ToolingU-SME Report Reveals Manufacturers Are Not Addressing Skills Gap

December 14th, 2016

In 2011, I attended the imX Expo (interactive manufacturing eXperience) in Las Vegas when Tooling U-SME ” announced their Mission Critical: Workforce 2021 initiative and “sounded the alarm that the future success of manufacturing is at risk by the end of the decade if industry does not address the growing skills gap.” The event was sponsored by SME (formerly the Society of Manufacturing Engineers) and the American Machine Tool Distributors’ Association (AMTDA).

At that event, Tooling U-SME, “the world’s leading provider of training and workforce development solutions for manufacturing companies and educational institutions,” introduced a free one-of-a-kind “Workforce 2021 Assessment” tool for companies to use to assess and gauge their company’s performance because they had identified that there would be a critical shortage of skilled workers by 2021 that would threaten the future of manufacturing in America. “By answering a short series of questions about a company’s knowledge retention, readiness of future skill requirements, and the status of employee development programs, a company is able to assess their ability to meet current and future workforce challenges.”

In a September 5, 2016 commentary in The Hill contributor Grant Phillips wrote that the National Association of Manufacturers found there are “600,000 unfilled jobs in manufacturing primarily due to a lack of skilled labor. It is this skills mismatch that plagues the US labor market…”

On September 8, 2016, ToolingU-SME, released a report that showed the progress towards achieving the goal of the Mission Critical: Workforce 2021. Based on five years of insights from the Workforce 2021 Assessment tool, the report states, “the results are not encouraging. Responses show there has been little advancement. While it’s not too late, companies must take action now to ensure a healthier next decade.” The report quotes from report, “The Skills Gap in US Manufacturing: 2015 and Beyond” by Deloitte and The Manufacturing Institute, which states, “Over the next decade, nearly 3.5 million manufacturing jobs will likely need to be filled. The skills gap is expected to result in 2 million of those jobs remaining unfilled.”

ToolingU-SME Vice President Jeannine Kunz wrote in the cover letter, “only a very small number of worldclass organizations are prepared for the extreme talent gap predicted by the year 2021. Some of these companies started planning years ago to address the coming labor shortage. Others were forced to take reactionary steps when faced with a shrinking employee pool. Regardless, they started formal training programs, introduced apprenticeships, built relationships with educators and more…At Tooling U-SME, we are concerned that more manufacturers aren’t taking action since this has a big impact on the long-term health and competitiveness of the industry as a whole. There is a false sense of security among many manufacturers who are not recognizing these future challenges or investing in the development of their workforce today.”

The companies that responded to the survey fall into five categories:  procrastinator, strategist, role model, and visionary.

The procrastinators nearly make up the majority of the respondents because 49% said that “their company has not begun assessing their manufacturing employee’s current skills against skills they will require in the future.” In fact, only “1 out of 20 (5%) acknowledge conducting a complete assessment of all staff.” Since “nearly 9 out of 10 respondents (88%) said their company is having problems finding skilled works in manufacturing,” you would think there would be more urgency to address this problem. This problem will only get worse because “14% of respondents say they will lose a full quarter (25%) or more of their workforce to retirements in the next five years.”

The highlights of the report are:

  • “Key findings from responses to the survey from manufacturers of all sizes
  • Insights on business pains, such as hiring needs, training resources, mentoring and talent development
  • Best practices to immediately start ensuring your workforce is ready for the next decade”

The key findings are:

  • “Less than one-third (29%) of respondents would characterize their company’s talent development as good or excellent”
  • “30% say their company has no community involvement (internships, co-op, etc) to help develop the proper skills of their incoming workers.”
  • “54% don’t budget for employee development”
  • “33% say their job-related training options are minimal”
  • “88% say their company is below average when it comes to offering outside resources to upgrade the skill sets of employees”

While 74% agree that training needs in the organization impact a wide range of levels throughout the company…3 out of 4 (75%) say their company does not offer a structured training program on manufacturing skills. In addition, “less than half (45%) say their company has personnel designated to manage training and employee development.”

The report identifies issues related to the skills gap that need to be addressed immediately:

  1. Incoming employees — finding them
  2. Incoming employees — training them
  3. Incumbent workers — upgrading their skills to keep up with changing technology

With regard to finding manufacturing employees, I commented that we need a national manufacturing database of skilled workers when I gave my presentation on how to solve the skills shortage to the Cincinnati Chamber of Commerce. Many workers that have been laid off due to transferring manufacturing offshore or plant closures have no idea where to go to find a new job in manufacturing. They take lower-paying jobs outside of manufacturing because they can’t uproot their family on the chance they could find a job at a manufacturer in another city.

The ToolingU-SME report urges manufacturing to establish training programs for both incoming workers and incumbent workers to upgrade their skills. The report identifies the following six steps for companies to take to get started immediately:

  1. “Build a business case for learning with senior management. Involve the right stakeholders in discussions and tie learning to performance so you can measure the results later. It is important to set expectations, get buy in and gather support for the program early on.
  2. Define and update your job roles with the required knowledge, skills and abilities needed to build strong performance on the job. This competency-based learning approach will lead to the positive return on investment (ROI) your stakeholders expect.
  3. Build career progressive models, showing growth from entry level to more senior levels. This modeling effort will improve employee engagement and retention, and allow the alignment of skills to pay.
  4. Benchmark incumbent employee competencies through knowledge and skills-based assessments to determine gaps in performance and build a training strategy to address them.
  5. Design a custom competency-based training curriculum using blended learning that consists of online and on-the-job training as well as other performance support.
  6. Ensure performance standards are measurable and trackable. These standards will validate you ROI investment.”

What struck me is that all of these steps are integral to a company becoming a Lean Company. They are nearly identical to the requirements of “Talent Development” that are incorporated into the journey of transforming a company into a Lean company. It would appear that from this survey that the majority of manufacturers have not begun their journey to becoming even a Lean manufacturer, much less a Lean Company.

My recommendation is to start by using the free Assessment tool of ToolingU-SME. Then you can decide what steps to take next. If your workers need specific manufacturing skills certification, then check out the classes offered by ToolingU-SME, either online or on-site.

Another source for training is the Manufacturing Extension Partnership Program (MEP), which is “a national network with hundreds of specialists who understand the needs of America’s small manufacturers. The nationwide network consists of manufacturing extension partnership centers located in all 50 states and Puerto Rico. MEP provides companies with services and access to public and private resources to enhance growth, improve productivity, reduce costs, and expand capacity.” Locate your nearest MEP here. The MEPs have a variety of training programs that are available at reduced cost to manufacturers. The California Manufacturing Technology Consulting (CMTC) is the designated MEP for California, and they offer training in Lean manufacturing and many other subjects that would incorporate the above steps.

In California, companies can apply directly for a training grant from the Employment Training Panel (ETP) to help defray the cos of training or they can join an active ETP Multiple Employer Contract (MEC).

Many community college systems around the country offer training in specific manufacturing skills. California also has nine Centers for Applied Competitive Technology funded by the Chancellor’s Office of the Community College system, which provides training in specific manufacturing skills as well as Lean Manufacturing.

A number of community colleges actually use the ToolingU-SME courses instead of developing their own curriculum. I have discussed some of the training offered at community colleges in California and other states in previous articles I have written. You can peruse these articles under the Training and Workforce Development categories on my website:  www.savingusmanufacturing.com.

As more manufacturing is reshored to America, it will be even more critical to have the skilled workers we need to make American manufacturing great again. Do not procrastinate any longer on addressing this important problem.

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

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

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

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

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

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.

 

Coalition for a Prosperous America Summit Discusses How to Grow Economy

December 8th, 2016

On October 13, 2016, the “Southern California Manufacturing Summit” was held at the Wedgewood Center in Aliso Viejo. The summit was hosted by the Coalition for a Prosperous America (CPA), with SDG&E/Sempra Utilities as the major sponsor, along with a long list of non-profit organizations, regional businesses and associations as sponsors and partners. The purpose of the summit was to learn and discuss how we can use Southern California’s advantages to re-grow manufacturing and create good paying jobs through smarter policies on trade, taxes, and the economy.

CPA is a unique alliance of manufacturing, agriculture, and labor working for smart trade policies and represents over three million households through our member associations and companies.
Since nearly all of our sponsors provide services that benefit manufacturers, we modified our format from previous summits to provide opportunities for our sponsors to tell about their services to promote networking among attendees.

Our first speaker was Greg Autry, Adjunct Professor of Entrepreneurship, Marshall School of Business, University of Southern California, who discussed “National Security Concerns with the Current U.S. Trade Regime.” Among the highlights of his presentation was his statement, “There are national security concerns with trade agreements. An economy that builds only F-35s is unsustainable – productive capacity is what wins real wars. Sophisticated systems require complex supply chains of supporting industries. They require experienced production engineers, machinists, and more.”

He recently prepared a report analyzing the competition and found that we are now outsourcing most of our space-related technology. He said, “NASA awards contracts for launch vehicles to Boeing and Space X, but chose to buy Russian lower stage engines. We have to choose if we are going to have a supply chain for the space industry. We cannot rely on China to produce what we need for our military and defense systems.

He added, “The International Space station was funded by the U. S. to the tune of $100 Billion of the $120 Billion that it cost. We should not be relying on Russia’s Mr. Putin to launch our satellites and space vehicles and provide us a seat to get to the international space station.”

Autry stated, “If you own stock in Alibaba, you actually own stock in a holding company in the set up in an offshore tax haven of the Cayman Islands, and the real owner behind Alibaba is the Chinese government. In contrast, he said, “It was the wealth he created at Amazon that enabled founder Jeff Bezos to now lead Blue Origin, which was selected by the United Launch Alliance to finish development of a new engine to replace the Russian made RD-180 rocket engine used by ULA’s Atlas 5 rocket.”

He pointed out that the Germans had the best technology in WWII, but didn’t win because we out produced them. Productive capacity is what wins wars. We wouldn’t be able to do the same for a future war as China has become the shop floor for too many American manufacturers. Take the U.S. F-22 airplane vs. the Chinese J20 airplane. We have 187 F-22s, and we stopped producing them because they were too expensive. China has several hundred J-20s, and they are still producing them.

He warned, “China has been an aggressive nation for thousands of years – it’s how the country grew from a small nation state. China has expanded their claim to territorial waters to include territory claimed by all of its immediate neighbors — Taiwan, South Korea, Vietnam, Japan, the Philippines, Japan and even New Zealand and Australia. China’s threat to these countries could eliminate getting supplies from Vietnam, Taiwan, and Korea, where companies are located that are now part of our supply chain for the military and space industry. We are going to lose our supply chain for the military and defense industry because the people in the State and Commerce Departments don’t talk to the Defense Department.”

After his presentation, July Lawton, President of The Lawton Group/TLC Staffing, explained that her company provides temporary to permanent staffing solutions for engineering, manufacturing, information technology, as well as the more traditional human resources, accounting, administrative, marketing, and healthcare positions.

Nicholas Testa, Jr., CFPIM, CSCP, CIRM, is founder and CEO of Acuity Consulting, Inc. a firm specializing in supply chain and operations management and systems consulting and training. He is president-elect of the APICS Orange County and described the types of supply chain education and training that APICS provides to its manufacturing industry members.

Economist Ian Fletcher, author of Free Trade Doesn’t Work” was the next speaker. A few highlights of his presentation were: “Free trade is trade without restrictions. Economic rivalry is taking place every day. There is rivalry for wealth and power. We live in America, and it does matter where you live. America’s trade deficit is averaging $500 B/year. Free trade is part of the cause of poverty, as well as family breakdowns. Free trade mostly destroys jobs. We are looking in a decline of quality rather than quantity of jobs. De-industrialization is occurring. Many major American companies are not American any longer; they are owned by foreign corporations. Boeing is losing manufacture of airplane wings to Mitsubishi. There is not a single airplane that doesn’t rely on parts from other countries.”

He stated, “Free trade simplified means there must be something good for both parties. Free trade is only one sided by the United States because many countries practice mercantilism. Trade is being manipulated to benefit our trading partners. The Euro currency has been manipulated to reduce the value of the currency of Germany to be lower by balancing it out with the economies of France, Italy, Spain, and Greece. The U.S. is being forced to compete with the state capitalism of Europe and Asia.”
He added, “Free traders say that trade deficit doesn’t a matter, but trade deficits mean that we consume more than we produce. David Ricardo’s theory of comparative advantage did not work when it was created and doesn’t work now. A nation needs some protection. Protectionism is really the American way. Alexander Hamilton was the founder of American protectionism. The U.S. had a protectionist policy until after WWII. Every country has done protectionism to succeed. He showed a chart showing the history of tariffs in the U. S.

 

 

 

 

 

He concluded, “After WWII, free trade became a policy because of the politics to win the Cold War. It is crumbling now because of politics. There are dangers in protectionism, but there are dangers in doing nothing. Treaties or trade agreements are basically about protecting property rights. The World Trade Organization has failed to enforce terms of current trade agreements and will not do any better with the proposed Trans Pacific Partnership Agreement.”

After the morning break, I provided a brief overview of California manufacturing prior to moderating our panel of manufacturers. California is the 8th largest economy in the world, and if it were a country, it would be equal to France. California lost 33.3% of manufacturing jobs between 2000 and 2009 compared to 29.8% nationwide, and lost 25% of its manufacturing firms.

I pointed out that even with its unfavorable overall business climate, California still ranks first in manufacturing for both jobs and output. However, since the Great Recession, California lags in manufacturing job growth at a 3.6% rate compared to the national 7.2% rate and a GDP growth rate in manufacturing of 11.2% in California compared to a 22.6% GDP growth in the U. S. as a whole.

On the positive side, California leads the nation in R&D and number of patents issued, and
California companies received $78.4 billion of VC dollars in 2015 (57% of U.S. total – up from 51% in 2010).

Mexico, Canada, China, and Japan are the top four export markets for California, and California represents 11% of total U. S. exports. California ranks second behind Texas in all exports, but
California ranks first among all 50 states in agricultural exports estimated at $13.6 billion per year. California is the biggest U. S. producer of nuts, dairy, ice cream, and wine. The top high tech export is computers and electronic products, which equals 26.1 % of all the state’s exports. Transportation goods are the second top export, consisting of airplanes, ships, unmanned vehicles, and underwater vehicles.

Besides the good weather, Southern California’s advantages are:

• Gateway to Pacific – two major ports – Long Beach and San Diego
• Major hub in western U.S. for air, rail roads & waterway transportation
• Skilled, educated workforce for ALL occupations
• Research Institutions and Universities
• Large inventor/entrepreneur pool
• Hundreds of business Incubators and Accelerators
• Angel investor networks
• Venture capital networks
• 18 Foreign Trade Zones
• Employment Training Panel funds for employee training
• Workforce Investment Boards

There is also an abundance of business resources in Southern California, such as the California Manufacturing Technology Consulting (designated California MEP), two Centers for Applied Competitive Technologies, several Small Business Development Centers and Economic Development Agencies, as well as many Chambers of Commerce and Business Councils.

I concluded with mentioning the opportunities we have to improve the California business climate, change our national tax and trade policies, return manufacturing to U.S. through reshoring, connect regional manufacturers with other U. S. suppliers, increase collaboration between manufacturers and community college to address workforce and skills gaps, and educate community/youth about career opportunities in manufacturing.

After my presentation, the following three panelists shared their stories:

James Hedgecock, Founder and President of Bounce Composites, which designs, engineers, and manufactures high-quality, durable composite goods for multiple industries, including wind energy, automotive, aerospace, and sporting goods. He shared that the company started out producing their own patented design of stand up paddleboards, but it has been tough to compete with offshore companies because of unfair trade practice. He said it was especially difficult to export to Mexico and Europe because Value Added Taxes (VATs) are added to the price of their products, making their product more expensive.

Robert Lane and Dave Mock, principals of Lane OPX, shared how they help companies optimize excellence through blending Lean Six Sigma principles, strategic business initiatives and participative management philosophies to grow organizations, and inspire high performing, motivated teams. By leveraging their deep experience in manufactur9ing, team dynamics, leadership development and organizational design, they have been able to power the turnaround of small to large companies. More recently, they have been able to help manufacturers return manufacturing to America from overseas.

Mr. Wei-Yung Lee, CEO of Carlsbad Technology Inc. was our final panelist. Based in Carlsbad, California, Mr. Lee said that Carlsbad Tech was founded 1990 and is a subsidiary of Taiwan’s leading YungShin Pharmaceutical Co. The company began as a contract manufacturer of generic pharmaceuticals and has become an industry leader in manufacturing and distribution of generics, supplements, and medical devices. He said, “We have 150 employees and 15 are well-trained chemists. We have the capacity to produce 60 million capsules and 400 million tablets per year. Last year, we Launched our Comfort Vision™ contact lenses in the USA and have sold over 1 billion units in Asia. We are striving to become a global health bridge, bringing a world of innovative health products to the markets that need them. ”

After the panel, Jill Berg, President of Advanced Test Equipment Rentals, told about the products and services of her company. They rent, lease, and sell a large selection of test and measurement equipment and other types of lab equipment to companies all over the world. She announced that her company was hosting a San Diego Test Equipment Showcase on October 18th.

Then, Chris Marocchi, Field Operations Manager of California Manufacturing Technology Consulting (CMTC), explained that his organization is a non-profit consulting organization that just won the competition to provide Manufacturing Extension Program services for all of California. These services provide innovation and growth strategies along with operational enhancements to foster profitable growth for California companies. MEP services include: innovate new products, open new markets, improve workforce skills, increase product quality and reduce costs through Lean training, increase energy efficiency and green production, and optimize supply chain performance.

After our lunch break, I presented information on Lean Six Sigma Institute (LSSI) as neither of the principals was able to attend and I had obtained my Yellow Belt Certificate in Lean Six Sigma from LSSI in 2014. LSSI is boutique-style training and consulting company that uses training and coaching model to guide companies to manage Lean Six Sigma change, develop internal leaders, and sustain the results. LSSI’s is headquartered in Chula Vista California, but has satellite offices located in nine countries and employs over 60 expert consultants worldwide. Lean and six sigma principles and tools apply to virtually any process, and LSSI has successfully helped clients implement Lean Six Sigma in a variety of industries, such as manufacturing, retail, and healthcare.

Our key note speaker for the summit was Michael Stumo, CEO of the Coalition for a Prosperous America, speaking on “Growing SoCal Manufacturing.” Mr. Stumo stated, “CPA is a true coalition
of manufacturing, agriculture, labor, Republicans, Democrats, Progressives, Conservatives, and Independents. Our members are: Trade Associations, companies, farm organizations, Labor Unions, and individuals from all walks of life. Our non-Agriculture industries are: manufacturers, steel, tooling and machining, electronics, textiles, copper, aluminum, etc. Our mission is to balance trade and produce more in America to reclaim American prosperity.”

Mr. Stumo explained that there is a difference between service jobs and manufacturing jobs. According to Investopedia, “Examples of service sector jobs include housekeeping, psychotherapy, tax preparation, legal services, guided tours, nursing and teaching. There are very few “tradable” service jobs. By contrast, individuals employed in the industrial/manufacturing sector might produce goods such as cars, clothing and toys.”

He said, “There is also a difference in income and purchasing power between manufacturing and service jobs. When considering what industry sectors to prioritize for workforce and economic development efforts, it is important to look beyond basic employment numbers. This is because, while a sector might have a lot of jobs, it might not actually be producing a lot of income for the region, which is also very important for overall economic health and vitality.”

Mr. Stumo stated, “The problem is that as more manufacturing jobs leave, more productivity leaves as well. Unlike manufacturing, service-sector jobs have strict limits in terms of productivity. For example, a live performance of Beethoven’s 5th requires the same amount of performers/employees as when it was performed early in the 19th century. Compare that with the production of almost anything manufactured — the number of workers now required to produce a bolt of fabric, for example.”

He added, “There is a regional ripple effect of service vs. manufacturing jobs. At $4.4 trillion in total sales, manufacturing is by far the biggest income generator in our nation, despite a fairly rapid decline in employment. Yet, manufacturing still manages to far outperform all other industries in terms of pure income creation. Manufacturing generates more income per worker and has much bigger ripple effects, creating much more impact in a region while helping to raise wages in lower-productivity service sectors.”

He asked the rhetorical question, “What’s wrong with a service economy? He answered, “It shrinks manufacturing employment as well as the manufacturing sector’s ability to prop up wages. A labor market that loses wage pressures of high-productivity manufacturing industries will settle at wage rates lower than markets where this wage-boosting effect is present. Economic development policy makers should be careful about shunning manufacturing or other production sectors in favor of service sectors. This is a problem because 66% of U. S. workforce is without a four-year college degree.”

He concluded stating, “America is at a crossroads. We are losing an economic competition against other nations whose mercantilist strategies are destroying our manufacturing jobs, critical industries, and our standard of living, our national security, the security of our food supply, and our children’s futures. For the U. S. to become prosperous again, our future strategy must include the following:

• National Priority of Balanced Trade
• Strong enforcement
• Stop new trade agreements to force a re-think.
• Neutralize currency manipulation
• Tax reform with VAT/consumption taxes
• Consider tariffs to neutralize imbalances

We have a choice. We can continue our current trade and tax policies or we can develop and implement a comprehensive strategy that retains and reinforces our leadership in innovation, locates investment and production in the U. S. and raises employment by creating good paying jobs.”

As chair of the California chapter of CPA, I hope you will join our efforts to make America prosperous again.

Lean Transformation Saves Aluminum Trailer Company

October 17th, 2016

On the second day of the Lean Accounting Summit, August 26th, The ATC story was the Keynote, presented by Steve Brenneman, President, and Duane Yoder, Production Manager.

Their story was so impressive that it justified being told in an article instead of a brief summary in my previous article about the summit. Steve titled his presentation, “It’s a lean life!” His definition of lean is “using the scientific method to continuously improve the business and other related parts of the entire value stream. Also, it is a complete change of the way that we work as human beings. We go from individual heroes to strong teams.”

From the ATC website, I learned that ATC is a privately held company with eleven owners, 9 of whom “are involved in and manage every aspect of the company…Each owner contributes to the company in almost every phase of the business by doubling their duties as both Owner and CEO, CFO, Production Manager, Engineering Manager, Sales/Marketing Director.” The company was founded in 1999 and is located in Nappanee, IN, within Elkhart County, which is touted to be the Trailer Capital of the U. S. for RVs and Cargo Trailers.

Their website states, “ATC is one of the only manufacturers who can build all models and custom trailers in, both, steel and aluminum…This can range from a barebones 5’ x 8’ trailer up to a mobile command center fully fit up with dual slide outs, custom finishes and 60 KW power generation. ATC produces a wide array of trailers to meet every customer request.”

ATC is very vertically integrated in their manufacturing processes, as the website states, “Our system of material handling and placement on the production floor ensures that your workers’ time is spent building your trailer and not searching for material, tools and fixing errors. By fabricating and building components on site, we eliminate the overhead costs that come from outsourcing. Every hour spent and piece of material used is transparent and reflected in the pricing you are quoted.”

This is where ATC is now, but they have come a long way since the economic crash in the fall of 2008 that led to a near collapse of the trailer and RV industry in 2009. ATC owned a window manufacturing company, Nappanee Window, that provided windows for their trailers, as well as trailers and RVs made by other companies.

Because of the steep industry downturn, Steve said, “We had to shut down Nappenee Window in 2009 and sell off the assets. We had also built ATC up from scratch in 1999 to $26 million business in 2006. From 2007 to 2009 sales dropped 60%, and we were in survival mode.”

This dire situation led to a serious examination of where they were headed. Steve said, “We had only dabbled with lean previously. After reading Lean Thinking, we saw all of our mistakes at Nappenee Window and saw many of the same issues at ATC, but now we saw them through lean eyes.”

Steve said, “We had relied heavily on tribal knowledge, and as a result our average vendor was paid 25 days late. We had negative equity, and we only did five raw material inventory turns/year. We started practicing lean and changed to building a standard line of trailers.

Duane took over as presenter and explained that they separated into three lines based on work content and complexity of the trailers:

  • Line 1 (Raven)
  • Line 2 (Midline)
  • Line 3 (Custom/Large).

Duane said, “We set up three Value Stream teams, composed of trailer design, Inside Sales, Value Stream Leader, and the Value Stream team members. We created a lean office for each value stream. Steve and I became a leader for two of the value streams. We now have five value streams and are trying to change the mindset of everyone.” Then, he shared the following slide showing their Value Stream reorganization:

atc-value-stream-chart

 

 

When Steve took over again as presenter, he said, “We were profitable the first year after starting to practice lean. Our sales went from $10 million in 2009 to $42 million in 2015, and our net income has grown dramatically as well. Our inventory turns tripled from 2010 to 2014. Our long term debt has dropped by over 50%.”

Steve said, “After seven years of hard work, we have:

  1. Improved flow – went to one building from two
  2. Cleaned up the mess
  3. Did 5S for maintenance department
  4. Established a supermarket/material supply system
  5. Use a Materials/Kanban to all lines
  6. Changed to Value Stream Management since 2012

We are working with Joe Murli (CEO of The Murli Group). We follow Joe’s definition of a Lean Management System – “everybody, everywhere, every day comes together in small teams and reflects on how we did yesterday, where the waste was, and how we can do better today.”

In the Murli Group’s Lean Management system, True North is the unifying, overarching purpose for the entire organization and keeps the individuals and organization all pulling in the same direction. True North equals:

  • Zero Defects
  • 15% Productivity Improvement year over year
  • 100% value-added activity
  • 100% on time delivery
  • Respect for People

“We use visual controls on the shop floor. Standard work was the most difficult to do. We developed a Leader Standard Work Bus schedule.

From January 2015 to February 2016, we reduced labor time from 181 min down to 84 minutes for our simplest trailer (Line 1). On our Open Utility line, we reduced labor minutes from 360 min. in January 2015 to 248 minutes by mid April 2016. We use “kitting” and improved cell arrangement to eliminate as much walking as possible.

With regard to talent development, we are training leaders to lead in a new way. We do daily reflection team leader meetings at end of day. There are five tier 2 meetings per day, two tier 3 meetings per day, and one tier 4 meeting per day.

The change took nine months ? three months longer than we had planned. It took four years to gradually switch over to Lean accounting. It is simple and just makes sense to lean organizations. Now we get P & L weekly.”

In an interview after the summit, I asked Steve a few clarifying questions:

In answer to why they chose to transform their company into a Lean company instead of using some more traditional turn-around methods, he said, “Lean just seemed like a better way to think about operational excellence. It was more of a method rather than just trying harder or doing what everyone else was already doing. It felt right for some reason.”

When asked what was their biggest stumbling block in their Lean transformation, he said, “We tried to do too much too fast before allowing people to start to understand these new concepts with us. We tried to just be the experts and do the thinking for everyone.”

In answer to my inquiry about how becoming a Lean company changed the culture of the company, he replied, “Lean has really helped us to have a unified concept that everyone could get behind. It provided a common framework that we could point out to people as to where we were headed and why.”

Finally, I asked what have been the biggest benefits of becoming a Lean company, and he replied, “We get to involve everyone in the process of making things better. Then, we all get to share in the proceeds. I like that a lot. It seems to fit within my view of how the world should work.”

Hearing stories like this is one of the reasons I enjoy attending and presenting at the Lean Accounting Summit put on by Lean Frontiers. It is another example of how transforming into a Lean Company can make the difference between success and failure as a company. Have you made this transformation? If not, start learning and practicing now!

How the Trade Secrets Act will Benefit Manufacturers

October 11th, 2016

Many times, Congress passes important bills that are go unreported by the mainstream media. Such was the case with the Defend Trade Secrets Act of 2016 (DTSA – S. 1890), passed by the Senate and House of Representatives with near unanimous support in April and signed by President Obama on May 11, 2016. This beneficial bill was authored by U.S. Senators Chris Coons (D-DE) and Orrin Hatch (R-UT) and cosponsored by nearly two-thirds of the Senate.

The bill was supported by a broad industry coalition that included manufacturers and organizations, such as the Alliance of Automobile Manufacturers, the Association of Global Automakers, Inc., Biotechnology Industry Organization, The Boeing Company, Caterpillar Inc., Corning Incorporated, Eli Lilly and Company, General Electric, Honda, IBM, Intel, The Intellectual Property Owners Association  Johnson & Johnson, Medtronic, National Alliance for Jobs and Innovation , National Association of Manufacturers, The Procter & Gamble Company, Siemens Corporation, Software & Information Industry Association (SIIA), U.S. Chamber of Commerce, and United Technologies Corporation (click here for full list). This industry coalition sent a letter dated December 2, 2015 to Senators Hatch, Coons and Flake, saying in part:

“Trade secrets are an essential form of intellectual property. Trade secrets include information as broad-ranging as manufacturing processes, product development, industrial techniques, formulas, and customer lists. The protection of this form of intellectual property is critical to driving the innovation and creativity at the heart of the American economy. Companies in America, however, are increasingly the targets of sophisticated efforts to steal proprietary information, harming our global competitiveness.

Existing state trade secret laws are inadequate to address the interstate and international nature of trade secret theft today. Federal law protects trade secrets through the Economic Espionage Act of 1996 (“EEA”), which provides criminal sanctions for trade secret misappropriation. While the EEA is a critical tool for law enforcement to protect the clear theft of our intellectual property, U.S. trade secret owners also need access to a federal civil remedy and the full spectrum of legal options available to owners of other forms of intellectual property, such as patents, trademarks, and copyrights.

The Defend Trade Secrets Act will create a federal remedy that will provide a consistent, harmonized legal framework and help avoid the commercial injury and loss of employment that can occur when trade secrets are stolen. We are proud to support it.”

The intent of the DTSA is:

“IN GENERAL.—Section 1836 of title 18, United States Code, is amended by striking subsection (b) and inserting the following:

‘‘(b) PRIVATE CIVIL ACTIONS.—

‘‘(1) IN GENERAL.—An owner of a trade secret that is misappropriated may bring a civil action under this subsection if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce.”

‘‘(c) JURISDICTION.—The district courts of the United States shall have original jurisdiction of civil actions brought under this section.

However, the DTSA does not preempt state law. Therefore, the owner of a trade secret could potentially file a federal claim and a state law claim at the same time.

In a May 11, 2016 guest post on www.manufacturinglawblog.com by Ian Clarke-Fisher of Labor & Employment and Jim Nault of Robinson + Cole’s Intellectual Property Litigation Practice Team, they wrote, “…the DTSA provides the following important provisions, among others:

Federal Civil Action:  The DTSA creates a federal civil cause of action, giving original jurisdiction to United States District Courts. This will allow companies to decide whether to bring claims in federal or state courts, and may have the net effect of moving most trade secret litigation to federal courts…Importantly, similar to federal employment laws, the DTSA does not supersede state trade secret laws.”

“Seizure of Property:  The DTSA includes a provision that permits the Court to issue an order, upon ex parte application in ‘extraordinary circumstances,’ seizing property to protect against to improper dissemination of trade secrets…the DTSA permits such an order only if the moving party has not publicized the requested seizure…”.

“Damages and Attorney’s Fees:  In addition to the seizure of property and injunctive relief, the DTSA permits for the recovery of damages for actual losses and unjust enrichment, and allows for exemplary (double) damages trade secrets that are ‘willfully or maliciously misappropriated’… The DTSA also provides for the recovery of reasonable attorney’s fees in limited instances…”

In a blog article prior to the bill’s passage (April 8, 2016), Nuala Droney and James Nault, members of Robinson + Cole’s Intellectual Property Litigation Practice Team commented: “The law provides for the award of damages for trade secret theft as well as injunctive relief. It even includes a provision allowing a court to grant ex parte expedited relief to trade secret owners under extraordinary circumstances to preserve evidence or prevent dissemination of the trade secret…”

They explained that “Trade secrets are a form of intellectual property that are of increasing importance to many manufacturers for a variety of reasons. A trade secret can be any information that is (i) valuable to a company, (ii) not generally known, and (iii) not readily ascertainable through lawful means, as long as the trade secret holder has taken reasonable precautions to protect it. A classic example of a trade secret is the formula for Coca-Cola. A more recent example is DuPont’s innovative Kevlar product, which was the subject of a large scale trade secret theft in 2006. Trade secret theft is a huge problem; a recent Pricewaterhouse-Coopers study showed that trade secret theft costs American businesses $480 billion a year.”

Dennis Crouch, Law Professor at the University of Missouri School of Law and Co-director of the Center for Intellectual Property and Entrepreneurship, provides this commentary on his blog:

The Defend Trade Secrets Act (DTSA) includes a new provision added to the Economic Espionage Act (EEA) that, depending upon how it is interpreted, may govern how district courts handle trade secret information in all cases. The new section will be codified as 18 U.S.C. 1835(b) and reads:

(b) Rights Of Trade Secret Owners—The court may not authorize or direct the disclosure of any information the owner asserts to be a trade secret unless the court allows the owner the opportunity to file a submission under seal that describes the interest of the owner in keeping the information confidential. . . .

Courts already liberally allow parties to file documents under seal – so that doesn’t provide the entire impact of the provision. Rather, the provision’s importance is that it extends beyond briefs being filed by parties and instead reaches disclosures at trial and court opinions. Thus, the statute presumably prevents a court from disclosing a trade-secret in its opinion without first providing the trade-secret owner with the opportunity to brief the issue of disclosure. In addition, it provides non-parties with a right to request (under seal) non-disclosure of their trade secret rights.”

However, the website of the Essex Richards law firm of Charlotte, NC has a warning that “businesses should know that the DTSA contains certain requirements that affect their employment and similar agreements with provisions protecting against disclosure or misappropriation of the company’s trade secrets or confidential information.” Here are a few provisions of the DTSA that they highlight as important for employers to understand:

  • “The DTSA provides immunity from trade secret misappropriation claims to whistleblowers who disclose their employer’s trade secrets or confidential information to government officials for the purpose of reporting or investigating a violation of the law.
  • The DTSA requires all employers to notify employees of the DTSA’s whistleblower protection provisions in any contract or agreement with an employee that governs the use of a trade secret or other confidential information. Otherwise, an employer will be deprived of exemplary damages and attorney’s fees under the DTSA. This notice requirement is satisfied if the agreement cross references a separate written policy that addresses reporting suspected violations of the law. Importantly, the DTSA broadly defines “employee” to include any individual “performing work as a contractor or consultant for an employer.” Therefore, independent contractors and consultants, in addition to “W-2 employees,” are covered under this definition. The notice requirement applies to agreements that are entered into or modified after May 11, 2016.
  • The DTSA provides a variety of remedies. If the court finds liability, it may: (1) issue an injunction so long as the order does not prevent an individual from entering an employment relationship and does not conflict with applicable state law prohibiting restraints on lawful employment; (2) order that a party take certain affirmative action to protect the trade secret; (3) award actual damages and damages for unjust enrichment; (4) condition future use of the trade secret on payment of a reasonable royalty, and (5) in a case of willful misappropriation, award exemplary damages not more than twice the original damages amount.  In addition, if the court determines that a party willfully and maliciously misappropriated a trade secret, or if it finds that a misappropriation claim or a motion to terminate an injunction has been brought in bad faith, it may award reasonable attorney’s fees to the prevailing party.
  • In the event a defending party is damaged due to a wrongful seizure, it may sue for and recover “relief as may be appropriate,” such as damages for lost profits, damages for loss of goodwill, reasonable attorney’s fees and punitive damages if the seizure was sought in bad faith.”

As a director on the board of the San Diego Inventors Forum, I am particularly interested in the fact that the DTSA is the first federal legislation that allows private citizens, without first having to obtain patent, trademark, or copyright registration, to sue in federal court to protect their trade secrets. This will be a great help for inventors and existing businesses that do not have “patentable” Intellectual Property and have to rely on trade secrets to protect their “secret” formulas or processes to produce their products.

Innovative Products Win Best Invention at San Diego Inventors Forum Contest

September 7th, 2016

Ten companies competed for the best consumer product of the year at the 9th annual invention contest of the San Diego Inventors Forum on August 11, 2016 held at Coleman University. The San Diego Inventors Forum (SDIF) meets every 2nd Thursday in Del Mar (just north of San Diego) and has been the nursery for hundreds of ideas of local San Diego inventors for over 10 years.

The San Diego Inventors Forum is a non-profit organization that provides a year-long education program at monthly meetings where keynote speakers cover the full spectrum of what inventors need to know to go from capturing a design concept to how to get their product to the market. I have been involved with SDIF for seven years, first as a member of the steering committee and mentor to inventors, and now as a director on the board after SDIF incorporated in 2014.

Our meetings cover topics such as harnessing creativity, patents, trademarks & copyrights, licensing, video and internet marketing for inventors, finding funding/investors, and planning and giving presentations. I give one of the presentations each year on “Manufacturing 101 – how to select the right processes and sources for your products.” All of our meeting presentations have been videotaped for the past three years and can be viewed on YouTube and are linked at the SDIF website:  www.sdinventors.org

The meetings also provide unique opportunities for inventors to connect with people and services they may need to develop the knowledge, skills, and confidence needed to bring their product to market and profitability.

At the end of each year, SDIF hosts a competition where ten inventors have the opportunity to present their product to an audience of 75 – 100 people. The number of votes by members of the audience determines which inventors receive the top prizes ? 1st prize is $1000, second is $500, and third wins $250.

President Adrian Pelkus said, “This was one of the most competitive contests we have ever had. Each of the products was so innovative, unique, and useful that it was tough to choose the best consumer product. There was only a five vote spread between the first place winner and the third place winner.”

The winner was Greg Wawrzyniak for his PaintWell Caddy. The two models attach easily to any kind of a belt and hold the brush and roller in place with embedded magnets when not being used. The small size holds a small roller and paintbrush for painting trim and the larger size holds a large roller and brush for painting walls. For further information, contact Greg at  enovex@gmail.com.

Second place went to Dean McBain for his Alive Iris Biometric security system solution that comprises a dual parallel authentication ID system that analyzes an individual’s iris independently. The system identifies the individual as well as verifying the “alive” status simultaneously. For further information, go to www.trueidsecurity.com.

Third place winner was Dan Garcia and Kirsten Hanson Garcia for their Sipsee – the only universal, sanitary, reusable, portable bottle plug. The Sipsee enables you to immediately be able to identify your bottle among a myriad of identical bottles at home, parties, sporting events, picnics, campsites, and other places. The plug has a cover that can be attached to a lanyard or key chain for handy use. For further information, contact Daniel.L.Garcia2014@gmail.com or go to their website www.mysipsee.com.

Other contestants were:

Marvin Rosenthal for his Enforcer dog leash ?  a innovative leash with three ergonomically designed handles to allow owners/handlers to choose how much control they have over their dog, especially designed for military or law enforcement applications. For further information, contact lawdog_leashco@yeahoo.com.

Van Dexter Duez for his Pieceptions – an easy to use baking device that allow you to create two pies in one for flavorful combinations, as pumpkin and pecan, cherry and chocolate silk, and spinach and Lorraine quiche. For further information, contact pieceptions@gmail.com.

Robson Spiane for his Pro RiseTM seat assist product that allows seniors, wounded veterans, and post-surgical individuals to rise from their seats independently without motors, pistons, or hydraulics.  It allows an individual to use their upper body to assist their legs in rising up or descending into a seated position. It is portable and can be secured too many types of seating. For further information, go to www.tryprorise.com.

Josh Rifkin for his Bit Viper ? a right angle hand tool that holds two interchangeable bits in one small easy to use tool. For further information, contact joshrifkin@gmail.com.

Mr. Tam Phuong Tran for his patented, new age eating utensil that makes grabbing and picking up food easier than traditional chopsticks. For further information, contact tamptran@yahoo.com

Alex Robertson for his Lumasoothe Low Level Light Therapy (LLLT) device to provide an advanced, cost-effective, non-surgical home treatment  for pets that are suffering from various conditions, including arthritis, back pain, wounds, hair loss, skin discolorations, and more. For further information, contact Luma-Tech, LLC at www.LumaSoothe.com.

The San Diego Inventors Forum is one of 45 different accelerator or incubator programs in San Diego County, and San Diego is a hotbed of innovation. One of the more well-known accelerator programs is the CONNECT Springboard program that helps to create and scale great innovation companies through access to the resources that entrepreneurs and growing companies need most – People, Capital, & Technology. I joined the team of Connect mentors last year and had the pleasure of mentoring a company that came in second in the San Diego Inventors Forum invention contest last August – Bixpy for their lightweight water jet system that adds propulsion to water sports and can be used by kayakers, standup paddle boarders, divers and other water-sports enthusiasts. Houman Nikmanesh, founder and president of Bixpy, just graduated from the CONNECT Springboard program in July. SDIF has often been a “feeder” organization for entrepreneurs who want to found a company rather than license their technology.

The San Diego region has long been a hot bed of innovation. In fact, a report released in April by “the U.S. Patent and Trademark Office shows that the San Diego region comes in ninth for the number of technology patents granted with over 34,000 patents, among other metropolitan areas from 2000-2013.

The amount of technological intellectual property granted in the region has more than doubled in the last decade, with 4,805 patents awarded in San Diego County in 2013, up from 1,724 patents in 2000. The region had a total of 34,605 patents from 2000-2013.”

However, according to an article in the L. A. Times on July 13, 2013, “the Organization for Economic Cooperation and Development, which ranks cities around the world by calculating ‘patent density,’ or the number of patents produced per a certain level of residents” ranked San Diego as the second most innovative city in the world. The OECD ranked Eindhoven, a city in the Netherlands, as the most innovative city in the world that year.

“Eindhoven, for example, churned out 22.6 patents for every 10,000 residents, dramatically outpacing the 9 patents per 10,000 residents produced by San Diego. The top 10 list includes four American cities and 6 European ones. San Francisco follows San Diego at No. 3, while Boston clocks in at the seventh spot and Minneapolis at No. 9.”

The San Diego Inventors Forum is a member organization of United Inventors Association of America (UIAA), and our SDIF president, Adrian Pelkus, is on the board of directors. Mr. Pelkus also participated with other members of www.usinventor.org in testifying before a Congressional committee in Washington, D. C. in opposition to legislation that would have destroyed the patent system as we know it (H.R.9, The Innovation Act and S.1137, The Patent Act).

We welcome all inventors in southern California to attend our meetings, which are held at the conference facilities of AMN Healthcare in the Carmel Valley area of San Diego the second Thursday of every month at 6:30 PM. The availability of Kickstarter and other crowdfunding mechanisms is providing the opportunity for inventors to get their products into the marketplace faster than ever. It has been exciting to see the successful launching of new products of so many of our San Diego Inventors Forum members in the past two years.