Çağlayan Arkan, vice president, manufacturing industry, Microsoft, joins Peggy to talk about reskilling and upskilling in the manufacturing space. Çağlayan and Peggy take a deep dive in to the biggest misconceptions about manufacturing today and what are the biggest hurdles facing a growing workforce. In addition, they address the skills required for a modern manufacturing career and how sustainability and the circular economy come into play. Arkan also addresses what Microsoft is doing to empower the next generation of skilled workers to help the industry build its labor pool and the skills required for the digital age.

Below is an excerpt from the interview. To hear the entire interview on The Peggy Smedley Show, visit peggysmedleyshow.com, and select 01/26/2021 from the archives.

Peggy Smedley: There are the misconceptions about understanding manufacturing. What do we need to do to encourage the next generation and the workforce that’s in there now, but where do we have to go for tomorrow?

Çağlayan Arkan: No, absolutely, Peggy. I think this is a wonderful topic to discuss, because you said I was passionate about what I do. I am indeed, because manufacturing is about innovation. It’s about building capacity. It’s about employment. It’s about competitiveness. It’s about a lot of things that are near and dear to all of our hearts—whether we are businesspeople, or students, or employees, or policymakers, you name it, manufacturing is relevant. Plus, we all use stuff, right? Products, and manufacturing is what makes them. And so I’m extremely energized to have the conversation. So there are misconceptions. Well, I will say realistically manufacturing of yesterday, manufacturing today, manufacturing of tomorrow, are not necessarily the same thing, Peggy. And manufacturing used to be long cycles, very manual work, used to be perceived as old, dirty, blue collar, repetitive, low value add, mass production, all of that is changing or has changed already.

And so manufacturing is becoming a digital job. It’s a data job. It’s very relevant to sustainability. It’s a software job. And everything, as we know about manufacturing, is changing or has changed. And so that’s a wonderful conversation to have because manufacturing needs new skill sets, manufacturing needs new people. The U.S. and every country needs manufacturing to become digital and operate at very, very different levels.

Smedley: Is part of the challenge when we look at this because we don’t know how to engage with the workforce the way we need to when we think about the way manufacturing is changing and the way the technology is changing from what it used to be, let’s say five, 10-years-ago, to the way technology is today and where it is going to be when we look at how Industry 4.0 is?

Arkan: Yeah. That’s actually a very good point. There’s a lot of things that are going on around manufacturing. But one thing that has already changed is the environment and the shop floor, the plant. The four walls used to be production lines and people just carrying stuff around, doing physical work, if you will. Now what we’re seeing in at least, you used disruptors or early adopters, we have so many companies including Microsoft itself. Microsoft is a manufacturer. If you look at those HoloLens’s or service computers, so we know and understand manufacturing because we’re a manufacturer ourselves, that shop floor environment is now touchscreens, is now mobile apps, is now HoloLens or mixed-reality devices.

And actually manufacturing employees are using data to make decisions, are using touch screen and modern environments or interfaces to interface or interact with machines, including robots. Robots used to be a part of the manufacturing environment, but now they’re becoming much lighter, much more safe, much safer to be around and work with you. They’re called cobots (collaborative robots) for a reason, collaborative robots, because you teach them, you train them, and they do what you want them to do. Again, they’re very nimble. And so they take lots of the repetitiveness and lots of the physical work away. And so the manufacturing employee’s now doing higher value stuff, responding to data or predictions from AI (artificial intelligence) engines. And also the whole manufacturing environment is moving from mass production to mass customization. What I like to call one size fits all too one size fits one.

Yeah. So major, major changes. And this industry forwarded all those notion. Actually, kind of implicitly suggest that there’s a lot of new technology at play. Actually, most of the technology stuff we’re talking at play here is not new, just the capabilities that those are now able to offer us in terms of artificial intelligence, or IoT, or mixed realities of it has changed, has advanced to a point unprecedented levels where right now you can do a lot more with it. And then the compute tower is just infinite and virtually. And so our environment has changed.

And my call to action has been for some time in terms of the leaders at manufacturing, to understand what I call the auto possible into the how technology has already changed their workforce, their environment, what it’s capable of in the end. And so that they lead with it as opposed to lead with stuff in the past.

Smedley: So when we talk about manufacturing, we’re still talking about knowing about the defects. We’re still talking about understanding our upstream, our downstream, all the things we’ve always had to know, and this is always why manufacturing has always been around. And that’s what people need to understand, but what’s different is trying to understand the skills now, because we’re applying data, we’re applying this new insight, but it’s still manufacturing at the heart of it. So when you think about it today, what are those real skillsets? You talked about HoloLens. Now I hear AI. I talked about mixed reality. So what are the required skillsets for a modern manufacturing career when I hear you talk then today?

Arkan: Yeah, absolutely. So let’s kind of dissect manufacturing into its kind of value chain. So what does manufacturing do? It designs stuff, right? It makes stuff, it sells stuff, and then it manages an entire supply chain doing all of that, then it provides services after sale. Now when you look at the design section, or elements of it, it’s completely changed. It’s completely transformed, because we are coming from a computer rated design kind of paradigm where we used to design stuff with straight lines and corners, and then we weld them. So we manufacture a lot of parts. We weld, we screw them, we bend them to make a product, right?

Now, you give that same design requirements to an AI engine to generate a design. AI designs stuff as in mother nature, it’s even hard sometimes to understand what you’re looking at. It’s an amorphous, it doesn’t look like anything. And you cannot manufacture that kind of designs with the existing manufacturing paradigms in terms of manufacturing parts and assembling them. But what is available to us today is additive manufacturing in terms of 3D printing. So you can 3D print stuff in these very strange shapes, but then those products are lighter, more durable, giving you higher strength levels. They’re more resistant to temperature. They’re much cheaper. So complete paradigm change those skillsets. So you can be the best designer, the most innovative, or creative person, if you don’t know how to design using AI engines or how to use a new environment, you better because you will not be performing at the highest levels.

Similarly, the mixture of the environment gives you a holographic image of what you’re designing, so that you don’t have to design and build a prototype, build a physical image or thing, investing in molds and spending a lot of money and time. You can look at that holographic image and then start designing the user experience for example, in that virtual environment, and do it with teams in China, or Mexico, or Europe, at the same time. You don’t even have to speak the same language. So it’s a very, very different skill set. And we’ve only barely discussed design and engineering.

Smedley: I was thinking about this, what’s really interesting is if you think about the new leadership, because I was thinking what keeps them from being in the status quo is understanding. You mentioned mother nature, it’s understanding the ecosystem. So now the new manufacturer, so to speak, has to be thinking about sustainability, circularity, what comes into play here? So we, as the manufacturer, can’t be thinking about, make, take waste, just filling our landfills with all this stuff. We have to think about what the next generation is thinking about. How do we become more sustainable? How do we do things better? How do we design it better from the beginning? And that’s what you’re saying here. So now manufacturers have a better way of doing things better instead of taking everything out of our environment, how to design it better, and build it better, create it better. I mean, that’s what I’m hearing you say now.

Arkan: Yeah, absolutely. Look, with the things that I said, we aren’t involved in virtualizing an entire supply chain in say aerospace, in automotive, in satellites. I mean, there’s no plan B in satellites. Once you launch one of those things into space, it’s gone, right? And you better have a good design. You better have something that will work as opposed to fail. And so it’s just the opportunities are endless. You just need to know. You just need to understand. If you are a leader, you need to understand that your job is technology digital. You got to understand it all and make that translation. If you’re working on the shop floor or in the design environment, you got to translate your job into a new one.

I’ll go back to shop floor, today in the automotive space we have people wearing HoloLens’s assembling stuff, and they don’t need the training that they receive because that mix of the environment and the guides will just guide you through step-by-step. So even if you’re brand new, if you’re a rookie in that job and that environment, you can still perform 50% better than you would otherwise have. Similarly, if you’re doing a layout, you can bring your holographic image into shop floor, fit it somewhere, turn it around, look for maintenance, and what kind of space you need, look at the workflow and sort of put stuff in the middle of where people walk in the shop floor. So all of these you can design or assimilate even before you make decisions or move stuff around.

Similarly, for digital twins you can design something and create a digital twin or a digital thread and look at, I use satellites as an example, right? How that thing will function, will perform. You can look it as designed, as configured, as built, then as maintained, and then as serviced, and go all the way back to all of that. If you’re working in field services, again, if you’re new, if you wear a HoloLens and call up support center, an experienced employee can look at what you look at, can see what you see and tell you exactly like I’ve been doing this for 30 years. This is why you do this, this is how you deal with the problem ahead of you. And then we’re talking about a skills gap, Peggy, in manufacturing. We can actually encourage our more experienced aging employees to stay in the workforce, even from their homes, right? Become a multiplier or force or still make their IP and knowledge available, become knowledge workers. And then help hundreds of people in the field, regardless of where they are.

So I can go on and on with examples. And every example that I talk about, Peggy, has amazing brands that are already using it. Like Daimler, like ZF, like Tetra Pak, like thyssenkrupp, and ASML, this is all at play. But again, when I talk to leaders, some are aware of what’s possible or available to them and some not.

Smedley: So let’s talk a little bit about that because as you and I know, Çağlayan building resiliency and adapting to change takes time. We know that that all happens. Microsoft understands the art of having to work with companies. You can’t do it alone. You can’t champion alone. You have to empower workers. You just said, re-skilling that upskilling. You have to do it together. Some of the companies you mentioned, these companies understand they have to work together. How are you doing that? How do you build industries to make that change happen? Because to shift to those digital capabilities to accelerate all of this change takes time, takes pace, takes determination, to encourage that introvert, that extrovert, to want to see what’s the possibility. The art of the possible that you just said. There’s so much that can happen, yet how do they see what they can do? And yet the abilities that are out there right now, because change happens so fast, yet sometimes it happens so slow and now we have this pandemic happening. And yet there’s so many things that we could do together when we work together.

Arkan: That’s very true. And I’m afraid I have a very loaded answer to that. Let me give you a couple of bullet points. So at the highest level, Peggy, we’re partnering with the World Economic Forum, with McKinsey, and a number of institutions from a policymaking standpoint, providing those reports that talk to the art of possible, eliminates, demystifies, AI taking away jobs. Yes, jobs will change, but our work with World Economic Forum says that 75 million jobs will disappear and 133 million new jobs will be created. So it’s actually new, it’s incremental jobs, but it’s those are different jobs. So have the factual database and the right conversations, right? So institutions. The second one is universities and the ecosystem. We’re partnering with Purdue, University of Wisconsin, in Finland, and in Turkey, in so many places in terms of new jobs, new curriculum, new disciplines, and professions. And then we even play a role of educating people themselves in terms of our subject matter experts, engineers, and industry expertise.

The third piece is we obviously engage customers, right? I talked about some of them, you can add BAE, Honeywell, Rockwell, and Eaton, and Siemens, Buehler, Ecolab. So you go to those leading companies that sit in the middle of automotive value chain, that sit in the middle of food value chain, or aerospace, and then they educate everyone on bringing an entire ecosystem together. And we do that. And then finally, of course, from a sustainability standpoint we lead by example. So you’ve seen that we announced that we will actually eliminate all carbon emissions from our inception in 1975 and be carbon negative, including our history as a company. Now we are making the translation, Peggy, into what does it mean for sustainability and manufacturing and circular economy. And we can talk about that, what it really means, and what it means for supply chains, and what it means for employee behavior, and how does that translate into workforce or sustainable designs, et cetera. So we’re doing all of that work.

Smedley: So I guess the question then comes because there’s so much we could talk about, is the idea when you’re talking about implementing a workforce right now, the new workforce that’s going to transition from an existing workforce to the next gen, to a future gen, about making a gradual improvement in performance and saying, “Look, we have to think about how the leadership has to see what we’re doing today.” And say, “Where are we thinking about how do we service our customers the demand changes?” We’re socially engaged. We have to think about what our needs are and then make those moves. Is that what the best manufacturing environment can be? Because as you talk about those things, how do we become sustainable? How do we become circular? How do we become resilient? All of those things have to be discussed.

And then as the employees are in there, that’s how they get skilled. That’s how they get reskilled. That’s how they see the technology and the evolution. It sounds like there’s so many things happening at once that digital transformation, as we always say in manufacturing, it’s a journey. So you can’t just say we got there, we got to keep moving. And as we move, more things happen. And that’s why you say jobs are lost, but new jobs are had.

Arkan: Absolutely. I talked about our university partnerships. The other piece where we see a multiplier effect is our work with like National Assn. of Manufacturers, NAM in short, in the U.S. or MXD as a digital innovation Institute out of Chicago, and ARTC in Singapore, I can go on and on, but those are kind of focal points for the industry to see the art possible, as well as come and train their people, and do stuff, and play with stuff, test some hypothesis. I’ll go back to our work with World Economic Forum, Peggy, in that it’s been over three years now. We engaged in this lighthouse manufacturing program together with McKinsey. And that is us actually showing the ark possible through some companies such as Tata Steel, Schneider Electric, and Bosch, and others, and show that when you are a modern digital manufacturer, when you’re a lighthouse, as in everybody walks to, or towards your light in darkness. What we’re seeing is like with Schneider Electric, we’ve seen 78% of their carbon footprint reducing their lighthouse environment.

Obviously lighthouse is just one plant out of multiples, sometimes in large manufacturers case, out of the hundreds that they have, but it’s still a very strong manifestation of it works and it reduces carbon footprint. With Henkel we reduced 38% of energy consumption and 25% of their water consumption. Water is immensely important. Manufacturers use a ton of water and very inefficiently so far. So we’re partnering with Ecolab to actually start from awareness and all the way to policy, all the way to technology offerings and services to change that. With Outokumpu in Finland, we already delivered sustainability gains to the tune of 30%, less carbon emissions and steel manufacturing. So those examples are examples that no one can really ignore or find trivial.

And also communicating those with those leaders and credible enterprises, I think it goes a long way to encourage everyone. But our awareness challenge, Peggy, as far as the workforce, in terms of attracting young people, attracting new people to manufacturing and say, “Look, your environment at home you’re using technology at its best in manufacturing.” At least with some manufacturers today, we are able to give you even better. We are able to get you even more equipped from a technology standpoint. And this is not your grandmother’s manufacturing environment, if it’s appropriate to say so, it’s very, very new. It’s ‘very attractive. It’s very rewarding.

And this is the final thing I will say, Peggy, a lot of people are activists for the sake of the environment and sustainability. And it’s one thing to criticize, or to shout your point of view. If you become the new type of manufacturing employee, you are actually walking the talk, you are actually taking part. You can come into a leading manufacturer and help them become carbon negative, water positive, help them become sustainable, get a part in it. That’s the real activism. So be part of the solution, as opposed to pointing to a problem. Pointing to a problem is good, but being part of the solution is even better. So, that’s my call to action. Get curious, get educated, and come and work for manufacturing, come and talk to us, come partner with us.

Smedley: And I love that you talk about that because I think as we started this conversation out is that if you can help manufacturer see the defects, reduce the defects, improve their upstream, downstream possibilities, transform the way that they’re thinking, improve their quality, their business, their outcome, their inventory. At the end of the day, they’re improving and eliminating the waste. Ultimately they’re improving the environment. That’s where we started this conversation. And you just said, you’re being an activist for positive change and that’s really manufacturing. We all need products. And you just describe it, we’re reducing water usage. I mean, we’re going to head towards a water shortage crisis, but you just described how we reduce our water usage. I mean, those are all the positive things you just described. I think that’s wonderful.

Arkan: I think that’s exciting too. So let me use that water example. So because manufacturers use a lot of water, they will all find a water reservoir to set up their plants. So what we find is that multiple plants or manufacturers will use the same reservoir. There’ll be neighbors. They will never talk to one another, or look at that as an ecosystem. What they will do is they will all take fresh water from the reservoir, and then use it and pump it back into the reservoir. What happens is that reservoir is in time polluted and becomes useless or runs out of water, right? And if you start measuring your water, and then if you start looking at the bigger picture as an ecosystem around that reservoir, what you find out is one, you can refresh water, and two your water out that you pump into the reservoir can be a good enough quality input to your next-door neighbor, because they’re may be using a heat exchanger, they don’t need drinking quality water.

So for these clusters, we see the possibility for them to become water positive in that zero usage of fresh water, right? So that’s one example. You look at circular economy, manufacturers realize that actually even their obsolete products have value, have parts, have components that are usable. So they are now looking at bringing them back home and reusing them not only recycling the plastic, or the metal, but also using components out of it. And so there’s no waste or it is largely reduced. Circular economy means there’s zero waste, right? And so those conversations are not happening. But for that, you got to say, close to your product or connected to your product that too requires technology capabilities, but these are exciting conversations to have.

Smedley: Well, Çağlayan … Thank you so much for your time today. Where can our listeners go to get more information about what you’re doing? This is really great.

Arkan: We actually have all of that at microsoft.com/manufacturing. And we’re happy to share all of that on our website, as well as follow us on LinkedIn and Twitter. And we’re very, very active in terms of communicating the news.