1. Innovation, Technology & Engineering Nan Mattai, SVP Eng & Tech, Rockwell Collins Daryl Pelc, VP Eng & Tech, Boeing Phantom Works Jeff Wilcox, VP Eng, Lockheed Martin Corp.

2. Strategic Imperatives for the A&D Industry Improve the performance and predictability of large, complex programs Enhance the affordability of our products Preserve and foster the industry’s ability to continue innovating into the future Maintain world-class STEM capabilities

3. Globalization of R&D – Future Uncertainty World Spending - $1.2 Trillion, U.S Spending $400B

4. A C HALLENGE FOR THE A EROSPACE & D EFENSE INDUSTRY A&D INDUSTRY CONCERN…THE VANISHING ENGINEER…. 4 “Without a workforce with engineering skills, the U.S. aerospace industry will lose its innovative and productive edge. While the country graduates about 70,000 engineers annually, only a small percentage enters aerospace or the related defense industry.…” Wanted: Qualified Engineers to Keep the Aerospace Industry Flying: A Shortage of Engineers Threatens the Industry – and National Security --- Wharton A&D Report “Baby Boomer Retirements could trigger an A&D engineering crisis. Aerospace companies aren’t attracting enough engineers to replace the wave of baby boomers nearing retirement. The gap could have profound impact on the future of the industry - - and the nation”. (Aviation Week) “Our policymakers need to acknowledge that the nation’s apathy toward developing a scientifically and technologically trained workforce is the equivalent of intellectual and industrial disarmament, and is a direct threat to our nation's capability to continue as a world leader…” (Commission On The Future Of The United States Aerospace Industry) “The Aerospace industry faces declining workforce numbers that could result in a disastrous loss of intellectual capital for the industry if measures are not taken to attract more skilled applicants” (Interagency Aerospace Revitalization Task Force) Brain Drain Could Ground Aerospace Production… “Industry task force offers dire warning if workforce challenges aren’t met.” (Industry Week) “Second only to a weapon of mass destruction detonating in an American city, we can think of nothing more dangerous than a failure to manage properly science, technology, and education for the common good over the next quarter century”…. “The harsh fact is that the U.S. need for the highest quality human capital in science, mathematics, and engineering is not being met”… (Roadmap for National Security) “The Aerospace industry faces declining workforce numbers that could result in a disastrous loss of intellectual capital for the industry if measures are not taken to attract more skilled applicants” (Interagency Aerospace Revitalization Task Force 2008) “Our nation is not producing enough qualified workers to fill important jobs in U.S. Aerospace companies and the shortfall will increase as retirements grow in the coming years’. To maintain America's leadership in the global aerospace marketplace in the 21 st century, we must cultivate a highly skilled workforce of scientists, engineers and other technical specialists critical to our national security, our economy and the strength of our industrial base” (Marion C. Blakey AIA)

5. Innovation, Engineering – Findings from Roundtables Requirements exist for new ideas, capabilities, tools, invention and innovation Gaps in Technical Areas - Energy solutions/sustainability - Plug and play adaptability - Cyber Security - Materials - Nano Science and Technology Gaps in Tools - Systems Engineering Tools to better manage complexity - Global Collaboration Tools

6. Innovation, Workforce – Findings from Roundtables The workforce is attracted by and does best in a climate that values/fosters innovation Incubator-like culture to assure continuous innovation and people development Strategic workforce plans for 5 to 10 year periods that parallel business and financial planning More innovative tools to increase attraction and retention (tuition forgiveness, selling the possibilities of the industry to current and future employees, apprentice-like opportunities) Work environment that engages

7. Innovation/Engagement – Findings from the Roundtables It is advantageous to overall enterprise for industry to interact directly with government customers prior to RFI/RFP Need to re-engage investment community in value of long- term R&D investment Create vendor-neutral entity for innovation – Leverage basic research into projects/programs – Immediately assist in addressing lifecycle cost issues

8. Innovation/Resources – Best Practices 20% time allocated for open-ended exploration, investigation, research, innovation Harvest – use portion of time/funds from Lean to support time/dollars for innovation Allowance – funding of time plus resources for in-house self- directed projects Hire based on curiosity/hobbies as indicators of innovation

9. The Innovation Index - Gauging the Health of the Industry Innovation Engine Factors of Value Organic R&D Funding Programs/projects in development Ideation and development stages Return on investment cycle Speed/velocity in responding to all-new challenges Breakdown of products by lifecycle quadrants New products/services over 5 year cycle Ability to attract - % acceptance by best and brightest