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Huntington Ingalls Industries: Investing in Human Capital

For more than a century, HII’s Newport News and Ingalls shipbuilding divisions in Virginia and Mississippi have built more ships in more ship classes than any other U.S. naval shipbuilder. HII’s Technical Solutions division provides a wide range of professional services through its Fleet Support, Mission Driven Innovative Solutions, Nuclear & Environmental, and Oil & Gas groups. Headquartered in Newport News, HII employs more than 41,000 people operating both domestically and internationally. The company reported sales of $8.17 billion in 2018 and is ranked No. 371 on the 2019 Fortune 500 list.

Q3 2019
Editor's Note: This article was provided by the Virginia Economic Development Partnership. It provides a perspective on changes that are disrupting the manufacturing industry. The article originally appeared in the Virginia Economic Review’s second quarter 2019 publication.

Virginia Economic Review: What do you see as trends in your industry sector from a manufacturing perspective in the U.S. over the next five to 10 years? How are things changing?

Mike Petters: The way I think about the business is three dimensions internally. There’s capital investment, there’s technology application, and there’s human capital. Those are the levers we have to work and pull, and I, frankly, believe there’s change afoot in all three, probably at a faster pace than we’ve seen in our careers to this point.

Manufacturers that are going to be successful have to stay in front of that change. Capital investment is not around building a new version of what you used to do. It’s actually going to be investing in facilities and processes that give you better output than you had before — and maybe do it in a different way.

Technology’s going to be part and parcel to that, where you’ll see more automation and automatic manufacturing. One of the big things that’s changing is additive manufacturing. You’re going to see the application of data analytics and artificial intelligence to the manufacturing process. You’re going to need to be able to stay on top of that, which brings you to human capital.

Human capital is really interesting because I think it falls into two discussions. There’s a high-level, post-secondary, maybe even post-college, discussion about STEM and skill applications where companies have very high-end jobs available, and they don’t have qualified people to fill them.

And another part is, frankly, that the majority of what we’re going to need are folks working on the piers. They’re going to be down on the docks, actually assembling our products. The skill set for a welder today is very different from the skill set for a welder just 10 years ago, much less 30, 40 years ago. The tools we’re providing them are very different than they were 10, 15 years ago. I’ll tell you, having been here in manufacturing in Virginia for 30 years, Virginia really does have a good understanding of this dichotomy.

VER: Getting back to capital investment, are there particular kinds of shifts you’re seeing?

Petters: Imagine a factory that’s 100% robots. How would you support that factory? Well, you’re going to need some planners and probably some engineers and maintenance people to take care of the robots. You’re going to need people who do different things than you had before. If you talk about a horizon of five to 10 years, certainly in my business we’re not going to be anywhere close to 100% robots. But we’re going to have more and more automation. Automated welding, automation in terms of pipe fabrication and machine shop digitization. We’re moving toward additive manufacturing in terms of foundry items, castings, and things like that. We’re moving in a direction that’s changing what our workforce will be asked to do. And what we’re finding as we’re making that change are a couple of really interesting things that I don’t think we expected.

A remarkable thing for us is to see folks who’ve done things a certain way, or who have built a career around the way that we’ve done things, take on this whole new approach to what their job is and love it.

We’re now able to do that with some agility because of the new tools we have. We’re able to reset some of those conditions that actually empower our workforce to bring in better ideas.

VER: What do you think states and regions could do to better position themselves to retain the manufacturers they already have and attract manufacturing investment in the future?

Petters: First of all, I would try to separate what are federal things and what are state things to be done. At the federal level are discussions around tariffs and trade policy and those kinds of things. States may be able to weigh in on and suggest to help influence, but states probably aren’t going to get a lot of bang for their buck to get too involved.

On the other hand, I think states can be deeply involved in education. Frankly, that pipeline starts when kids are 3 or 4 years old. At Huntington Ingalls, we provide scholarships to our employees so they can put their preschoolers and early childhood folks into schools, because 90% of your brain is developed by the time you’re 5, and we need to have in this next workforce generation people who love to learn. If you’re trying to teach a 15-year-old, or help a 15-year-old discover their love of learning, it may be too late. And even if it’s not too late, it will be expensive.

VER: What do you think makes Virginia a compelling place for manufacturing?

Petters: Gosh, where do I start? I think it does start with human capital. Virginia has a very coherent structure for workforce development from public school education, community colleges, and the four-year institutions. The whole system is nationally recognized as being top-tier. I think that’s where it starts. We have an education system that can provide that workforce.

Secondly, I think there’s a pretty good track record of partnering with companies to attract them to Virginia. There’s a pretty good track record, at least with my business, of Virginia supporting our business.

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