Archive for the ‘Technology’ Category

CONNECT’S MIP Awards range from Pure Fun to Life-Saving

Tuesday, December 13th, 2016

On December 1st, the winners of the 2016 CONNECT Most Innovative New Product Awards were announced at the 29th annual dinner event held at the Hyatt Regency Aventine in La Jolla.

CONNECT is a premier innovation company accelerator in San Diego that helps start up entrepreneurial teams become great companies in the technology and life sciences sectors by providing access to the people, capital, and technology resources they need to succeed. CONNECT has assisted in the formation and development of more than 3,000 companies since 1985. Lead sponsors for the event were Cubic Corporation, and JP Morgan Chase & Company.  Tom West, San Diego Executive Director & Regional Manager of JP Morgan Chase, presented CEO Greg McKee with a check for $200,000 to support CONNECT.

CONNECT CEO Greg McKee said in part, “This event gives us an occasion to celebrate what we do best in San Diego ? innovate. From genomics to robotics, Bluetech to biotech, and data analytics to medical devices the breadth of our innovation economy is staggering. In fact, it’s a quarter of our GDP. You, as innovators, matter. And, I would bet, that many of the products we see here tonight will have an equally profound impact. For over thirty years CONNECT has been, and continues to be, an organization driven by discovery, innovation, economic empowerment, and the opportunity to change the world. But, changing the world isn’t always about a single sweeping gesture or one grand moment, it’s hard work, it’s a blend of small insights and little steps forward, it’s about sharing discoveries and thriving on others’ inspiration.”

There were a record 111 entrants this year across the ten categories listed below. To be eligible, the product must have been first introduced after January 1, 2014, never been selected as a MIP finalist, and generated revenue from sales (except for free mobile apps and companies submitting for the Life Science Products – Clinical Stage category). Each semi-finalist demonstrated their products in front of an expert judging panel in early October, from which 30 were selected as finalists. The winners and other finalists were:

Bluetech:  Water Pigeon – a fast, simple, secure way to deliver automated metering infrastructure (AMI) capability without replacing existing water meters or building wireless networks. Water Pigeon is a graduate of CONNECT’s Springboard program and a resident of EvoNexus.

After winning the award, CEO/CoFounder Clay Melugin said, “The MIP award from Connect is an outstanding honor to win. With so many great startup companies in San Diego in all categories, being recognized for Innovation delivers a boost to our team as we continue to push forward on goals that improve the world. Innovation is clearly not dead in the US and we want the world to see how innovation emboldens a supportive city like San Diego.

The outreach from others after the award has been amazing. It is very inspiring when people take time to understand our mission and offer to help us continue the journey both as investors and people who simple want to help. This only happens in a vibrant technology community like San Diego where startups encourage and help each other move forward towards success.”

Other Finalists:

Diver6a life-saving diver tracking system used to wireless supervise divers position and monitor their vital information provides services and technology for government and industry with extensive experience and capabilities supporting complex scientific and maritime operations.

Planck Aerosystemsits flagship drone brings high performance, autonomous unmanned aerial systems to moving vessels previously only possible from manned helicopters.

Cleantech, Sustainability, and Energy:  Camston Wrather LLC – recovers gold, precious metals, and polymers from electronic waste using proprietary patents and green chemistry.

Other Finalists:

  • Measurabl – an all-in-one commercial real estate energy and sustainability management software.
  • SDG&E – a regulated public utility that invented the Renewable Meter Adapter (RMA) as an alternative for private solar rooftop customers to avoid costly panel upgrades.

Defense, Transportation, and Cybersecurity:  Cubic Corporationdesigns, integrates and operates systems, products and services that increase situational awareness for customers in the transportation and defense industries.

Mike Twyman, President of Cubic Mission Solutions, said, “Cubic is honored to receive the Most Innovative Product (MIP) award from CONNECT in the Defense, Transportation and Cybersecurity category for our inflatable satellite communication system. Cubic GATR’s industry-leading inflatable satellite antenna is changing the satellite communications industry and receiving innovation awards, such as the MIP from CONNECT, validates the push for innovation at Cubic. We look forward to continuing our support of CONNECT and fostering innovation in San Diego region.

Other Finalists:

  • B&B Technologies LP – developer of the DAMPS advanced magnetic suspension/propulsion shock mitigation technology R&D for the military, medical and professional/commercial markets.
  • Space Microthe Micro-STAR-200M is a space qualified sensor observing start and delivering precision pointing information to its host spacecraft.

Information Communications Technologies: Aira develops remote assistive technology and services that bring greater mobility and independence to blind and low-vision people in daily living by connecting them to a network of certified remote agents via the blind user’s wearable smart device.

The impact of winning the CONNECT Most Innovative Product (MIP) Award certainly marks an important milestone at Aira, including our place as a recognized technological innovator in the San Diego region” said CEO Suman Kanuganti. “We believe that San Diego, because of its supportive and engaging technological environment, is truly the best community for startups like Aira, and we thank CONNECT for the work they do to grow the region, and of our peers who continue to inspire and challenge us to be more competitive, smarter, and committed to thrive and succeed here in San Diego. Equally important, Aira’s winning of the MIP Award allows further light to be shed on the often-forgotten challenges that people with vision loss face on a daily basis in functioning in a sighted world, and how the power of technology and innovation can play a major role in alleviating these challenges.”

Other Finalists:

  • Creative Electron – the TruView Cube is an innovative x-ray machine used to count the number of semiconductors without the need to open protective cases.
  • Qualcomm Technologies, Inc. – The SnapdragonTM 820 processor represents a rare feet in the engineering and design of semiconductors, in which every major IP block in the system is a new and custom design.

Life Science Diagnostics and Research Tools:  Echo Laboratories Inc. – developed the Revolve, a new hybrid microscope that easily transforms between upright and inverted configurations, merging the capabilities of two instruments into one. Echo Laboratories graduated from CONNECT’s Springboard program two years ago.

CEO/Founder Eugene Cho said, “Winning the event was a big achievement for us. Just two years ago we were at the same event, sitting in the audience as Springboard graduates. It was incredible validation to our team of how far we’ve come since then.”

Other Finalists:

  • DermTech – a non-invasive gene expression platform that works with samples collected using DermTech’s Adhesive Skin Biopsy Kit to facilitate the diagnosis and treatment of psoriasis and other inflammatory skin conditions.
  • NanoCellect Biomedical– the WOLF Cell Sorter is the new benchmark for access and performance to make flow cytometry and cell sorting technology more affordable and accessible for life science researchers to perform cellular analysis, develop molecular diagnostics, and improve personalized medicine.

Medical Devices:  Onciomed, Inc.the Gastric Vest System™ (GVS) is a revolutionary, minimally invasive implantable device to treat obesity and diabetes.

Other Finalists:

  • Innovative Trauma Care – created the ITClamp Hemorrhage Control System which is designed to address massive hemorrhage – a leading cause of death in traumatic injury – by controlling critical bleeding in seconds.
  • 11Health – a connected medical device company, where all patented devices use Bluetooth® wireless technology to send secure real-time data to mobile devices, including smart phones, tablets and watches.

Pharmaceutical Drugs and Biologic Therapies:  ACADIA Pharmaceuticals, Inc. – NUPLAZID is the first FDA-approved treatment for hallucinations and delusions associated with Parkinson’s disease psychosis.

Bob Mischler, Senior Vice President, Strategy and Business Development said, “We’re honored that NUPLAZID was chosen as the winner of the Pharmaceutical Drugs and Biologic Therapies category. Even more importantly, we are gratified that this innovative treatment offers renewed hope to patients with Parkinson’s disease psychosis, a debilitating condition that affects around 40 percent of people with Parkinson’s disease, and the loved ones who care for them.”

Other Finalists:

  • Ardea Biosciences– Zurampic is the first new oral medication for treatment of gout approved by the FDA in 60 years.
  • GlyConMedics LLC – Pre-biotic (OZ101) tables advance the treatment for type 2 diabetes by providing an affordable and effective long-term ADD-ON treatment to existing SU therapies to improve glucose control, educe hypoglycemia and weight gain.

Robotics and Unmanned Vehicles:  Clever Pet – a connected game console that intelligently trains and engages dogs using their normal daily food automatically, whether their humans are home or not. CleverPet is a resident of EvoNexus.

We were honored to receive CONNECT’s Most Innovative Product award in our category,” commented Co-founder Leo Trottier. “We could not have built CleverPet without the support of the San Diego community and organizations like Connect. We see this award as validating a business and idea that when we started felt at best a pipe dream.”

Other Finalists:

  • NXT Robotics – provides service robots to support increased security monitoring and alerting requirements.
  • Robolink – aims to make STEM education accessible, engaging and fun for children and hobbyists by producing robotics educations kits and providing educational lessons that teach core principles of engineering and programming.

Software, Digital Media, and Mobile Apps:  Guru – an app that features beacon-enabled technology that interacts with smartphones to create digital experiences for museums, aquariums and zoos. Guru is also a CONNECT Springboard graduate and a resident of EvoNexus.

Hilary Srole, Project Manager said, Entrepreneurship is hard, so receiving recognition like this from CONNECT is awesome. Winning gave us a great sense of validation. Not only for us, but for the San Diego Museum of Art for taking a chance with us. It really feels good to show that their faith in us wasn’t misplaced. This whole process has been rewarding. Springboard’s mentorship has helped us avoid some of the pitfalls commonly associated with start-ups and has helped us to move in the right direction faster.”

Other Finalists:

  • Nanome, Inc. – developed the world’s first immersive and scientifically accurate molecular modeling tool in Virtual Reality.
  • South Doctors, Inc. – the leading platform that connects patients from around the world with the best doctors and facilities in Mexico.

Sport and Active Lifestyle Technologies:  Bixpy LLCthe world’s first portable and modular personal water propulsion device that runs on lithium batteries for snorkelers and scuba divers, with attachments available to motorize kayaks and standup paddle boards.

Founder/CEO Houman Nikmanesh, said, “We were absolutely humbled by our selection as a finalist for the MIP Awards by Connect. We were among some brilliant people, amazing products, and innovative ideas. So when we won, we were absolutely beyond ourselves. It has taken us more than two years to develop the Bixpy Jets and we have worked tirelessly on a project that at times seemed like a pipe dream. Winning such a prestigious award validates our vision and paves the way forward for us. We’re proud and attribute much of our success in our product development to being in San Diego. Aside from being the perfect hub for an outdoor lifestyle company, the San Diego startup and innovation community has been instrumental to our drive and success.

Other Finalists:

  • ElliptiGO Inc.the world’s first elliptical bicycle, combining the best of running, cycling, and the Elliptical trainer for a fun and effective way to exercise outdoors.
  • FlyDivethe X-BOARD connects to a personal watercraft for hydro jet propulsion, empowering riders to hover and fly above the water. It is the most advanced hydro flight system designed and engineered to support both beginners and professional riders.

It was a very exciting night for me because I had been one of Bixpy’s mentors in the CONNECT Springboard program this year. Bixpy graduated in July, and in only four short months, they conducted a successful Indiegogo crowdfunding campaign, were selected as a finalist, and won this prestigious award.

CONNECT has a built an unbeatable roster of over 500 highly-qualified individuals to serve as Springboard Entrepreneurs-In-Residence and Mentors who volunteer their time as mentors to help entrepreneurs develop successful companies. I look forward to mentoring more companies in the future.

 

Cincinnati’s Cintrifuse Connects Entrepreneurs, Big Companies and Tech Funds

Monday, December 12th, 2016

During my visit to Cincinnati earlier this month, I had to pleasure of meeting key people from Cintrifuse and a few of the regional accelerators. The website says Cintrifuse is “Where Dreamers, Disruptors and Doers Connect” because “the world needs innovation. Entrepreneurs, BigCos and Tech Funds need each other. An active network ensures they can connect. And at the heart of that network is Cintrifuse.”

At Cintrifuse, I met with Wendy Lea, who has been CEO since 2014, and Eric Weissmann, Director of Marketing. Ms. Lea is “an accomplished Silicon Valley executive with deep experience in marketing, sales, and customer experience.” Ms. Lea serves on several boards, including Corporate Visions (San Francisco) and Xyleme (Boulder) as well as still being the executive chair of Get Satisfaction (San Francisco.)

Ms. Lea said, “Cintrifuse was born to answer this question: What will it take to create a thriving startup ecosystem in Cincinnati? Cintrifuse is a not-for-profit public/private partnership that exists to build a sustainable tech-based economy for the Greater Cincinnati region. Our purpose is to advocate for entrepreneurs leading high-growth tech startups– attracting, inspiring, and supporting them on their journey. The goal of Cintrifuse is to lower starting costs of business, especially businesses with the potential for high growth and that are disruptive technology. The Cincinnati Business Committee wanted to see how they could be relevant and formed Cintrifuse in partnership with the City of Cincinnati and EY. They wanted their kids to be able to come back to Cincinnati. The Cintrifuse Syndicate Fund is at $57 million and invests in VC firms outside of the region with the understanding they (VCs) create a regional engagement plan. There’s no stipulation that they invest in Cincinnati startups, but just be involved in the ecosystem. This includes reviewing deals, participating in events, and meeting our Limited Partners (LPs) most of whom they would love to meet with anyway – Procter & Gamble, Kroger, the University of Cincinnati, etc.”

She said, “We own and manage a 38,000 sq. ft. building in the economic area known as “Over the Rhine.” We got the building mortgage free, but put $17 million into improving the building. We opened in 2012. We provide services to 285 members companies – advisory services (such as mentoring and office hours), connections to talent, funding, and customers, as well as operating co-working space in downtown Cincinnati. We are part accelerator, part incubator, and part co-working space to move a company to the next ‘Lily pad’.

Ms. Lea added, ” The ‘headroom’ at Cintrifuse is wide. There is a strong appetite for new technology, new ideas, and disruption. Cintrifuse is a census taker – 300 startups are on our database across industries. We have brought is $160 million into the region for their startups, and we give them lots of exposure to VCs. One of our success stories is Everything But the House, which started in Cincinnati. They just raised $41 million, and Cintrifuse made the introduction to their investors.”

She explained, “Cincinnati has more Fortune 500 companies than anywhere else outside of San Francisco Bay area, so we created a Customer Connections program to share information between large companies and small companies. Our Customer connections program is taking 15 startups to Israel to present “innovation briefs.”

She would like to see Cintrifuse expand all over the world similar to TechStars in Boulder, CO with which she was involved when she lived in Boulder. She said, “Tech Star is the largest global network in the world with 28 centers, and their graduates have created 800 companies. Cintrifuse hosted their   reunion of graduates called FounderCon in the fall of 2016.”

The next day, I met Jordan Vogel, now V. P. of Talent Initiatives with the Cincinnati Chamber of Commerce, who worked for Cintrifuse for three years as director of the entrepreneurial ecosystem., He gave me more background information on Cintrifuse, saying, “It was created by Cincinnati Business Committee, composed of the top 30 CEOs in region and  the Cincinnati Regional Business Committee, composed of about 100 CEOs of somewhat smaller companies. When Chiquita left, the leaders became concerned and asked “What does the future look like? What should it be? They decided they needed to promote the next P&Gs of the world. Entrepreneurship was the key. They commissioned McKinsey & Company to conduct a comprehensive study on what would make the Greater Cincinnati region more attractive to startup entrepreneurs and outside investment. The study revealed the region’s strengths and gaps. Cintrifuse was formed to leverage the strengths and fill in the gaps. There are four universities in the region, but there was no path to commercializing technologies being developed”.

He added, “Funding was needed, so they created a fund of funds. They raised $78 of which $57 million went into a syndicate fund. To be part of the syndicate, Venture Capitalists had to commit to take a look at startups and be committed to engage with two to four trips per year to the region to meet with entrepreneurs. The purpose was to create a food chain.”

According to its StartupCincy Resources page, “Cincinnati lays claim to one of the most vibrant startup ecosystems between the coasts.” Home to The Brandery, one of the nation’s Top 10 accelerators; HCDC, the #1 incubator in the State of Ohio; CincyTech, one of the Midwest’s leading seed-stage investors; Queen City Angels, a private, seed-stage venture capital investor ranked #2 in the nation; four universities committed to innovation; and now the country’s only faith-based accelerator – there is a ton of innovation activity in this town!”

The Cintrifuse webpage lists the following accelerators as collaborative partners:

  • ArtWorks CO.STARTERS (formerly SpringBoard) “is a nine-week business development program that helps aspiring and seasoned entrepreneurs examine assumptions and turn business ideas into action.”
  • Bad Girl Ventures “is an educational and micro-finance organization dedicated to inspiring and supporting women entrepreneurs in all the key elements of their business.”
  • The Brandery “is a seed stage startup accelerator ranked as one of the top programs in the United States. It runs a 4-month program in Cincinnati, Ohio, focused on turning your great idea into a successful brand driven startup.”
  • First Batch ”It is a five-month accelerator that is the first business accelerator in the nation to focus on scaling physical product companies using local manufacturing. Cincinnati’s long history as a center for consumer products, branding, and manufacturing make it THE place for growing a business creating and selling tangible goods.”
  • MORTAR was started by three minority community members in the downtown area called “Over the Rhine.” “It is called ‘Mortar’ because people are the mortar between the bricks of the buildings and the founders believe that the neighborhood’s residents have the potential to create booming enterprises – just footsteps from their homes.”
  • Minority Business Accelerator – “its mission is to help accelerate the development of sizable minority business enterprises and to strengthen and expand the regional minority entrepreneurial community. It works with companies under $1 million in revenue to connect them with large companies who want to diversify their supply chain.”
  • Ocean is a faith-based “accelerator for startup growth by focusing on the purpose that drives founders…and their companies.”
  • UpTech “is designed to attract and accelerate entrepreneurs who have the next big idea to make the world a better place. Its mission is to create an informatics industry in Northern Kentucky. It is especially well suited to support entrepreneurs who benefit from our partnership with the NKU College of Informatics.”

It lists the following incubators in the Cincinnati region, which also collaborate with Cintrifuse:

  • bioLOGIC is a life sciences incubator.
  • Hamilton Mill “is a Southwestern Ohio small business incubator for green, clean, water, digital and advanced manufacturing technologies. Conveniently located between Cincinnati and Dayton in the original pioneer town of Hamilton, OH.”
  • Hamilton County Development Center (HCDC) “is a nationally recognized startup incubator in Southwest Ohio that helps entrepreneurs launch successful innovative businesses. It just spun off an accelerator called Pipeline for water product development.”
  • The Northern Kentucky ezone (NKY ezone) – “It works collaboratively with several organizations that provide funding assistance to fast-growth, high-tech companies. Its team will work with you in assembling the necessary information, plans, and presentations to apply for these opportunities.”

Over dinner at Cintrifuse, I met with the heads of three of the accelerators, Matt Anthony and John Spencer with First Batch and JB Woodruff with Uptech. Two entrepreneurs also joined us for dinner, Konrad Billetz, CEO of Frameri, and Paul Powers, CEO of Zoozler LLC and Physna LLC. Frameri makes the world’s first interchangeable prescription frame and lens system. Mr. Billetz was previously part of the Brandery four month accelerator program in 2013. He said, “We got $20,000 as part of the program, and then we did an Indiegogo crowdfunding and got about $100K to get into full production. We were on Shark Tank in 2015, but we turned down the deal we were offered. We found a lens manufacturer in Dallas, TX, but still do some production in-house.

Mr. Powers said, “Physna is a member of Cintrifuse. I started Physna in December 2015, and we are developing software that will lead the revolution in 3D printing. I am also the CEO of Zoozler LLC that is about two years old. Zoozler is a tech development company (including websites, apps, digital marketing and media) and has an initiative for local startups requiring help in tech development.”

I connected with Matt Anthony by phone after I returned from my trip to find out more about First Batch. Mr. Anthony said, “I founded the accelerator in 2013 to overcome the gap between a well made early prototype and being able to make the first batch of product at manufacturing scale. Over the next four years we grew the program to educate and connect entrepreneurs to overcome the additional hurdles to scale, including legal, marketing, distribution, and more. We’re unique nationally in that we’ve focused on utilizing the strength of our local manufacturers, which tied with the heritage in physical consumer products and branding make for a perfect set of resources to grow new physical product companies. We operate out of a 10,000 sq. ft. maker space on the 4th floor of a former brewery, located in the “Over the Rhine” area. The program itself is five months of rigorous learning from regional experts, product testing, development, one-on-one mentorship, and $10,000 in funding to get into actual production. Companies must all come in with a working prototype and an understanding of their business to really get the most of the five short months. Some of our companies have been making their product for years and are looking to expand their production beyond themselves. The goal of the program is to get the companies into the first stage of production and actually selling products in order to set them up for future growth and funding.”

For example, one of their companies, Textile House, used the funding to make a couple hundred garments for their fall fashion line. They already raised an additional round of funding through a Kiva micro loan to bring their spring line to market in early 2017.

 

He added, “We started out with two companies in 2013, four in 2014, five in 2015, and six this year. We started this year in June and our 2016 class just culminated in a Demo Day on November 9th. We try to check in with graduates to continue to ensure growth, and about half of the companies each year choose to stay on as members of the maker space.”

When I asked him to describe how their program works, he said, “After an open application, our companies are selected through a series of interviews that end in a final juried selection. Once the program starts our cohort meets as a group twice a week, and one-on-one at least once, often with speakers, manufacturer visits, branding support, and other individual consultation sprinkled in between. We start the week on Monday mornings reviewing business concepts and readings, ranging from learning more about the types of entrepreneurial personalities via E-Myth, and later how to start prototyping and quickly testing product ideas via Lean Startup and marketing channels via Traction. We are primarily funded through grants and donations of time and materials, and don’t currently take an equity position in our companies. We look to help grow companies by connecting to resources down the line from ECDI, Queen City Angels, Cintrifuse, even other accelerators.”

With so many accelerators and incubator programs to nurture startup companies, Cincinnati is off to a good start to achieve its goal of re-industrializing the Cincinnati region. Other cities in the United States that were formerly major industrial centers would do well to follow the example of Cincinnati in setting a goal of re-industrializing their city to create more higher paying jobs and restore prosperity.

 

Cutting Edge Technologies Power Cincinnati Industries – Part 2

Sunday, December 11th, 2016

T, sensDuring the second day of my visit to Cincinnati, Ohio November 1st – 4th, I had the pleasure of meeting with Tony Canonaco, CEO, and Tom Rosenberg, Director of Marketing, at Balluff’s North American headquarters based in Florence, Kentucky.

Mr. Canonaco said, “With over 50 years of sensor experience, Balluff is a leading global sensor specialist with its own line of connectivity products for every area of factory automation. Our global headquarters is based in Germany, and our North American headquarters was established in Florence, KY in the early 1980s. Our products include  a wide variety of sensors, mechanical limit switches, rotary and linear measurement transducers, machine vision and RFID systems, and distributed modular I/O network solutions.  Our products are involved in making the Industrial Internet of Things (IIoT) work.”

As we toured the plant, I saw their sensors being used right on their own production and packaging lines, as well as for inventory control of finished goods. With IIoT’s promise of total visibility, we saw a great example right on their plant floor. IO-Link technology, an advanced point-to-point connection technology, was integrated into all their automated systems providing operators and management a continuous view of the process. With faster response to workload variations, Balluff now has a much leaner operation. Lean examples were also evident in their single-piece flow work cells. Products were produced in a surprisingly small footprint with high efficiency.

Mr. Canonaco said, “Many of our internal transitions towards Lean began during the recession in 2009. It was during this time, we realized that in order to better compete in the future, we needed to eliminate all types of waste and raise the level of productivity of the company. In addition to the change in their own mindset, we accelerated our New Product releases that focused on Automation and Sensing Solutions to help our customers shrink the size of their control panels, reduce their engineering time, and speed up troubleshooting on their machines. We started our journey to become “Leaner” and our customers were provided with new products to help them realize performance and productivity machine enhancements as a result of the recession. Nearly a decade later, this path has proven to be a win-win for us and our customers.”

An additional customer-focused effect of their Lean journey is with one of their most watched metrics inside of Balluff ? On Time and In-Full Delivery to the customer promise date. They consistently plan to achieve greater than 97%.

When I asked if they had a problem of finding people to hire with the right skills, he responded, “Finding people with the right skills and the right mindset is always a challenge and makes all of the difference. We require production associates for manufacturing as well as engineers who work in technical sales, marketing, support, and operations. We are involved with local work force development efforts to help ourselves as well as surrounding manufacturing neighbors. Balluff is an active supporter of National Manufacturing Day to highlight the attractiveness of manufacturing as a career choice. This has proven to be very popular with local middle and high schools. We utilize co-op students from select universities and have started our own Technical Sales Training program for recent college graduates that focus on how to best help manufacturers apply automation in innovative ways.”

We have our own accredited laboratory and a quality management system certified according to ISO 9001:2015 to form a secure foundation for optimized added value for its customers.

Our products increase performance, quality and productivity around the world every day. They satisfy prerequisites for meeting demands for greater performance and cost reductions on the global market. We deliver state-of-the-art solutions no matter how stringent the requirements may be.”

Our last plant visit was to TSS Technologies, located in West Chester, Ohio where we met with CEO, Marc Drapp, followed by a tour of the facility. TSS Technologies provides complex electro-mechanical assemblies and turnkey contract manufacturing solutions to the aerospace, life sciences, energy, semiconductor, solar, sports, consumer, automotive, as well as food and beverage sectors. TSS also builds automation equipment for themselves and other companies.

Mr. Drapp said, “TSS Technologies has been in business for over 65 years and is family owned and operated. We have a machining facility totaling 110,000 square feet and an assembly facility totaling 210,000 square feet. We have approximately 225 employees. We are ISO 9001:2008 and 13485:2003 Certified, as well as AS9100C Certified and won the GE Healthcare Excellence award.”

As we toured the plant, we saw examples of many of the above products being assembled or being staged for assembly for a couple new products coming online. Contrary to most contract manufacturers, Mr. Drapp likes to get involved with early stage companies to help them get into batch production and ramp up to full production. We saw a complete “bakery” producing shelf-stable pretzels that is an example of working with a start-up company to ramp up into full production within his facility. We each gratefully accepted two packaged pretzels and shared one when we returned to the conference room.

When I asked Mr. Drapp how the Great Recession had affected them and what they did to recover, he said, “The recession was tough on our company, especially our machine shop. We lost a lot of contract machining work to our customers that brought the work back inside their plants. On the other hand, it really allowed for us to right size our operation and allow for us to be more nimble in the coming years.

We capitalized on the tough times by reorganizing our structure and tightening our manufacturing processes. This allowed us to become more lean and efficient. Ultimately allowing us to come out of the recession quicker and better able to respond to customer needs.

The recession really allowed for us to take a look at TSS and what we wanted to be. It allowed us to focus on the right customers for our business. It also allowed us to focus on the right areas for growth. From a lean perspective, we have always practiced lean manufacturing. The recession didn’t really change that.”

From these stories, we can see that cutting-edge technologies and unique capabilities have been the key to these three companies surviving the Great Recession and now thriving. The rebuilding of manufacturing in the Cincinnati region is being  helped by the innovative technologies being developed at the University of Cincinnati and the other three regional universities and colleges. The collaboration of public and private entities and far-sighted leaders will enable Cincinnati to achieve their vision of re-industrialzing Cincinnati to create jobs and prosperity.

Cutting Edge Technologies Power Cincinnati Industries – Part 1

Sunday, December 11th, 2016

During the first day of my visit to Cincinnati, Ohio November 1st – 4th, I had the pleasure of meeting with key personnel from the Intelligent Maintenance System Center (IMS) at the University of Cincinnati:  Dr. Hossein Davari – IMS Center Post-Doctoral Fellow, Patrick Brown – IMS Center Program Director, Chao Jin – IMS Center Graduate Researcher, and Michael Lyons – IMS Center Program Coordinator.

Prior to my visit I had been provided with background information on how the University of Cincinnati evolved into what it is today:  “The Ohio Mechanics Institute (OMI), parent name of the College of Applied Science, was founded in 1828 as a private educational institution and the first school west of the Alleghenies dedicated to technical education.” This struck me because this was about the same time as the Lowell Machine Shop in Lowell, MA first started producing interchangeable parts for firearms sold to the Springfield Armory. I did not realize that Cincinnati was industrialized so early in the Industrial Revolution period.

“OMI operated exclusively as an evening college until 1901 when day courses on a pre-college level were added. In 1919 the day courses were revised into collegiate programs…In 1958 the college designated separate names for its day and evening operations, the day school became the Ohio College of Applied Science (OCAS) and the evening school was named the Ohio Mechanics Institute Evening College (OMIEC). The college merged with the University of Cincinnati in 1969 and offered programs in the engineering technologies and related areas with the aim of preparing individuals for careers as engineering technologists, engineering technicians, and managers in industry. The college began offering bachelor’s degrees in the early 70s. The name of the college was changed in 1978 to the OMI College of Applied Science and was shortened to the College of Applied Science in 2000.

In 2009, the UC Board of Trustees approved the creation of the College of Engineering and Applied Science (CEAS)… [to integrate] two predecessor colleges —The College of Engineering and The College of Applied Science… During the late 50s…advanced studies in engineering and research became the focus…to strengthen the college’s focus on graduate education. A joint project with the Engineer’s Council for Professional Development (ECPD), and local industry provided opportunities for young professional engineers to pursue graduate degrees without leaving their jobs. Both colleges and the City of Cincinnati have shared long and productive partnerships…through cooperative education assignments, research funding and graduate placement…”

Dr. Davari told me that the “IMS Center is a leading NSF Industry/University Cooperative Research Center (I/UCRC) that consists of the University of Cincinnati, the University of Michigan and Missouri University of Science & Technology.”

He said, “The Center has over twelve years of experience in developing and delivering Prognostics and Health Management (PHM) solutions for a wide-range of applications. The IMS Center’s mission is to enable products and systems to achieve and sustain near-zero breakdown performance, and transform maintenance data to useful information for improved productivity and asset life-cycle utilization. Since its inception in 2001, the Center has conducted over 100 successful industry and NSF supported projects, and has attracted over 80 members from all across the globe. The IMS Center was recently identified as the most economically impactful I/UCRC in NSF’s recent study titled Measuring the Economic Impacts of the NSF Industry/University Cooperative Research Centers Program: A Feasibility Study. According to this study, the Center delivered its members $846.7 million in combined benefits over the last ten years.”

Dr. Davari explained the work of their Masters in Science and PhD students, “Graduate students in the IMS Center focus on developing innovative technologies and tools for health assessment, degradation monitoring and prognostics of machinery. Graduate students work both towards conducting fundamental research along with developing specific tools to address the needs of the industry. Graduate students get the opportunity to work closely with industry members ranging from manufacturing to energy and transportation applications. With a unique set of skills and experience in the field of Prognostics and Health Management (PHM), they continue to develop innovative tools and technologies and bring value to both industry and academia. The IMS Center researchers have also won the PHM Society Data Challenge five times since 2008. It is an annual competition organized by the PHM society and is open to researchers in academia and industry worldwide.”

Dr. Davari stated, “In 2012, National Instruments awarded the Prognostics Innovation Award to IMS Center for the development of Watchdog Agent Prognostics toolkit. Watchdog Agent consists of a set of algorithms and tools developed for degradation assessment and failure prediction of machinery and processes. The toolbox has been implemented in various industrial applications and has been commercialized by National Instruments as an additional toolbox for the LabVIEW software package.

I told him I could see how important preventing failure is healthcare because a failure could result in serious harm to a patient and even be fatal. When I asked him to explain what a “Digital Twin is, he said, “It is a digital representation of the physical system, generated by data-driven and physics-based models. IMS Center has developed a Cyber-physical Interface, through which the data is being collected from a machine continuously. This data is then processed and converted to machine health information using tools in Watchdog Agent toolbox. This health information is used to make informed decisions for optimum maintenance and near-zero breakdowns. It also continuously seeks for possible variations in the machine performance and provides insight into the current performance of the machine compared to its past performance, or its peers doing the same job. Digital twin basically connects the physical world to cyber world for improved visibility and transparency in machine operation.” He later forwarded me a link to a video describing IMS technologies.

Next we visited the Ceramic Matrix Composite Laboratory at GE Aviation and met with Jon Blank, Composite Matrix & Advanced Composite Section Leader, and Perry Bradley, Communications Leader, GE Aviation, followed by a tour of the lab.

From the material I was provided in advance, I learned that advancing the use of ceramic matrix composites (CMCs) has challenged industry for decades. In my day job as a manufacturers’ sales rep for fabrication companies, I had represented a company doing ceramic injection molding and a company making pre-preg layup composite parts for airline interiors in the 1990s. I was aware of the ultra-lightweight and super-heat-resistant properties of CMCs and knew that companies were investing millions to try to win the race to mass-produce this engineered material.

We first toured the Leaning Center where all the engine models GE has produced were on display. It was inspiring to me to see that advancements in technology incorporated into these successive generations of engines. Since I have previously represented companies that produced forgings and investment castings, I understood how advances in metals technology, particularly the use of Titanium, had reduced weight and improved the efficiency of engines. Since Solar Turbines in San Diego was one of my customers, I was aware of their work in the development of using ceramic molded parts in small turbine engines. However, when I saw the complexity of shape and size of the CMC turbine blades that GE Aviation is now making, it was astonishing.

Mr. Blank told me that “For more than 20 years, GE scientists in the U.S. and worldwide have worked to develop CMCs as a differentiating technology in large gas turbines for power generation, and in jet engines for commercial and military jet planes. Now their big bet is paying off as GE leads the charge to industrialize CMCs for large engine applications. GE leads the world in introducing CMCs into the hot section of jet engines and gas turbines and is creating the vertically-integrated supply chain necessary to mass produce CMC components.”

He explained why CMCs are critical to advancing the jet propulsion and power generation industries. “Components made of CMCs allow gas turbines and jet engines to run hotter, and thus more efficient. Ultra-lightweight CMCs also reduce weight throughout the engine, leading to higher fuel efficiency. CMCs in gas turbines and jet engines contribute to lower emissions and improved environmental performance. They create a significant economic advantage. CMCs are made of silicon carbide ceramic fibers and ceramic resin, manufactured through a highly sophisticated process, and further enhanced with proprietary coatings. They are one-third the density of metal alloys and one-third the weight.”

He continued, “CMCs are more durable and heat resistant than metal alloys, allowing the diversion of less cooling air into the engine’s hot section, and thereby improving overall engine efficiency. By using the cooling air instead in the engine flow path, the engine can run more efficiently at higher thrust. The average rate of technology progress for turbine engine material temperature capability increased 50 degrees per decade. With the use of CMCs, GE will now increase the temperature by 150 degrees in this decade, 3x the traditional rate. The benefits of CMCs are a 10% thrust increase and increased temperature using 2400F CMCs.”

He said, “In 2009, GE Aviation ran the first CMCs in the hot section of the F136 military engine. The CMCs were structural shrouds that direct air in the high-pressure turbine section, the hottest area of the engine. The results encouraged us to pursue CMC components with its next-generation commercial jet engines. GE worked to expand its overall CMC production capability. In 2012, Nippon Carbon (NCK) of Japan, a producer of composite fibers, formed a joint venture with GE (25% ownership) and Snecma (25%) called NGS Advanced Fibers, which produces fibers for CMC components such as the CMC shrouds. The next year later, GE Aviation expanded CMC “lean lab” operations in Delaware to develop new CMC components and the plant in Asheville, North Carolina was selected as factory to mass produce CMC components. Their lab was established in 2014, and in 2015, the Huntsville, Alabama factory was selected to produce CMC building-block materials [fiber and tape.]”

As we toured the lab and watched a couple of parts being made, he said “We have now established a fully-integrated CMC supply chain in the U.S. involving CMC raw material production in Huntsville, research and low-volume production here in Cincinnati, the CMC Lean Lab in Delaware, and CMC mass production in Asheville.”

Mr. Bradley said, “The LEAP engine for narrow-body aircraft will enter airline service in 2016 with CMC shrouds [18 shrouds per engine] in the high-pressure turbine section. This is being developed by CFM International, which is a 50/50 joint company of GE and Snecma of France. By the end of the decade, GE will introduce the GE9X engine for the new Boeing 777X under development. This engine will also feature CMC components in both the combustor [inner and outer liner] and high-pressure turbine sections [stage 1 and 2 nozzles, and stage 1 shrouds]. ”

He also said, “GE Aviation continues to run an advanced military engine through the U.S. government-sponsored ADVENT program with CMCs in the combustor and turbine sections – demonstrating the highest core temperatures in jet propulsion history. In 2014, GE Aviation successfully ran CMC turbine blades – a high-speed rotating part – in a F414 military demonstrator. This is a huge breakthrough for GE in pursuing the use of CMC in rotating parts because up to now, CMCs have been limited to static parts in an engine.”

Mr. Blank concluded, “This is all part of GE Aviation’s continuing efforts to further mature CMC technology for future commercial and military engines. The demand for CMCs is expected to grow tenfold over the next decade.”

We ended day one with a meeting with the directors of several accelerators/incubators and a few entrepreneurs in these programs in the region, which I will cover in a future article. I already covered meetings I had with key leaders in my first article last week on “Cincinnati focuses on Re-industrialization to Create Prosperity. Part two of this article will cover the companies I visited on day two of my visit.

Cincinnati Focuses on Re-industrialization to Create Prosperity

Thursday, December 8th, 2016

Last week, I spent two and a half days in Cincinnati, Ohio as the guest of Source Cincinnati, an independent, multi-year national social and media relations initiative that works to enhance perceptions of Cincinnati as a world-class Midwestern region. I met with Julie Calvert, Executive Director, during my visit, but my personal guide and host was Paul Fox, VP of Strategic Initiatives at Proctor & Gamble and “Executive on Loan” to Source Cincinnati for a year.

From Mr. Fox, I learned that Cincinnati is the third largest city in Ohio and had such interesting nicknames as “Porkopolis” in the past because it was the largest pork packing center in the world and the “Queen City of the West,” for its ideal location on the Ohio River and its rich culture and heritage of a predominantly German population who settled Cincinnati in the late 1700s.

After arriving late Tuesday afternoon, Mr. Fox and I had dinner with David Linger of TechSolve, and Scott Broughton, Center Director for Advantage Kentucky Alliance at the WKU Center for R&D at Western Kentucky University in Bowling Green, KY. TechSolve is a 30-year old consulting firm that is a State of Ohio Manufacturing Extension Partner (MEP) affiliate, and Advantage Kentucky Alliance (AKA) is the MEP for Kentucky. Mr. Linger just took over the reins as President and CEO on September 1, 2016 after Gary Conley retired from 20 years of service.

Mr. Linger, said “There are about 2,500 manufacturers in the Ohio region of metropolitan Cincinnati, and Cincinnati used to be known as the “Machine Tool Capital of the U. S.”, but very few machine tool companies exist today, including its most well-known machine tool company, Cincinnati Milacron,” after its machine tool line was sold to Unova. TechSolve provides manufacturing and health care consulting. It has a focus and strength in process improvement, machining, and innovation — applying these skills to help businesses find long-term solutions and promote problem-solving cultures.

Mr. Broughton said, “AKA is a not-for-profit partnership that provides assistance and training to help manufacturers of all sizes grow, improve their manufacturing and business strategies and processes, adopt advanced technologies, increase productivity, reduce costs, and improve competitiveness. Manufacturing in Eastern Kentucky was mainly related to the coal mining industry, and two-thirds of the companies have gone out of business. We have focused on helping the remaining manufacturers to understand their core competencies to market to new industries, such as aviation and automotive. Our services include:  business growth services, continuous improvement services, and workforce solution services.”

On Wednesday morning, we had breakfast with Laura Brunner, President/CEO, and Gail Paul Director of Communication Strategy of the Port of Greater Cincinnati Development Authority. She told me that the Port Authority was established by the City of Cincinnati and Hamilton County in 2001 and is the second largest inland port covering 26 miles from the Indiana/Ohio border. In 2008, the Port Authority was reformed and empowered to take a leadership position in regional economic development. It is a quasi-public agency that operates collaboratively with dozens of economic development, community and corporate partners.

Ms. Brunner presented me with a report prepared for me, titled “Manufacturing in the Greater Cincinnati Region. As background, “The Port Authority leverages its infrastructure strengths and development-related expertise to design and execute complex projects to improve property value, catalyze private investment and promote job creation.”

I was astounded when she told me, “The Cincinnati region has lost 67% of its manufacturing jobs.” The report states, “Manufacturing was a primary component of Cincinnati’s economy until its peak in 1969 when 43 percent of the workforce in Hamilton County was employed in manufacturing jobs. Today, lower-wage service-providing jobs far outnumber manufacturing jobs by about 7:1…From 1969-2015, the number of people employed in manufacturing decreased from 146,000 to 48,000.”

She said that the Port Authority Board of Directors has established a vision to transform Cincinnati to prosperity by 2022 through “repositioning undervalued properties and re-building neighborhoods.” The report she gave me states that the strategies for success are:

  • “Industrial Revitalization – redevelopment of 500 acres of underutilized industrial land along key transportation corridors
  • Neighborhood Revitalization – transform ten communities for lasting impact, including residential properties and commercial business districts
  • Public Finance Innovation – cultivate a nationally-recognized public finance program that supports economic and community development efforts

The projected Return on Investment for these strategies is:

500 industrial acres redeveloped 10 revitalized communities
8,000 new jobs 300 quality homes
$565 million in annual payroll 50 commercial acres with 400K SF
$550 million in capital investment 130 new businesses
$8 million in income taxes Increased property & income taxes
$14 million in real estate taxes Improved lives of residents

In June 2015, the PGCDA Board approved establishment of the industrial and neighborhood strategy, development of internal resources, communication strategy, and the financing and fundraising plan to support the strategies.”

The report states, “The proposed redevelopment of approximately 2,000 acres of industrial land through Hamilton County for Manufacturing uses will have a considerable impact on the Greater Cincinnati Region.”

The first sites for the Redevelopment Pilot program have been selected, and the first funds have been obtained for acquisition of land parcels, demolition/remediation of existing buildings, and site preparation. The first site is assembled and is scheduled to open in 2017.

In the meeting with Ms. Brunner and Paul, I was also provided a “Manufacturing Attractiveness Study” by Deloitte Consulting LLP presented on October 3, 2016 to the Greater Cincinnati Port Development Authority, TechSolve, and Cushman and Wakefield.

The study states, “The current lack of easily developable real estate (cleared, access to utilities, free from environmental concerns, etc.) in the Cincinnati area likely puts the city at a significant disadvantage for attracting manufacturing investments.

The Port Authority’s operations focus on transportation, community revitalization, public finance and real estate development makes it especially well-equipped to evaluate and address opportunities to redevelop and reposition sites formerly occupied by industrial operations.”

The Port Authority seeks “to achieve the following objectives:

  • Analyze the last 5 years of manufacturing deployments in the Ohio Region (Ohio and surrounding states)
  • Understand trends in urban manufacturing through case studies
  • Identify demand-side location factors that drive location decisions in the advanced manufacturing, food and flavoring, and Bio-Health (Life Sciences) industries
  • Understand the strengths/ weaknesses of Cincinnati as business location”

In analyzing the Manufacturing Investments for the Ohio Region from 2011-2016, the study revealed:

States # of Project Announcements Capital Investment Jobs Created
Indiana 350~ ~$13.4 ~37,000
Ohio 271 ~$17.6 ~34,000
Kentucky 230 ~$9.0 ~24,000

“Indiana, Ohio and Kentucky saw the most number of project announcements along with largest amounts of capital investment over the past five years.”

“The majority of the manufacturing investments in Ohio over the past 5 years are spread throughout rural areas within commutable distances of large metropolitan areas (Cincinnati, Dayton, Columbus, Akron and Cleveland.) Based on FDI data, 14 manufacturing projects were announced in Cincinnati within the past 5 years.”

The Deloitte study stated “Advanced manufacturers are highly interested in labor quality and availability as well as minimizing risk related to site development and neighboring use concerns.” The two highest factors are: “Labor Quality and Availability (engineers, technicians and operators) and Real Estate (Site readiness, Capacity and availability of utilities, and Neighboring use/pollution). Labor quality, labor availability and supply chain tend to be the key drivers for food industry in making location decisions.

The study showed that “A 1-hr drive time from downtown Cincinnati allows access to a significant labor force, with over 2.5 million in population.” The manufacturing industry represents 14.34% of the Cincinnati Metro economy. Persons with Associate degrees (20.12%), Bachelor degrees (11.97%), and graduate degrees (8.42%) represent 50.51% of the population, and another 45.71% of workers have a high school diploma (26.08%) or some college (19.63%).

Other advantages are: “When compared to the states surrounding Ohio, Ohio has a relatively low average industrial electricity price;” and “Cincinnati is located right in the heart of the most utilized truck routes in the country and has a relatively low percentage of roads requiring significant maintenance when compared to nearby states…”

The summary findings of the report were:

  • “Cincinnati has an advantage in the presence of industrial engineers, machinist and tool/ die makers, as well as a large supply of lower skilled production workers, giving the area a talent proposition to attract manufacturing deployments
  • However, a key driver of the evaluation process for manufacturing deployments is developable sites… Cincinnati currently lacks suitable real estate options to entice most manufacturing operations
  • Given Cincinnati’s availability in key manufacturing skill sets and low/average cost in several talent segments, an investment program to prepare site options would enhance its ability to attract manufacturing investment.”

Our next meeting was with Kimm Coyner, V. P. Business Development & Project Management of REDI Cincinnati, which was spun out of the Cincinnati Chamber in 2014 with the support of Jobs Ohio. REDI Cincinnati covers 15 counties ? five in Southwest Ohio, seven in northern Kentucky, and three in Southeast Indiana, through which the Ohio River runs in the center.

Ms. Coyner said, “REDI is solely focused on new capital investment and attracting and expanding manufacturing to create good paying jobs. We have 165 public and private members. Our team identifies opportunities to attract businesses to the region by developing relationships with companies and new markets – domestically and across the globe. We provide connections to the resources that take startups to the next level and grow existing businesses. We connect companies to the region’s assets, advantages and business leaders to secure Greater Cincinnati’s place as one of the world’s leading business centers.”

She told us that railroads were the key to industrial development of the region in the 19th Century to provide transportation beyond the river. She said, “While Cincinnati arguably stayed too long in the manufacture of carriages and missed out on being a primary automotive manufacturing center like Detroit, we remain a major tier 1 supplier to that industry with hundreds of manufacturers and a significant talent base. We have five key industry clusters:  Advanced Manufacturing, Information Technology, Food and Flavorings, BioHealth, and Shared Services. Advanced Manufacturing is made up of automotive, aerospace, chemicals and plastics and additive manufacturing/3D printing. Our region is the #1 supply state to Boeing and Airbus. We have nine Fortune 500 companies headquartered in Cincinnati, and four of the nine are manufacturers: AK Steel Holding, Ashland, Kroger and Procter & Gamble.”

I was subsequently emailed a list of the top ten employers, nine of which are manufacturers:

  • Kroger 21,646 employees
  • GE Aviation – 7,800 employees
  • AK Steel Holding Corp. – 2,400 employees
  • United Dairy Farmers – 2,029 employees
  • Ford Motor Co. – 1,650 employees
  • Mubea NA – 1,360 employees
  • Bosch Automotive Steering – 1,300 employees
  • Intelligrated Inc. – 1,100 employees
  • Hillenbrand Inc. – 1,080 employees
  • Milacron LLC – 1,020 employees

She added, “We participated with JobsOhio in a booth at the IMTS show in Chicago and focused on promoting Cincinnati as a site destination to companies from Germany.” She noted that Cincinnati has the second largest Oktoberfest outside of Munich, Germany. I told her that we have a strong German-American club in San Diego that puts on a good Oktoberfest featuring a band they bring from Germany.

It is obvious to me that Cincinnati leaders recognize the important role that manufacturing plays in a local and state economy. I had mentioned to everyone I met that manufacturing is the foundation of the middle class, and if we lose manufacturing, we will lose the middle class. Cincinnati learned this lesson the hard way, but I am confident that their new vision to re-industrialize Cincinnati will create good paying jobs for residents and restore prosperity to the Cincinnati region.

I was honored to be invited to give a presentation on “How to solve the skills shortage and attract the next generation of manufacturing workers” that was based on several articles I have written in the past four years (all are available at www.savingusmanufacturing.com under Workforce Development category). If Cincinnati’s leaders achieve their vision, more skilled workers will be needed. Specific recommendations I made were: (1) start to engage youth in middle school through summer camps, and robot contests (2) provide career technical pathways in high schools and community colleges, plan a Maker Faire, promote establishment of a Maker Place, and become more involved in future Manufacturing Day (www.MFGDAY.com).

These meetings provided so much information that I will devote my next article to my visits to local manufacturers:  GE Ceramic Matrix Composite Laboratory at the GE Aviation plant in Cincinnati, Balluff North America in Florence, KY, and TSS Technologies in West Chester, OH, as well as the Center for Intelligent Maintenance Systems at the University of Cincinnati.

 

Mixed Messages at San Diego’s Economic Outlook Events

Tuesday, February 9th, 2016

Economists and industry experts presented conflicting outlooks at the three of the Economic Outlook events held in San Diego this month. I attended two of the three ? the 32nd Annual San Diego County Economic Roundtable and the San Diego 2016 Economic Outlook by the National University Institute for Policy Research ? and read about the third, the San Diego Business Journal (SDBJ) Economic Trends event.

The SDBJ event focused on the areas of expertise of industry panelists in banking, health care, insurance, commercial real estate, tax, and employment, which is why I did not attend this event. If you are involved in these industries, then you were happy to hear that these experts forecast a healthy year for San Diego with the U. S. economy growing about 2.5%. Home prices have increased, consumer spending is growing, wages are increasing, and commercial real estate vacancy rates are below the 10-year average.

The other two events paid more attention to the manufacturing sector in which I am involved. Marney Cox, Chief Economist for the San Diego Association of Governments (SANDAG) participated in both events, and he and Kelly Cunningham, Chief Economist at the National University Institute of Policy Research (NUPR) were more cautious, forecasting a more modest 1.9% growth in the region, 2.1% in California as a whole and only 1.8% growth in the U. S.

Kelly Cunningham stated that it took us 74 months after the last recession to get back to the job level we had in 2007, which was two to three times as long as the recessions of 1980-81, 1990-91, and 2000-2001. The average GDP growth after these three previous recessions was 4-5% annual growth, but the U. S. GDP has grown an average of only 2% since the Great Recession. At the SDWP event, Marney Cox opined that the regional GDP growth should be >3%.

San Diego is adding jobs faster than the rest of California, and he forecast that the San Diego unemployment rate would remain at the low of 4.8% reached in December 2015 compared to 5.8% for California. He emphasized that this is the commonly used U3 rate of employment, not the U6 rate that includes part-time and discouraged workers. The U6 rate is about double the U3 rate, and was 9.8% in December 2015. However, the U3 rate doesn’t include people who have dropped out of the labor force. At the SDWP event, Marney Cox stated that 698,000 people had dropped out of the labor force in San Diego since 2005.

What concerns me is that manufacturing is only 9.5% of the regional GDP (based on 2014 data), up from the low of 7.6% of GDP in 2008. This is still considerably down from the high of 30.1% in 1980. It had slipped to 24.8% by the end of 1999, but that is less than a 6% loss in 19 years, whereas we have now dropped another 15.3% in 15 years. Also, San Diego’s GDP dropped from 7th in 1999 to 17th in ranking of the top 35 metropolitan areas in the U. S.

According to NUPR report, San Diego has “added 7,000 manufacturing jobs back as 2015 ended. Half of the new manufacturing jobs are in non-durable goods, one-quarter in aerospace, and the rest among other durable goods production, including shipbuilding and recreational goods…” However, this is about 5% or 6,000 fewer jobs than we had in 2007 (102,400) and more than 26,000 fewer jobs in manufacturing than we had in 1999 (128,300).

Since you have to make it, grow it, or mine it to generate tangible wealth, it is questionable whether or not San Diego can even maintain its level of prosperity in the future. Agriculture did not even show up on the pie chart of GDP for San Diego, and natural resources only represented .5% of the GDP. Thus, it is critical that San Diego maintain a strong manufacturing base. Manufacturing jobs create 3-4 other support jobs, while service jobs only create 1-2 other jobs.

Construction dropped from 3.8% of the region GDP in 2008 to only 3.3% at the end of 2014, but there has been very little recovery in the number of construction jobs as the number of jobs is still down by 12% from what the number was in December 2007. The NUPR report stated, “In 2016 we do not foresee a significant increase of this part of the economy, in part because of the

relatively small number of housing permits approved in the County. Absent a fundamental change of that figure, this part of the economy will continue to struggle.”

Since manufacturing and construction represent good paying jobs for the middle class, this explains why middle wage jobs are decreasing. The NUPR report released at their event defines “middle wage jobs as those paying between $35,000 and $77,000 per year in 2014 dollars” and states that “in 2001 middle wage jobs accounted for 56.6 percent of all payroll wage jobs…the ratio continued to shrink, standing at 49.5 percent as of 2014.”

Essentially in San Diego, we are creating six times more low paying jobs than high paying jobs and double the number of low paying jobs than middle wage jobs. Higher wage jobs “increased from 21.2 percent in 2001 to 26.2 percent by 2014,” and lower wage jobs “increased from 22.3 percent in 2001 to 24.3 percent as of 2014.”

This trend is nothing new. I remember Marney Cox expressing concern over the shrinking number of middle wage jobs at economic roundtables I attended in the mid 1990s.

Another trend Marney Cox mentioned is that the percentage of workers age 55+ has increased from 25% of the workforce to 35.1%, and there has not been a recovery in employment for those ages 25-54. Since these years are supposed to be the “golden years” of making money in a career, this does not bode well for the future for this age bracket. My own son and daughter are in this age bracket, and my son has had to work as an independent contractor since early 2010 without being able to find a permanent, full-time job in an occupation related to construction. Neither of my children has been able to afford to buy a house because with rents as high as they are, they can never save enough money for a down payment. Their dad and I were able to buy our first house in our mid 20s when houses cost about 3-4 times a median annual salary, but now they cost 9-10 times an annual median salary.

As I have mentioned in past articles, San Diego has been an innovation hub of advanced technology for the past 30 years, and we now have many startup companies at various stages of development in the more than 45 different accelerator/incubator programs in the region. This is why I was very concerned when Marney Cox stated that venture funding being invested in San Diego companies has greatly diminished. Last year, venture fund investment was <$One Billion and represented only 2% of national investment compared to 4-5% previously.

If this trend continues, it would have far-reaching effects. San Diego’s diverse industry clusters derived from technology-focused R & D have always helped the region perform slightly better than the rest of the country. However, if early stage companies cannot get venture funding beyond the Angel investor stage, it will be more difficult for them to ramp up into the full production stage where the majority of job expansion occurs. As a mentor for startup technology-based companies for the San Diego Inventors Forum and the CONNECT Springboard program, I am witnessing the increasing difficulty entrepreneurs are experiencing in getting investment funds. Crowdfunding is helping more companies get off the ground, but they will not be able to succeed in the long run and scale up to full production without significant Angel and venture funding.

San Diego’s economy cannot depend on military/defense spending and tourism for growth in regional GDP. Tightening defense/military budgets because of sequestration have been a drag on the San Diego regional GDP growth for the past three years, and the slight increase in defense spending in the current fiscal year budget will not make much of a difference.

These considerations are why I think that the conclusion reached in the NUPR report is valid: “World and national headwinds suggest battening down the hatches with a prognosis for tightening economic conditions…San Diego will be fortunate to achieve a seventh year of continuous positive economic momentum in 2016. These indicators of economic activity, however, do not portend an acceleration, but rather uneasy movement going forward.”

Based on the economic indicators I am seeing for the national manufacturing industry, I would say that these words of caution should also be applied nationally.

Louisville Knocks Manufacturing out of the Park

Thursday, December 31st, 2015

In mid-November, I had the pleasure of touring manufacturing plants in the Louisville, Kentucky region as the guest of the marketing consortium of the Greater Louisville Inc. Initiative. Well-known as the home of the Louisville Slugger baseball bat and the start of the “Bourbon Road” tours of bourbon and rye whiskey distilleries, Louisville has a much more diverse manufacturing base than I expected. My hostesses for the plant visits were Eileen Pickett and Ceci Conway, members of the marketing consortium.

Our first visit was FirstBuild, which is a partnership between GE Appliances and Local Motors. We met with Director Venkat (Natarajan Venkatatakrishman) and Randy Reeves of Operations. Venkat said that they are creating “a new model for the appliance industry, engaging a community of industrial designers, scientists, engineers, makers and early adopters to address some of the toughest engineering challenges and innovations.” He explained that “Firstbuild’s mission is to invent a new world of home appliances by creating a socially engaged community of home enthusiasts, designers, engineers, and makers who will share ideas, try them out, and build real products to improve your life.”

The Microfactory is divided into four sections: an interactive space for brainstorming, focus groups and product demonstration, a lab for prototyping, a fabrication shop, and assembly area. In the interactive space, there were some current projects on display: a smart chillhub refrigerator with two integrated USB hubs, an easy-load double oven with a sliding drawer, a wall-mounted pizza oven for home use, and a micro kitchen. Randy Reeves gave us a tour of the fab shop, and besides the expected 3D printers, they have a CMC mill and lathe, a small turret press, a press brake, a small stamping press, and a laser-cutting machine. The shop is capable of producing up to 2,000 units per year of a new product.

Venkat said, “We test the market for a new product using innovative techniques including Indigogo for crowd funding and preordering of the products. If there is sufficient interest in a new product, we can then manufacture those designs in our Microfactory for rapid product introduction and iteration. We are pioneering the future of work with a new model for inventing, building, and bringing the next generation of major appliances to the market. Since we opened on July 23rd, 2014, we have launched 10 products, and one has been scaled up to mass production.”

After lunch, we visited D. D. Williamson (DDW), the world leader in caramel color and a leading provider of natural colors for major food and beverage companies. DDW’s natural colorings are used in everything from beer, malt ale, soft drinks, sauces, baked goods, cheese, ice cream, and confectionery products.

I was frankly astonished when Chairman and CEO Ted Nixon told me that the company had been founded in 1865 by Dutch immigrant Douw Ditmars Williamson in New York to manufacture burnt sugars for the brewing industry. He said that the company was well positioned to provide caramel color when the cola soft drink industry started and then expanded into colors for other products in the latter part of the 1900s. The company set up a plant in Louisville in 1948, and then moved its headquarters to Louisville in 1970.

Nixon said, “We set up our first plant outside of the U. S. in Ireland in 1978 to produce caramel for the European cola industry. Then, we set up a plant in Shanghai to manufacture caramel color for customers in Asia. In 1999, we began producing in Swaziland to supply customers in Africa, the Middle East and South Asia. In 2001, we opened a plant in Manaus, Brazil to service the South American market and acquired a company in Manchester, England in UK in 2004. Now we have nine plants on five continents.”

He added, “About ten years ago, we launched the first certified organic caramel colors in North America and added annatto extract, turmeric, paprika, and red beet to our natural color portfolio. Our lab is continually working on new natural flavors to keep us as the leading producer of natural colors.”

Our last visit of the day was to Peerless Distillery in downtown Louisville. Chairman Corky Taylor gave us a brief history of the company. He said, “The company was originally founded in 1881 by Elijah Worsham and Capt. J. B. Johnston as Worsham Distillery Company in Henderson, Kentucky. My great grandfather, Henry Kramer, purchased the company in 1889 after Mr. Worsham died and reincorporated as Kentucky Peerless Distilling Company in 1907. My great grandfather invested in new equipment and built the company up from 300 barrels of bourbon a year to a peak of 23,000 barrels in 1917. He stopped production when America entered WWI that year to aid in the conservation of corn for the war. Production did not resume after the war because prohibition went into effect. The 63,000 barrels in the warehouse were sold for medicinal use during prohibition. My great grandfather invested in and became president of First National Bank of Henderson. My dad went to military school and went in an army. During WWII, he was one of the aides to General Patton.”

I asked him what his prior career had been and why he chose to recreate Peerless, and he said, “I owned successful financial services that focused on designing pension systems for government agencies. About five years ago, I sold my business and retired to Sarasota, Florida. Walking the beach one day, I realized that being retired and boring was depressing and boring, so I moved back to Louisville to resurrect my great grandfather’s business and leave a legacy. I needed something to make life worth living.”

Corky’s son Carson was a building contractor and they hired an associate of his, Michael Vaughn, to rehab the building they selected in the historic downtown area being redeveloped. It took over a year to rehab the building, and they began production last February. Michael Vaughn stayed on as Operations Mgr. and is working to become a Master Distiller. Michael gave us the tour of the distillery and told us that it takes four years to age bourbon and two years to age rye whiskey, so they are producing moonshine in the meantime. They have developed unique flavors, and we were each allowed to have a half ounce of two flavors. As a virtual non-drinker, I liked the Green Apple and Chocolate the best. The moonshine is only 44 proof, about the same as wine, and it was a nice way to end our busy day.

The next day, we visited Amatrol, located across the river from Louisville in a 120,000 sq ft. headquarters plant in Jeffersonville, Indiana. President Paul Perkins said that his parents, Don and Roberta Perkins, founded the original parent company, Dynafluid, Inc. in 1964. He said the company started as a manufacturer of industrial automation systems for many Fortune 500 companies including Coca Cola, General Electric, Alcoa, Ford, Chrysler, and others.

Perkins said, “Many of our customers wanted help in training their employees to use and maintain the automation systems and other equipment we built, so Amatrol was created as the educational division of Dynafluid in 1978 and was formally incorporated as a separate company in 1981.” Amatrol, short for Automated Machine Controls, first provided training equipment to industrial and educational clients for new technologies like those being implemented in Dynafluid’s systems.”

Perkins said, “Amatrol was in a unique position to effectively develop training programs for these technologies because its engineers and technicians were thoroughly familiar with the design, application and maintenance of them. Since that time, Amatrol has grown significantly, becoming the leading company in our primary market segments.”

Over the years, Amatrol focused its business model by providing training equipment and highly engaging interactive multimedia online training software in the following areas for high schools, colleges, and private industry: Advanced Manufacturing, Biotech, Certified Production Technician, CNC Machine Operator, Construction Technology, Engineering Technology, Green Energy Technology, HVAC, Industrial Maintenance, Iron and Steel, Mechanical Maintenance, Mechatronics, Mining, Oil and Gas, Packaging, Power and Energy, Solar Technology, and Wind turbine technology.

Perkins said, “A key factor to our success is that we have a group of people who have developed a very close connection and understanding of the needs of our customers and a realization that satisfying the needs of our customers to make them successful makes our company successful.”

Our next visit was to Rev-A-Shelf, back in Louisville. Rev-A-Shelf was originally a division of Ajax Hardware in California. In 1978, it was established as a division of Jones Plastics and Engineering, a family owned injection molder of appliances parts, and other custom polymer components that now has five manufacturing facilities in Kentucky, Tennessee, and Monterrey, Mexico.

General Manager David Noe said, “We began making metal and polymer Lazy Susan components for some of the largest U.S. cabinet manufacturers. We are a family owned business with a national scope and a passion for innovation. We have grown our product line from Lazy Susans to Kitchen Drawer Organizers, Base Cabinet and Pantry Pull-Outs, functional Waste Containers, LED lighting systems and Childproof Locking System to become a market-leading innovator of quality, functional residential cabinet storage and organizational products. We have factories, warehouses and satellite offices strategically located to serve our expanding customer base of kitchen dealers, architects, furniture manufactures, cabinet industry distributors and retail home centers worldwide.”

We toured the assembly plant and didn’t visit their plastic injection molding facility down the street. The two buildings total 315,000 sq. ft. of space, and the company has about 250 employees. When I asked about Lean, Noe said, “We are currently implementing a comprehensive “Lean Manufacturing” initiative throughout the company. Our goals are to add value to our customers with quality, service, and innovation in everything we do. We are committed to a more functional and organized life for our consumers. Our Marketing Slogan is “We Are Going to Change the Way You Think about Cabinet Organization!”

The last company I visited on my trip was Dant Clayton that manufacturers bleachers and stadium grandstand structures. Founded in 1979 by Bruce Merrick, the company started out making bleachers for Little League ball fields and has grown to providing everything needed for up to 60,000 seat stadiums.

We toured the two production plants built next to the corporate headquarters of the Dant Clayton campus, consisting of 350,000 sq. ft. of production space, spanning 25 acres. The company has a full range of material finish capabilities in-house, including powder coating of steel and aluminum and blasted slip-resistant deck. It was astonishing to see 3 ft. X 12 ft. steel beams attached to hooks moving down the 600 ft. robotic powder coating line before entering the oven to cure. I have never seen such a large supply of aluminum extrusions anywhere. I am sure that having these capabilities and equipment internally allows for greater quality control and continuous improvement.

Merrick said, “For the first few years, we experienced 20% growth before flattening for awhile. Thereafter, we would experience growth spurts for two or three years, and during the growth spurts, we doubled the seating capacity of our bleachers from 500 to 1,000, to 2,000, to 5,000, to 10,000, to 25,000 and then 50,000.” Merrick explained that they “are the most competitive when they get involved at the design stage and provide engineering, construction management, and installation services.”

When I asked what are the key factors are that have led to his company’s success, he said, “A culture of continuous improvement that goes beyond lean manufacturing to include product development, R&D efforts, and discovering latent customer needs, as well as rigorous hiring practices, and a culture of personal development and accountability by all employees.”

The examples of commitment to excellence and continuous improvement displayed by the companies I visited in Louisville are what make America great. And, yes I did get to visit the home of the Louisville slugger between appointments. The company was wooed back from Indiana to set up their manufacturing plant right on the main street of downtown Louisville, and you can watch the bats being made through windows on two sides of the building and visit the museum that houses the model bats for all of the famous baseball sluggers.

 

CONNECT’s Most Innovative New Product Awards Feature Cutting Edge Technology

Thursday, December 31st, 2015

On December 1, 2015, CONNECT presented its Most Innovative New Product awards to winners in eight categories at its 28th annual event at the Hyatt Regency Aventine. CONNECT is a premier innovation company accelerator in San Diego that helps startup entrepreneurial teams become great companies in the technology and life sciences sectors by providing access to the people capital, and technology resources they need to succeed. CONNECT has assisted in the formation and development of more than 3,000 companies since 1985. Lead sponsors for the event were Ardea Biosciences, Cubic Corporation, and JP Morgan Chase & Company.

Under the new leadership of CEO, Greg McKee, CONNECT has refocused its vision for the future. In his opening comments, McKee said, “We enable and empower scientists and entrepreneurs to transform their ideas into products and services that change lives. We create and activate a powerful network of the world’s leading researchers, entrepreneurs and investors that have an innate drive to be purposeful in making the world a better place. The CONNECT experience elevates the value of this network to make San Diego the center of extraordinary and highly convergent technology. The people of CONNECT are dedicated, authentic, and passionately committed to making a difference in our region and the world. CONNECT’s community ignites San Diego’s position as a leader in the global innovation economy.”
He announced a new big goal to “build the next ten ONE BILLION DOLLAR COMPANIES” by 2025 to help grow the San Diego 200 billion dollar ecosystem to 300 billion dollars.” While admitting the goal is ambitious, he said it is important “Because companies of this size are the life blood of our community – they bring jobs, tax revenues, international recognition, sophistication, and most importantly, they are a magnet to the next generation of leaders. The more successful companies we can create, the stronger the gravitational pull to San Diego becomes.”

Continuing, he said, “But, San Diego’s entrepreneurs are no strangers to creating billion dollar companies. Just off the top of my head, there’s Illumina, Dexcom, Cubic, Care Fusion, Amylin, Idec, Life Technologies, Nuvasive, Callaway, Auspex, Viasat, Resmed, Cymer, Ardea, and I almost forgot that little startup  Qualcomm, just to name a few.” He concluded by saying, “This is the next generation of CONNECT, and if you are with me, if you believe that San Diego’s future depends on being a leader in the global innovation economy, then JOIN US!”

Over 100 companies applied for the Most Innovative Product Award this year. To be eligible, a company must have developed the product in the San Diego or Baja California region, introduced the product and generated revenue from sales between March 2014 and August 2015, and not have been nominated previously. A more than 60 member selection committee pre-screened the applicants and narrowed them down to 24 finalists, three in each of the following eight categories.

Aerospace, Security and Cyber Technologies

Ocean Aero won for its Submaran, which is a wind and solar-powered surface and subsurface vessel, designed for extended autonomous ocean observation and data collection. This unmanned vessel is changing how we observe our oceans because of its survivable and undetected ability to perform long-term data-gathering missions without the need to refuel or recharge.

CEO and President, Eric Patten said, “Ocean Aero is incredibly honored to receive this award, especially considering the competitive field of finalists.” He added, “This award validates the massive potential of the Submaran for the Ocean Aero team.”

The other finalists were Cubic Global Defense for its Javelin missile simulator and Tortuga Logic for its security software suite.

Cleantech

Q Factory 33 won for its B3 Bypass Device that facilitates 625% increases in energy potential of solar, wind, stationary battery backup systems and electrical generators and enables 30% increases in conductivity, five?fold reductions in soft costs and elimination of expensive electrical upgrades.

President and CEO Randy Hughes said, “CONNECT’s recognition of the potential of the B3 Bypass to overcome one of the solar industry’s most perplexing challenges — the bus bar limitations imposed on energy backfeed potential of solar, storage and wind systems across the board — lends another valuable validation to the relevance of our work to drive widespread adoption of clean tech solutions.”

The other finalists were Flux Power for its lithium-ion battery pack and Yulex for its plant-based, natural rubber wetsuit.

Communications and IT

Mushroom Networks won for its VOIP Armor, which if a “Voice over IP” gateway device that automatically heals and works around any network problems that otherwise negatively impact phone calls. You set and forget it for crystal clean phone calls with unbreakable reliability for your business.

“MIP Awards are the Oscar’s of the IT industry and is very important for our company as it confirms our innovative approach to bringing solutions to the market”, said Cahit Akin, Mushroom Networks CEO.

The other finalists were Field Logix for its innovative dispatching solution and the Lytx DriveCamTMVideo-based safety solution for commercial fleets.

Life Science Diagnostics and Research Tools

CureMetrix won for its CureMetrix image analysis platform that quantifies the qualities of anomalies in images. As a first target, CureMetrix is focused on doing early and accurate detection of breast cancer in mammograms along with reducing unnecessary biopsies.

CEO Kevin Harris said, “Winning the CONNECT Most Innovative Product Award in Life Sciences was no small feat since the companies in this category all have amazing teams and products. For us, this is one more bit of validation and recognition that were are working on something that is incredibly important and has the opportunity to change lives.”

The other two finalists were DermTech for its non-invasive adhesive skin biopsy kit and Gattaco for its CENTREPON Centrifuge Replacement Tool.

Mobile Apps

Chalk Digital won for its Instant Mobile Ad Platform that is a Do-it-Yourself advertising solution (portal and app) that builds locally target, affordable campaigns with mobile optimized landing pages within minutes. It offers businesses and consumers the ability to build, target, and launch their own personal advertisement in minutes that is displayed in thousands of mobile apps based on your location.

The other two finalists were Boost Academy for its one-on-one math tutoring and Cubic Transportation Systems’ mobile payment app for trains and buses.

Pharmaceutical Drugs and Medical Devices

PureWick won for its PureWick device that empowers women with safe and simple incontinence management in hospitals, nursing facilities and at home. A non-invasive, disposable wick comfortably moves urine away from the body providing a new standard of care without the need for catheters or specialized nurses.

PureWick President, Camille Newton, M.D. thanked the judges for “recognizing the disruptive elegance in something so simple and intuitive.” She also said that she hoped that the “award will help them get their product to market faster to help women to be dry, comfortable, and safe.”

The other two finalists were RxSafe’s robotic production of strip packaged medications and Tandem Diabetes Care for its t-flex® Insulin Pump.

Software and Digital Media

Comhear‘s MyBeam won for its MyBeam single, portable, wireless 12-18″ sound bar device that produces spatialized, localized, and binaural virtual surround sound. MyBeam delivers a fully immersive audio experience through a portable personal device that replaces headphones. The device commercializes a patent-pending algorithm that sends sound directly to your ears precisely the way your body was designed to receive it.

CEO Perry Teevens said, “CONNECT is an excellent organization and a great platform for innovative companies to gain recognition for their products. We are looking forward continuing our relationship with SD CONNECT and associated members of the organization. Making it to the finals and eventually winning this category has been a thrilling experience. I’m grateful to our employees and partners who made winning this award possible.”

The other two finalists were AristaMD’s Referral intelligence Platform and the SOCI for scoring the social web.

Sport and Active Lifestyle Technologies

Hush won for its Hush Smart Earplugs, which are the world’s first smart earplugs that help people sleep better in noisy environments. Combining a sound machine, earplug, and Smartphone connectivity, Hush allows you to drown out noises that keep you up at night, while simultaneously allowing you to hear the alerts and notifications you need.

Co-founder/CEO, Daniel Lee said, “Winning the MIP award has been a pretty incredible milestone for Hush. As we gear up to finally launch and ship out our long-awaited Hush product, winning such a prestigious award couldn’t have been more timely. As each week passes by, we become less of the college students with lofty dreams and more of a legitimate company with a legitimate product. The MIP award was a landmark milestone defining this maturation.”

The other finalists were the FORECAST new film system by Ride100% and the hookit scoring engine for athletes.

The final award of the evening was the William W. Otterson Award, CONNECT’s highest honor given to technology or a product that has demonstrated a significant impact on society and our quality of life. This year the award was given to the RQ-4 Global Hawk, developed by Northrop Grumman. “The RQ-4 Global Hawk is a high-altitude, long-endurance (HALE) unmanned aircraft system (UAS) designed to provide military field commanders with comprehensive, near-real-time intelligence, surveillance, and reconnaissance (ISR), plus detection of moving targets over a large geographical area for battle management, targeting, and situation awareness of enemy actions. The superior performance of the Global Hawk’s system significantly enhances the U. S. military’s ability to prevail in all types of operations from sensitive peacekeeping missions to full-scale combat.”

The event concluded after “Brennon Crist, Managing Director at JP Morgan Chase & Company, presented a $230,000 check to CEO Greg McKee to support CONNECT in the development of small business clusters in San Diego…Crist stated, We understand that many entrepreneurs are tackling some of the world’s biggest problems, which is why we support start-up accelerators like CONNECT who are making a dramatic difference in the way small businesses work and how they succeed.”

CONNECT is the oldest of the over 40 different accelerators or incubators in the San Diego region, which is one reason why San Diego ranks #2 in the world for the most patents issued. After 30 years leading San Diego’s innovation economy, CONNECT has a built an unbeatable roster of over 500 highly-qualified individuals to serve as Springboard Entrepreneurs-In-Residence and Mentors who volunteer their time as mentors to help entrepreneurs develop successful companies. I am honored to be a new member of the Mentor group after working with inventors for the last six years as part of the San Diego Inventors Forum, which is a “feeder” organization for CONNECT’s Springboard program for entrepreneurs.

Vogt Awards Make Entrepreneurs’ Dreams Come True

Sunday, December 13th, 2015

I had the pleasure of witnessing the dreams of entrepreneurs come true when I attended the Vogt Invention and Innovation Awards Demo Day in Louisville, Kentucky on November 17thand watched Inscope Medical Solutions LLC, a Louisville-based startup, win $100,000 in grant funding.

Inscope Medical has developed an innovative laryngoscope, the OneScope, which integrates controllable suction and wireless video to provide a clear view of the vocal cords, improving the efficiency, speed, and safety of airway intubation.

The entrepreneurial team consists of CEO Maggie Galloway, chief scientific officer Dr. Mary Nan Mallory, and Chief Operating Officer Adam Casson, all of which are graduates of the Forcht Center for Entrepreneurship in University of Louisville’s College of Business.

Four other companies competed for the $100,000 grant during the Vogt Awards Demo Day. Each company had been awarded $20,000 in seed funding in August, which is non-dilutive, meaning no equity was taken. The $20,000 is designed to help the selected companies gothrough the program and maximize the value of the connections they are provided.It enables them to be able to create their first working prototypes via access to world-class resources.

Each company also received ten weeks of intense entrepreneurial training by the EnterpriseCorp staff and mentors, participated in a 10-week Lean Start-Up course by Nucleus and prototype development resources through the University of Louisville’s Rapid Prototyping, GE’s FirstBuild and LVL1 Hackerspace.

Winners also participated in Louisville Mini Maker Faire and were encouraged to network within the entrepreneurial community through Venture Connectors.

Upon completion of the program, companies then pitch their products at Vogt Demo Day. To have a chance to win an additional award up to $100,000 and meet with interested investors who can help take their business to the next level.

Lisa Bajorinas, Director of the Kentucky Innovation Network told me that the Vogt Awards are made possible by the Community Foundation’s Vogt Invention and Innovation Fund. During the 16 years of the program, nearly $2.5 million has been awarded to 50 companies. The program is administered by the entrepreneurial arm of Greater Louisville Inc., EnterpriseCorp, which is focused on assistance for entrepreneurs.

Lisa said, “The late Henry V. Heuser Sr., a native Louisvillian and founder of the Henry Vogt Machine Company, created a $5 million endowment at the Community Foundation to support local entrepreneurship shortly before his death in 1999. Henry had been able to use the equipment on his shop floor to assess the viability and commercial potential when he had an idea about how to make something better, quicker, or easier. He wanted to establish an award that would allow engineers and entrepreneurs access to the same kinds of resources.”

The four runners-up included:

Hue Innovations LLC – developed MiColor, a machine that includes a scanner, polish shaker, and ink that customizes creation of any non-toxic regular or gel nail polish color on demand for nail salons to reduce wasted polish, lower toxicity levels for salon workers, and enhance customer satisfaction by providing more color choices.

Stinger Equipment – created a concrete saw with its own engine and dust collection that safely cuts large blocks in a single pass eliminating fatigue, dangerous cuts, and exposure to lung cancer caused from silica dust inhalation.

Sunstrand – supplier and processor of value-added bio-material for domestic polymer composites using a proprietary line of bamboo and applied to hemp, kenaf, flax and jute offering increased potential to decrease weight and green-up plastics.

TriBlue Engineering Corporation – created a gas sweetening unit that allows natural gas processing plants to remove unwanted CO2 and H2S from their lines to make processing sour gas more economical and allows additional revenue streams to be made available because of the improved quality of the by-products.

The day after the Vogt Demo Day, I had lunch with Maggie Galloway and Adam Casson of Inscope Medical. Maggie explained that she and Adam had been MBA students at the University of Louisville and met Dr. Mary Nan Mallory, also studying for her MBA. They were assigned to form a team to find a problem and solve it. Dr. Mallory and her colleague, Dr. Thomas Cunningham, had experienced a failed intubation in the past and wanted to develop a better laryngoscope.

Maggie said, “Dr. Mallory and Dr. Thomas Cunningham, who was a resident physician in the Department of Emergency Medicine at University of Louisville, had the idea for the technology, so the University of Louisville filed the first patent on the device which they are licensing to Inscope Medical.” She said, “The OneScope streamlines the intubation process for physicians and emergency medical practitioners by combining the laryngoscope and the suction catheter so that physicians don’t have to juggle multiple tools.”

Maggie said, “The FDA just issued a recall of some of the equipment used to clean reusable scopes in hospitals, so there will be a big incentive to use disposable devices. Our OneScope is disposable. Maggie added, “About 25 million intubations occur in the U.S. each year and 50 million globally.”

Adam Casson said, “We’ve done more than 650 customer discovery interviews and more than 300 interviews with clinicians, including design feedback from more than 50 paramedics and Emergency Physicians. Our second generation device will also integrate a wireless video camera which will allow physicians to view the placement on a nearby screen.”

After returning home, I found out that the Vogt Award wasn’t the first award that Inscope Medical won. In February 2015, they won the Brown-Forman Cardinal Challenge and “received a ‘launch in Louisville’ package that is valued at $100,000. The package, provided by EnterpriseCorp includes services from various Louisville businesses as well as $15,000.”

“The Brown-Forman Cardinal Challenge brings top teams of graduate students to Louisville, where they compete for the prize and an invitation to the Global Venture Labs Investment Competition in Austin, Texas, in May,” said Van Clouse, the Cobb Family professor of entrepreneurship at U of L.

According to an article in the Louisville Business Journal, Inscope Medical participated in the Global Venture Labs Investment Competition and won another competition, on Saturday, May 9, 2015. “Among the prizes, Inscope Medical won $75,000, an invitation to close the NASDAQ OMX Stock Market, and a $25,000 incubator package….” The same article mentioned that Inscope Medical’s entrepreneurial “team had a second-place victory at the Rice Business Plan Competition in Houstonin April 2015, where it won $133,000. Prior to that, Inscope Medical took home third place and $4,000 at the Oregon New Venture Championshipin Portland, Ore.”

The number of awards won by Inscope Medical’s entrepreneurial team is impressive. As a director of the San Diego Inventors Forum (SDIF), I know of many startup companies in San Diego that would be very envious of Inscope Medical’s success in obtaining this amount of funding without having to dilute their ownership. Our 2015 SDIF Invention contest awarded cash prizes of $1,000, $500, and $250 to the top three winners in August. How nice it would be to have a multi-million dollar endowment to award ten times the amount we awarded!

As an alumnus of San Diego State University, I have attended the annual Venture Challenge Competition conducted by the Lavin Entrepreneurship Center at SDSU, which is the only other formal entrepreneurial contest of which I am aware in the San Diego region. The SDSU competition has showcased next generation companies for more than 20 years and provided students from around the world an opportunity to seek investment for their business ideas. Four years ago, the Venture Challenge transformed into the LeanModel™ Competition. “This new “business model” based competition focuses much more attention to testing a company’s assumptions and getting customer feedback in the early days of the startup.”

The 2016 LeanModel™ Competition will be on Friday, March 4th, and Saturday, March 5th, 2016 on the SDSU campus.” The LeanModel™ Competition is not a traditional business plan competition, it is designed to assist and reward student based start-ups that utilize both a solid business model and customer testing mentality.

“Teams will be competing for prizes totaling $20,000 in cash and inkind services. The top three teams in the competition will be awarded prize money. In addition, the small pitch event winners will also be awarded prize money. In the 2015 Competition, the top three teams won $7500, $4500, and $2500 in cash prizes respectively. The top three small pitch event winners took home cash prizes ranging from $500 to $1500.”

The companies competing in the Demo Day are examples of American inventiveness, but the most difficult challenge for any startup company is to raise enough money to get their product to market. The Vogt Invention and Innovation Awards set a standard that should be emulated by other regions of our country to enable more companies to succeed, grow, and create more manufacturing jobs in the United States.

 

Southwest Florida Attracts Manufacturers, not just Retirees

Tuesday, November 3rd, 2015

During my recent trip to southwest Florida as the guest of the Lee County Economic Development agency, I learned that in recent years, there has been an increasing number of business owners that have been regularly vacationing in the area who have decided to either move their business or set up a business where they like to play.

Lee County is on the Gulf of Mexico side of Florida about 125 miles south of Tampa and about 50 miles north of the Everglades National Park. There are five incorporated cities in the country: Cape Coral, Ft. Myers, Bonita Springs, Ft. Myers Beach, and Sanibel. The county population grew 63% from 1994 to 2014, but 55% live in the unincorporated area.

My tour host, Shane Farnsworth, Manager of Business Development for the Lee County EDO, told me that Cape Coral was a planned “bedroom” community, but many people never built homes on the lots. So, Cape Coral offers the greatest area of growth for industrial development through the purchase and combining of these parcels into industrial sites. Ft. Myers is the oldest of the five cities, so there is very little undeveloped land and new industrial sites will occur through redevelopment. During my visit, I met with executives of several manufacturing companies in three of five and the city of Naples to the south in Collier County (most of Collier County is taken up by the Big Cypress National Park.).

My first interview was with Bill Daubmann, founder and Senior V. P. of KDD, Inc. dba My Shower Door and a member of D3 Glass LLC. Bill originally had  established a closet organization business in Springfield, MA in 1986 and obtained a license agreement with Mr. Shower Door in 1989. After visiting the Lee County region for several years on vacation, he decided to move to Naples in 2001 and opened a showroom in 2003. His son, Doug, moved also and joined the company. He took the Fast track entrepreneur course by the Kaufman Foundation with one son in 2007 to “hone” their management skills, and took it again in 2011 with his other son.

Bill said, “It was a tough struggle from 2008 – 2010 due to the Great Recession, as southwest Florida was “ground zero” for the decline in the new home building market. We survived by mostly doing home remodeling.”

In 2011, they were informed that their Mr. Shower Door license would not be renewed for 2012, so they explored setting up their own manufacturing plant to make the tempered and glazed needed for shower doors. After analyzing how much glass they were buying out of the state and the problems they had with breakage and defective glass, they set up D3 Glass LLC in 2012 when new home building started coming back in a building they had bought during the recession. Bill’s oldest son, Keith, became President of KDD, Inc. dba My Shower Door. Bill said that the ovens for tempering the glass cost one million and everything else cost another million. They had to buy two custom-outfitted trucks to deliver the glass to their showrooms and customers.

Since Florida requires a license for the glass and glazing business, Bill and his sons took the test and got their licenses. Bill said, “We hired a consultant to do a “SWOT” analysis for our shower door business to make sure that our business model worked in all parts of the country. We wrote a business plan and did a beta test site. We are now selling our business model to others and running an academy on how to run a shower door business. We have four affiliate stores: Oklahoma City, OK, Grand Rapids, MI, St. Paul, MN, and York, PA. We also sell the specialized hardware for shower doors to our affiliates and other shower door companies.”

In the last two years, they expanded from just doing shower doors into other markets for tempered glass and recently finished providing all of the tempered glass for the new Hertz headquarters building that will open next month. Bill said, “We went from 22 to 50 employees in 18 months and are now up to 64 employees. We just made the INC magazine list of 5,000 companies at #2,085 and will be going to the big event next month.”

After I told him that I am part of the Reshoring Initiative to promote bringing back manufacturing to America, he said, “We were buying aluminum extrusions from China, but just switched to a vendor in the United States.”

In answer to my question about the advantages of being located in the region, he responded, “It is easy to deal with the people in the local government agencies, there is good transportation available on I-75 and Rt. 41, the new airport has flights going to our markets, and there are good local colleges for preparing the future workers we will need.”

My second interview was with Brian Rist, President and CEO of Smart Companies, of which Storm Smart is the largest subsidiary. Storm Smart is Florida’s largest manufacturer & installer of hurricane protection products and is the ninth largest manufacturer across all industries in Lee County. Brian is the inventor of the innovative Storm Catcher Wind Abatement Screens. He also moved from the northeast to southwest Florida to run his business. Brian said, “I started out with a couple of partners in a general contracting business and wound up as the sole owner. The first three years were a struggle to find a niche. The building codes were changing and I became the expert in the new codes, even teaching architects. After Hurricane Ambrose came in 1994, I tried to find a fabric that would replace plywood for covering windows. We talked with people in energy management and got everyone’s opinion. I founded Storm Smart in 1996 to manufacture fabric window protection. We became known as who to talk to about window protection. If you fail to plan, then you plan to fail. We did a CD on what businesses could do for emergency planning because 83% of businesses that have a disaster never recover.”

Brian explained that the building codes changed in Florida for developing sites in 1997 requiring window protection to be part of building a home. In 2001 new codes came out and insurance regulations changed also. Everyone has to have separate hurricane insurance. Insurance companies offered special rates for homes that had protection, and the State of Florida offered a rebate program.

“We started making polypropylene window protection by hand cutting the material, but we needed to ramp up to higher production. Getting a sales tax credit helped us to be able to buy a laser cutting machine in 2013, and it eliminated the bottleneck in our business helping us develop new products.”

They work with the biggest companies in the world that use fabric for hurricane protection. While their products protect homes from hurricanes, they also reduce energy costs. Brian said, “You can build a business based on a known market of saving energy and not just protection from hurricanes. Impact-rated windows are a fast growing part of our business. Most new homes come with impact rated windows.”

He added, “The building codes changed again and they are much more about retaining heat rather than saving heat. International codes are also changing. We watch what percentage of our business is with builders. We went to Cancun and set up small operation during recession in Mexico. We are currently doing work in Los Cabos, Mexico also. We sell to Caribbean countries like Bermuda, Jamaica, and wherever else there are resorts.

We have experienced fast growth and have been picked by Inc. magazine four times as one of the 5,000 fastest growing companies. We went from 26 employees to 100 employees after Hurricane Charlie. We went from five to six jobs per month to about 100 jobs per month.

We looked at all of their jobs and decided to really go back into the customer service business to be a sustainable business. We started to invest in our people and getting to know who they were. We had to make sure they were doing things right. We have to ‘walk the talk.'”

After we discussed some of the articles I have written on developing and recruiting the next generation of manufacturing workers and my involvement with the Coalition for a Prosperous America, he added, “‘ Walking the talk” also involves working with students and getting involved with the Southwest Regional Manufacturers Association [for which he is in the current Vice-President.] He said, “We won the manufacturer of the year for the local region last year. We work with five different academies related to construction. Only about 20% of kids go to college and only about 20% of them graduate from college. We had a tour of our plant during Manufacturing Day and had about 13-14 students come on the tour. Florida is too reliant on tourism and construction. Manufacturing creates more different opportunities for good-paying jobs. Our Governor was at our plant three weeks ago, and he understands manufacturing. By partnering with government and education, we can be more effective in growing manufacturing in Florida. In order to grow, we have to develop the next generation of manufacturing workers. Team building, time management, and ethics are the same regardless of the industry.”

In answer to my inquiry about Lean training, he said, “We have been very involved with lean manufacturing and are working with the Florida Manufacturing Program. We are going through a program for an ERP system in order to continue to grow. We have a plan to develop the company over the next three years. Part of it will involve having licensed dealers.”

The outlook for business in Lee County is very good according to the Lee County Business Climate Survey Report, Third Quarter, 2015 prepared by The Regional Economic Research Institute, Lutgert College of Business, Florida Gulf Coast University, released on August 27th, 2015. The key findings were:

  • 74 percent of executives stated that the current economic conditions have improved over last year
  • 66 percent of the executives stated that the current economic conditions for their industry have improved over last year
  • 67 percent of executives expect economic conditions for their industry to improve over the next year
  • 68 percent of companies expect to increase investment next year and none expect to reduce investment levels
  • 61 percent of executives reported increasing employment over the last year, while four percent reported reducing employment
  • 57 percent of executives expect to increase employment at their companies during the next year

While manufacturing represents only 2% of the economy of Lee County today, the staff of the Lee County Development agency is working with the economic development offices of the five cities and members of the Southwest Regional Manufacturers Association to grow the manufacturing industry and expand that percentage. Their work will be aided by the fact that Florida ranks 5th in the 2015 State Business Tax Climate Index with a score of 6.91. The corporate income tax rate is only 5.5% for C corporations only. There is no inventory tax for businesses, and there is no personal income tax. There are nine universities and colleges, and the two largest, Florida South Western State College and Florida Gulf Coast University have a combined enrollment of over 30,000 students. There is good technical training at the two-year community college level as well as at the Fort Myers Institute of Technology, Cape Coral Institute of Technology, and at the ITT Technical Institute. The Ft. Myers airport (RSW) is served by 15 air carriers offering nonstop flights to 46 destinations, most of which are east of the Mississippi.

The stories of these two companies are good examples of innovation to develop new products, becoming a lean company, creating a new business model, and expanding into new markets. These are some of the recommendations I made in the chapter “What manufacturers can do to save themselves” in my book, Can American Manufacturing be Saved? Why we should and how we can.

Having no corporate and personal income taxes and providing a friendly business climate are ideas I discuss in the chapter on what government can do to save manufacturing in my book. My next article will tell the stories of other companies I visited in Florida.