on in a panel. So I recommend next year trying to get a spot.

So my mandate today is to talk about what our government's doing and not doing to support EV policy as it relates to labor policy on the sorts of jobs being created. And obviously, we're at this moment right now where we've had a number of historic investments in electric vehicles and battery manufacturing, and they are carrying lots of standards, particularly in the context of making sure that the jobs that are being created domestically, or at least in North America, and also ensuring that their workers have a free and fair choice to join a union.

And we have a president who really brands himself as being the most pro-union president in modern history. So I challenge anyone to look at any of these new rebate programs, tax incentives, grants, and find one that describes itself without mentioning the opportunity to create good US jobs. That is the brand of what we're doing right now.

And so the question is, how are we doing that? And a lot of what we're looking at when we look at consumer rebates, it's about both assembling in the US and then scaling up components made in the US. The grants for manufacturing facilities have both that, and then this protection around ensuring that workers have this free and fair choice to join a union.

We also are investing in EV charging stations. And with that, with the workers who are actually building out the stations, they have wage and benefits protections. And we are also seeing at the state and local level little versions of this, along with cities and states, particularly when they're talking about building out their transit and school buses, thinking about, how do we support equity and local hire in these sorts of jobs?

So I think we get we're doing a really good job of answering this question on US manufacturing to the extent, I'm not-- I don't have any burns on the Federal Reserve, but we can talk about that afterwards. But I think that there's real opportunities here. However, this isn't just about what's happening with EV. Adam did a really great job of situating this of what's happening in the US auto manufacturing market broadly.

I was so struck by President Payne's comment where she said, we bargain market rates in Canada. Toyota pays our rates in Canada to compete. Can anyone ever say that with a straight face about Tesla? We can't. We are in a bifurcated labor market, and we're in a bifurcated labor market when it comes to EV, and when it comes to ICE vehicles.

So how do we start thinking about ensuring that when we talk about auto manufacturing, we're talking about good jobs, no matter where they occur in the US? So when we talk about a unionized auto assembly worker, all in, they're making, with their wages and benefits, around the area of $60 an hour, where when we're talking about EV battery workers, that's closer to $20.

We're talking, there is a rise in temporary workers that have both safety work conditions and also, in questions around dangerous work conditions, and also very low wages. And then we have this geographic North versus South divide. And so one of the policies that I've really been promoting in my work is called Prevailing Wage.

The concept of prevailing wage is that when the government is subsidizing private sector jobs, they should be paying market wages and benefits. The government determines what a market wage is and what the market benefits are. And, in order to receive those sorts of supports, the government has to pay those-- or, sorry, the employer or the private sector actor has to pay those market wages and benefits. And the government is watching to make sure that that happens.

This has been in place in the construction sector in the US for nearly 100 years. We have it also for wide amounts of service sector work that's subsidized by the government. We do not have it in place for manufacturing. And honestly, it was a missed opportunity that we didn't attach anything like this to our consumer rebates in the last go around.

Research shows that this is not only good for workers. You get, higher wages and benefits translate to lower poverty rates. It translates to higher home ownership rates. It translates into the ability to spread the wealth gains throughout our economy. But there's also lots of good research showing this translates to a more experienced workforce.

These are the no-brainers. You get workers who stick around on the job, who have higher levels of ability to innovate and make work processes stronger, who then are also translating to projects being delivered on time and on at a better value for the end user. So long term, we want to rectify this situation. We want to see states and federal governments moving to rectify this sort of floor setting ability.

So then, when we hear from our unions, they can say, we're setting market rates across our economy. And we're able to-- we have a strong floor from which we bargain up from. At the same time, we got to dance with who brought us. We have these new policies in place that are going further than we ever have in the past around domestic manufacturing, around bargaining rights.

And we need to really be focused in 2023 and 2024 as this money starts to roll out on, how do we make sure that we're implementing those in a robust way? So that concludes what I have to say.

SARA MILLER: Great. Well, thanks, Karla, and we'll get back to that. I'm curious on some of your thoughts as we think about this broader transition to electric vehicles and what that means for how we can redistribute quality all across the board. But Professor Stephanopoulou, over to you.

ANNA STEFANOPOULOU: Can I have that? Great, thank you. I have some slides to share, too. And they will be loading. I'm just incredibly proud, to be honest, to be among this panel, and also to be here in that amazing facility in the middle of downtown Detroit. So as the slides will so in a minute, I'm actually a professor. I teach and I do research in somewhere just 45 minutes away from here in Ann Arbor at the University of Michigan.

So let's see if the slides come up. There it is. So we call it-- we're really looking for addressing this Michigan EV engineering. And by Michigan, of course, University of Michigan, but the entire state. And also, UI. Of course, we know that there are big stakes for that. So in the next slide, just to orient you.

So University of Michigan, and I am from the automotive laboratory. It's been there for a lot of years, decades there. And we have been educating a lot of the leaders, engineers, that they are feeding, supporting, but also, I daresay, actually creating this cadence of vehicle-related R&D technical centers that are surrounding us.

So that's a great position to be, but also responsibility. I put next to this our US goal. So we have 50% of the light duty sales by 2035 to be EVs. That's the goal. That's about 10 million EVs per year. And if we want to create this EVs and the content in them in the United States, that means 2,000 cells per minute manufacturing.

And these are the 2,000 cells. The cells are the cells of the type that, let's say, Altium the bolt has, let's say. If we talk about the smaller cylindrical cells, multiply this by 10. So it would be closer to millions cells per minute that we need to spit out in our plants. So a challenge, but which other place could do such a manufacturing feat than where we have an automotive manufacturing base?

And this graph here, in the United States, we have 1.8 million, approximately, jobs in the auto manufacturing assembly plants, parts, and repair. And the colors in this graph here, they show, actually, the density of workers that are involved in auto manufacturing, auto parts manufacturing of parts that they are related to ICE engines.

Fuel injection, exhaust after treatment, things that will actually sunset as we move more and more to EVs. So we have 300,000 jobs overall in the United States. The majority of these 300,000 are actually in the auto belt-- Michigan, Ohio, and Indiana. And Michigan actually has the lion's share.

So I guess the question is, how is the battery economy shaping this? And we're going to match it with development and bringing the batteries' manufacturing here. I need to go back. So I think Turner actually showed a similar graph. There was a recent one from Argonne National Lab that there is a report that they just issued out just before Thanksgiving.

It's kind of more cluttered and it shows the density of battery plant, battery capacity in North America by 2030. You can see that there are many states like Kentucky, Tennessee, Georgia. But Michigan is with high density in the battery plant manufacturing parts, batteries in gigawatt hours per year.

Now I think a lot of us, and obviously in this panel, and me as an educator, gigawatt hours per year, it's a metric. We also know that this manufacturing is ramping up. We're improving it. We're making it better in the beginning. As we are setting it up, it is going to have inefficiencies. But we expect them to be very automated.

And therefore, what we're also looking for is what the promised estimated jobs would be. And sorry for the cluttered graph. As Sara mentioned, you will have the slide, so don't strain your eyes. But maybe what I want to show you here is every row. So the colors have to do with battery manufacturing, vehicle manufacturing.

And then the part that perhaps you can see is just the size of the bars in every state. So you can see Michigan with a lot of steel assembly plants and vehicle-related manufacturing, but a lot of battery cell manufacturing in states like Kentucky, Georgia, and Tennessee.

So we're going to the skills. So underneath these jobs, or inside these jobs, what are the skills that are needed? And we have high gaps. We have large gaps. This is a survey that the National Association of-- Battery Industry Association has developed just last year.

We are reviewing this in 2022 December. So the results will come very soon. But I think this is a pretty good one, and we don't see big changes. Red colors mean high. And what you see there, if you can see in the rows, we go by basically the level of education. So you can see that going from the right to the left, we're starting with postgraduate-- well, actually, the high level education.

Then four-year university education, and also then community colleges, associate degrees, and finally, trade schools. So you see a lot of red on the upper education. So a lot of people are looking for skilled workforce that will be skilled on the bachelor four-year education degree. Well, I guess that's good for University of Michigan, and along with many other universities.

And if you see, actually, the rows correspond to the skills. So battery materials, electrical engineers, power electronics, battery management systems. And I can go on down the list, but you can study that a lot. So you see that a lot of actually needs are in the community college and the universities, and a lot of other needs associated with high voltage safety type of training. It is in the trade school, and also community colleges.

So with this information, and just because I'm a professor and I always try to, when I do the surveys, I try to wonder, am I biased? Surveys, when they have few number of answers, sometimes we have to rely to our network. And is our network-- well, I just went and asked all the people that are graduated with high level of degree.

So I had to ask my students and looked into this H-1B survey, which basically would tell you what are the skills that indeed they are sought out in the master's and bachelor degree level, so that we can understand the gap, and we can develop the educational programs. So you see a lot of software engineering there. The bubbles that you can see have to do a lot with testing, controls, quality.

That was great, in some sense. And some of you might be asking, why so much software? Why so much controls? And the answer is, battery manufacturing has to do a lot with data and automation. Also, when the battery life, when the battery gets into the vehicles, it will live there for 10, 15 years. And it can actually also be hopefully reused.

So we need a lot of software, too, in real time with field data, and be able to understand the state of health of the battery, and really plan for a lot of things, including battery pack replacement resale value, which is very important for cost of ownership, but also, eventually, for repurposing and recycling.

So all these things rely on software and data and controls and battery management at the university level. And that will be my last slide. Therefore, we have a large initiative, not just our university. We're working with many other universities, but at least the one that I can really work on and have control over, let's say, is in Ann Arbor and at U of M in Dearborn and Flint, we have a lot of activities associated with creating depth and breadth courses.

If you look at the university level, we're creating fast-track master's degrees, both in electrical and mechanical engineering, that will actually address battery engineering and EV engineering. We work with community colleges all across, that they will actually address education for fleet operations and automotive technicians, especially because that's high density in the Michigan area.

But also, safety and pack testing. And I don't want to say last, but it's really last but not least with our K-12 teachers that we want to engage and create a problem-based solving kind of learning in our schools, all the way from elementary, but really focusing right now in the middle and high school because of the fast transition we need to have. And with that, I really thank you for participating in this, having participated in this.

SARA MILLER: Yeah. Thank you, professor. It's really interesting, what you're talking about here, especially this downstream at the K through 12 level, looking at the need to solve problems and work in teams, similar, Turner, to what you found, as well, in the shift between ICE and BEV skill needs that you'll need on that floor.

I want to come back and kind of ground us into the topic of the day around job quality. Obviously, as Lana was saying earlier, the pandemic laid bare everyone's need to fight for themselves to have a high quality job, and what does that mean, and they are kind of voting with their feet in terms of where they go and different jobs that they take, especially in such a tight labor market that we have.

But I want to open it up to my panel just so that we can kind of talk a little bit, either from the perspective of the electric vehicle sector, or just generally. What does a quality of job mean to you? Like when people talk about job quality, what comes to mind and what are things that we need to really center in these policy and strategic investment conversations? So I'll just run it down the road.

ADAM HERSH: Yeah. So we've been talking, I feel like-- at least I have-- for a decade about what quality jobs are. A quality job is a job that provides someone with a living to support a family and attain the things that we think are a basic consumption of a middle class standard of living. So be able to afford a home, be able to afford health care, be able to afford to send kids to university, and have some security in that job. You can count on it being there and be able to prepare for your golden years and retirement.

TURER COTTERMAN: Yeah. We're very focused in our research on job quality, not just because of the financial aspect that it brings in, but it impacts your life and your family. So what's important in a job? When we think about what these EV jobs will look like, safety is paramount.

Ability for career advancement is absolutely important. And I think one interesting thing I'll note here from a lot of the interviews that I had with workers is that many of those workers working in battery plants and in EV plants were really proud to be working on the future technologies that would be advancing and moving our country forward.

KARLA WALTER: Yeah. think this is intuitive. What's a good job for you? Translate that out to the rest of the United States, and translate it out with real empathy that it's not a good enough job. It's not a bare minimum job, but it is this, I need to be able to pay my bills. I need to be able to take sick leave when I'm sick or if I need to care for a family member.

And I need to know that I can retire without falling into poverty or getting three side hustles in order to keep myself going into my golden years. And this is really variable throughout the auto sector. And then we're also seeing new job quality metrics being important in terms of safety, whether that's safety-- it's nothing new, but we're in a new industry.

So safety with working with new chemicals, safety with working with new machinery. That is like an important consideration there, too. And then simply the, how do I deal with my bad boss? How do I deal with my manager? How do I ensure I'm safe on the job-- not just physical safety, but discrimination and harassment? Where are the protections there?

And so some of this is really about what sort of standards are we talking about the government setting? But then the other key metric of job quality is, do you have a free and fair choice to join a union that can bargain over these sorts of things, as well, and really ensure that when you are a part of a company that's doing new things that is extremely profitable, that you are being rewarded for the wealth you help create?

ANNA STEFANOPOULOU: Wow. Yeah. So I guess to add to that, as an engineer and as engineers, we actually have high wages. So we are getting paid well, and we are sought out. And at the end, we have a really rewarding activity because whatever we do, it really influences and improves, really, the generations in the future. And that is extremely rewarding for most times, most cases. And that's what we're trying to do with our education system.

And in addition, I want to say that it is important to be able to bring engineers from other backgrounds that have not been there. Of course, in the automotive area, what I'm really, obviously, extremely interested in and very invested is to increase females and minorities in the engineering sector because they don't have a pathway. Sometimes they don't even know.

They come from families that they haven't been educated with higher degree, with higher education degree. And so how do we work with community colleges to leverage and to increase that status for the family and their life, and get them into this rewarding place where I can make a difference?

SARA MILLER: And your research pointed out to you that that's where some of the biggest gaps are for the future. So I'll come back to that in just a moment. But just to add on how I think about quality jobs, too, I want to just kind of highlight what I was really struck by in the panel before this, and the Canadian unions getting ready to bargain for mental health.

I think that that's a really big component that also has kind of increased in focus and diminished a concern of talking about mental health, the need for that support. And also, some of the drug abuse support that workers need. So I would just say, I think it's really interesting. And when we get to talk about the difference between union and non-union opportunities in the automotive sector, where you need to expect that kind of support to happen.

And I think a lot of people are looking to their employer where they're spending majority of their waking hours of a week, and where they're getting their income, and where they're sustaining their family, to also provide those supports, as well. So it's not just the wage aspect. And I appreciate the career progression and thinking about that skill development piece of it.

Please do-- we have some questions. I'll get to those in one second, but I'm going to take some moderator privilege here, and I'm going to break this up into two parts, because I want to talk about what we see as some of the biggest risks and opportunities that are on the horizon in the electrification of the vehicle and the automotive sector.

So let me go from Adam and Karla, just on the policy side, what do you see as some of the biggest risks and opportunities that we have policy wise that we all need to be focused on in helping to advocate for or against?

ADAM HERSH: I think the biggest risk is that we're not going to do enough, and that we're not going to get it right the first time. I think we know, or we should know, that we're not going to get everything right. But when we identify these problems or oversights in the policies that we've developed, we can't be throwing the baby out with the bathwater.

We have to learn from that and come back to the table and revise how we're approaching these policies. It is going to be an iterative learning process, and we can't let hiccups shut down or deter us from this path. Frankly, I think we need more Solyndras in what we do, rather than fewer.

We need to have this kind of experimentation and recognize that not everything is going to succeed, but when we have a broad portfolio approach, those failures will be vastly more than offset by the successes that we can achieve.

SARA MILLER: A tall order in our current climate, but I appreciate that. Karla.

KARLA WALTER: So I think the risk that I think about on a daily basis is the implementation risks. I think we have really strong pieces of legislation that have just gone out the door that have been like this really sort of-- I think everybody-- I was surprised at how far we were able to go. I was surprised every time we passed a new bill that put money towards EV. I was like, oh, we did it!

So we're at this very good moment, but we have an administration that's really drinking out of a fire hose in terms of getting new regulations written, getting guidance for funding applicants on what they should be putting in their proposals to win discretionary grants to build out manufacturing facilities. Then they have to get all this information back from those companies and choose winners.

How do they do that? Is job credit quality really central to their decision making? Then they have to enforce these standards to ensure that it's really happening, that on the ground, what the commitments that firms have made are happening for workers. And Adam hit on his intro points. This is also a risk for how future policy making happens.

If this does not come across as a jobs bill, this does not come across as a way that made American's working lives better, there won't be appetite for this. We need to have enviros and worker advocates moving hand in hand throughout the EV transition in order to achieve this. We know how much dysfunction there is in Washington DC. We just witnessed a 15-cycle election process for one party to elect its own leadership.

So getting this enacted and getting more enacted is going to continue to be an effort that requires real coalition work.

SARA MILLER: Thank you. And Turner and Professor Stephanopoulou, I want to ask you the same, risks and opportunities that we have, but as we look at what's going to happen to the workforce. How are we making sure that we're getting them upskilled in transition or that we're filling that pipeline as we need to meet this future need? But what are some opportunities that we have in the balance of some bigger challenges systemically that we're going to face?

TURER COTTERMAN: I guess taking a stab at the risk component first, when we think about moving away from the production of traditional ICE components-- the crankshafts and the camshafts that are made in Michigan-- and more towards the electric motors and the inverters and the battery packs that are going to be needed in the EVs.

This also represents a geographic shift in the location of where these are produced, the map that Anna and I showed that we're moving away from the traditional center of automotive manufacturing towards a more distributed system of production. There's a lot of new battery plants opening up in the Southeast and the Southwest right now.

So this transition presents potential risks to community disruption and figuring out how to move around the workforce. But then I say, on the flip side of that coin, in terms of opportunities, we have the opportunity to bring a lot more manufacturing opportunities to this country. I find that there are more labor hours contained in BEV manufacturing than ICE manufacturing.

That means, with very deliberate policies and organized actions between government and business, that we could offer potentially more opportunities to the workforce in finding new areas of skilled employment.

ANNA STEFANOPOULOU: Opportunities. I mean, obviously, for me, this acceleration we are seeing now in going on a fast track from research to technology transfer, hopefully to implementation of materials, that they are not mined in places that there are issues, to try to bring a lot here with the right policy.

Policy, of course, like Adam says, is a big issue, going back and forth and slowing down this momentum when there is so much investment will be hard. But I also understand that the industry and globally, the momentum will continue. So I'm a little bit more positive and optimistic on that.

As a risk, again, I'm going to wear my engineering hat here and say, I always worry that sometimes we need to rush and go really, really fast, because we need, because of climate change, and because of the jobs that could be lost. But we also need to be thoughtful so we don't create a safety situation, we don't have an accident, we don't have a hazardous situation, we don't have stranded assets that will create a large swing to the pendulum, and really opposition to the new technology.

SARA MILLER: Great. I'm going to turn to a question from the audience. And I'll say, one of these, Turner, is to you, and very specific about some of the inputs to your research. So that's coming from Dan. So find Dan at lunch and ask him about that. But there is a question here about, generally, the collective wisdom is that there's going to be a reduction in jobs.

That's what Lana mentioned earlier today that one third of her membership is ultimately at risk in the shift to electrification. But your research says the complete opposite. So can you talk a little bit about how your collective wisdom with all the inputs to that flies in the face with what you've seen in the field, and maybe how you looked at it from a different angle? Or talk a little bit about that.

TURER COTTERMAN: Yeah, great. Great question. Our finding that there are more labor hours available in BEV manufacturing is centered on the assumption that you can bring all the hours available in battery manufacturing to this country-- Canada, the US. If that doesn't happen, then those hours are going to remain-- those hours in the battery value chain are going to remain locked in those areas of the world that are doing it right now and that are doing it really well.

And I think, also, to be able to offer as many labor hours as possible to the workforce, it also requires existing ICE plants and companies to be able to pivot their production as quickly as possible to those components that are going to be needed in BEVs.

SARA MILLER: Great. Go ahead.

ANNA STEFANOPOULOU: I also want to add-- I didn't bring this chart with me because I had already too many. But we actually also did just a data analysis from the census data and the automotive news production location of assembly plants and production. And we actually found the opposite way from Turner. He went bottoms up. We kind of went top down and just looked at data of what happens.

And again, we don't have too much data. There are only very few full electric, let's say, ecosystem's production right now. Very few. So with very few data, we actually found that one we have, it actually has more employment on the site. It could be because-- and the wages are way higher. Now, it could be because of the location. You probably know which site that is.

And also, because that they are doing R&D, it was not a well-established facility. And therefore, they house at the same place not just the manufacturing, but also the engineering and the research part. And their wages are very high, on average.

SARA MILLER: No, that's great. Go ahead.

ADAM HERSH: I just want to make two asides about Turner's research and caveat that I have not had the chance yet to study his paper in depth, and I look forward to it. It's very rich, and I hope to learn a lot from it. But the findings-- number one, the findings are quite out of step with what other analysts across the industry have been finding.

I hope that Turner's analysis turns out to be right. That would be great. But we can't make public policy based on the most optimistic outlying finding in this area of analysis. Number two is, if Turner's analysis is right and we are going to create more jobs in battery BEV production, that's fantastic.

One, we still have to-- all the stakeholders, unions, employers, governments have to deal with transitioning the workforce from the legacy internal combustion manufacturing and find things for them to feel whole so that we build their support for this transition.

And number two, the jobs that could be created will not be good jobs unless we take all these other steps to ensure, as Karla has talked about, what we can do to support the workers in these plants to have good pay and good representation.

TURER COTTERMAN: Just one comment here. I hope that Anna will agree with me that our findings are a little of a departure from what most people agree. At the end of the day, they're part of the scientific process. So we hope that they spur additional interest in this area.

There was very little information in the public domain when I began this process. So I hope that this work incentivizes businesses, academics, government to dig more into this issue because of how consequential its impacts could be.

SARA MILLER: I think that these are all really interesting ways of looking at it. I agree. I hope that your findings are accurate, and there's way more skills, different ways that they deploy the skills, well rounded skills, and high quality jobs at similar density to what we have now.

Quick question just from my own curious perspective. And I think about this quite a bit, especially as we're thinking about, where is the energy and where's the motivation to actually force this shift to happen? What side of the market is forcing this to go? What about the infrastructure component to this?

I think that's a huge place that I don't know that I really understand a lot of-- how we're thinking about preparing a workforce, deploying a workforce. What's that going to look like? And if there's any kind of measures inside of policy for that beyond rebate incentives on taxes for purchasing the vehicle? How do we set up our infrastructure so that we can be more welcoming to the electrification of cars writ large? So I don't know who I'm asking that to in particular. I'll welcome anyone's response. And maybe it's just an open question.

TURER COTTERMAN: I can take a stab. I'll start. I know that infrastructure is already dictating the locations of a lot of the production facilities. A lot of these new EV plants are choosing to locate around areas that have existing infrastructure for transportation purposes. And the battery plants, by default, are tending to locate near the EV production facilities because batteries are heavy, and you want to minimize the amount of transportation you can do.

And then, I think, aside from the production point of view, when we think about infrastructure more broadly and the full context within which EVs fit the charging infrastructure, and so on, that's going to be-- and we heard about this quite a bit yesterday, that the charging infrastructure represents now a critical bottleneck in the scale-up of EV deployment.

And one aspect that probably hasn't been fully considered is, what are those workers-- what does the workforce around charging stations look like? What does the workforce around all these new needs that are-- there's so many question marks right now. This is an entirely new area that hasn't been conceived. So giving appropriate attention to all these potential new areas of employment is probably pretty important.

KARLA WALTER: And I would just add that, actually, infrastructure workforce and how we think about the people building out roads, building charging stations-- we have, actually, more innovation in terms of how do we support the workforce in that space than we do in manufacturing.

There have been-- I'm not going to oversell. The trades are dealing with both standard setting in terms of ensuring that there's consistent standards application and construction. And they are also really focused on diversifying their workforce and have a lot of need there. But we have a prevailing wage standard for EV charging station workers, and we have that prevailing wage standard that was enacted for construction workers across IRA, CHIPS, and IIJA.

So we have the baseline wage and benefit standards in place for those workers. And then there is an encouragement, a lot of encouragement, in terms of, how do we think about hiring local? How do we ensure equity on those jobs? That is really happening at the state and local level, and there's a lot of encouragement at the federal level for cities and states who are applying for discretionary grants to do that.

There are similar models in place for the manufacture of our rail systems and our bus systems in terms of employment planning and really attaching standards in contracts that are about equity and about job quality. And so there's a real opportunity to think about, for transit, how do we expand that through this new funding?

SARA MILLER: And hopefully, depending on what we see in terms of dislocation in the current state of the sector to future, that can be other ways that we embed that and use policy as that push to say, OK, those workers that are being affected, moving to BEV development, have right of first refusal to these other jobs, and things like that, so that we're not just having this kind of disconnected loss of job and job growth, but one hand isn't shaking the other hand.

I'm going to go-- in our last couple of minutes, I'm going to go to some questions that we have from the audience here. So one is from Jean Whalen. Jean asks, are there particular details you would want to see in the EV purchase tax credit regulations coming out this March? Stumped them, Jean.

KARLA WALTER: Can you repeat the question?

SARA MILLER: Sure. Are there particular details you want to see in the EV purchase tax credit regulations coming out?

KARLA WALTER: I would just say, in general, we want to make sure that the domestic manufacturing standards that we have are really, truly pushing, and are doing it in ways where we're not creating loopholes for avoidance. If we're serious about US manufacturing and North American manufacturing, then we really need to make sure that all the buckets of money we're pushing out the door are rewarding that.

SARA MILLER: Professor?

ANNA STEFANOPOULOU: I also would like to consider the policymakers to think about-- and I think EPA, perhaps, could be thinking already about it, about data collection, and our ability. Of course, it's thoughtful to the privacy and individuals, but also to the companies, for many reasons-- inventions, and things like that.

But I think it is important to have data collection as we are changing electric school buses or transit system, as we are providing a lot of incentives for many things, network chargers and how they're used. I think it will help a lot, everybody, and including our research and development, but also just transparency to the public to be able to actually really collect data, and understand, and learn, and go forward.

I don't know how exactly. I can give you a whole list of things. Think about maybe just one. We are discussing here in the US now, and with California leading this discussion, about battery passport. The health of the battery. What are the diagnostic signals? In internal combustion engines, we have onboard diagnostics because of emissions, and because of, we wanted air quality to be maintained. And we had driven regulation for that in electric vehicles. It would be good to develop systems like that.

SARA MILLER: Sure. Yes. Good. Indeed well, with our last couple of minutes, I'm going to have all of my panelists just offer a parting thought or some burning comment that you wanted to get out that the conversation didn't create space for. And what do you hope that this group walks away and kind of is left with, from your perspective?

ADAM HERSH: Well, I would encourage those of you who are from the business side, and leaders, when you are out talking to policymakers, keep in mind that the success of this EV transition is not just dependent upon what is happening in the automotive industry, and that you can be a voice with them to advocate for broader approaches, comprehensive approaches to this transition, because this may become a dated idiom, but we have to be firing on all cylinders if we are going to make this transition.

SARA MILLER: Firing on all cells now.

ADAM HERSH: I'll circle back around to our previous panel here as we think about the role of unions. I think there is the potential for workers and for organized labor to benefit in this transition. However, for that to happen, a number of factors would have to align. I think a couple of facts worth noting is that we see that BEV manufacturing, the labor content is primarily driven by batteries. And then even within that, mostly by cell manufacturing.

We know that the locations where manufacturing BEVs is going to take place is going to be different than where ICE manufacturing has traditionally occurred. There's the risk that BEV manufacturing through new suppliers could be leveraged to reduce the involvement or the power of organized labor.

And then I'll note, too, from our research, we find as we think about the role of workers, we note in our research that we see that the skills needed for BEV workers are the same, if not higher, than ICE facilities, which lends an argument for why the quality of work and worker wages shouldn't be lower in new EV production facilities. Thank you.

KARLA WALTER: Yeah. Well, since we're talking about collective bargaining, I just wanted to quickly mention Altium and the recent 98% vote in support of unionization at that company. Workers are pushing there for higher wages. They're pushing for better safety. They're pushing for better protections and being treated fairly on the job.

And we are in a moment in the US where union support among the public at large is at its highest level since 1965. We are seeing workers at Starbucks, and Amazon, and across the public sector, and at Microsoft really pushing and winning unionization.

And so I think we've got this moment where job quality is at the forefront of our conversations with this industry. Job quality is at the forefront of demands from workers. And so we really have an opportunity to make the EV transition something that everyone cares about and sees themselves in.

ANNA STEFANOPOULOU: Wow. OK. So I would agree with all of these. And trying to add something to these amazing comments-- I want to say that, also, I think that a lot more events like this are extremely important, in my, opinion, where economists, policy makers, policy analysts, and engineers, technical scientists, technical people talk to each other and understand the issues.

I am, to be honest, after what I have heard so much in this event, I'm so glad I'm an engineer because what I do most likely will go in production or do something, whereas policy is so hard to push forward. I am just really thankful for all of you that you work in this area.

SARA MILLER: Yeah. Sad as it is, that's a really good analogy, that policy is not as-- there's no assurances there, like there is with engineering. So thank you all so much. Please join me in thanking my brilliant panelists.

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