Archive for November, 2017

North Carolina Prepares for the Future through Training and Redevelopment

Tuesday, November 14th, 2017

At the TEDx San Diego event on Saturday, October 14th, Dr. Mary Walshok, Associate Vice Chancellor for Public Programs and Dean of Extension at the University of California, San Diego, gave a short talk in which she said we need to add HEART to STEM.  She coined the acronym HEART meaning Hands-on, Engaged, Applied, Relevant Training whereas STEM means Science, Technology, Engineering & Math.

She said too many educators don’t realize the need for the hands-on workers, such as machinists, welders, plumbers, electricians, etc. Too many parents are focused on their children getting a college education, which is why we have millions of unfilled jobs requiring hands-on training. She recommended combining HEART and STEM to be more competitive as a country in the global economy.

Fortunately, there are more and more cities, regions, and states that have awakened to this problem and are doing something about it.  Charleston, South Carolina and the Piedmont Triad region of North Carolina are among the problem-solving regions.

After visiting the Guilford Technical Community College aviation training center that I wrote about in my last article, my hosts took me to visit one of the companies involved in the apprenticeship program, Machine Specialties Inc., where we met with Rob and Tammy Simmons, President and Executive Vice President of the company.

Rob said, “The company was founded by Carlos Black in 1969 after he moved to the U.S. from Argentina where he had apprenticed as a machinist. I started in 1980, and we were primarily a small machine shop supporting the textile industry. In 1990, we expanded into screw machine parts. We got our first government contract in 1995. I became part owner in 1998, and we moved into a new building in 2003. We expanded into doing large parts like aircraft landing gear and added in-house anodizing and chem film. We bought this building in 2009 with all of office equipment. We added a large laser cutting machine in 2009, and now have two lasers. Then, we bought two large multi axis WFL machines to be able to machine Titanium. We are open 24/7, but our weekend shift works three days. We are AS9100 Certified for aerospace, ISO 9001 for commercial, and ISO 13485 for medical parts.

I bought the company in 2005, and today, we are a leading contract machining and metal finishing specialist that designs and manufactures parts for many different industries including the aerospace, military, and medical industry. We plan to grow to be a $50 million-dollar company by 2020.”

He added, “We realized that we had a problem because about 15% of our employees will be old enough to retire within the next five years. So, we need to train new workers to take their place.”

Tammy said, “We were one of the first six companies to work with Guilford County Schools in starting a new apprenticeship program in the fall of 2016 for those interested in the advanced manufacturing field. Students will undergo a three to four-year program where they can receive an associate’s degree in Manufacturing Technology, a journeymen certificate as a machinist or welder, have their school paid for, and then end up with a manufacturing job.

About 50 students, juniors and seniors, applied for the program, and 27 students were selected to start the program initially.  This year we are up to 20 companies participating in the apprenticeship program.  During the summer, the students took classes for six weeks and then worked full-time for six weeks.

The students who are seniors when they start the program, spend half the day at school and then the other half working at our company. The students who applied as seniors and then graduate, go to school one day a week at GTCC to pursue their associate’s degree in manufacturing technology and then spend four days working.  GAP pays students hourly wage while on the job and when they sit in class at community college. I think it’s important to note that apprentices are paid while they are in class earning their degree because I don’t know of any other programs that do this. We also pay the students for their tuition and books while at GTCC.”

Afterward, Vice President Bob Schumacher gave us a tour of the plant, where we met three of their apprentices, two young men and one young woman.  One of the young men had graduated from high school before starting the program in the summer, and two are seniors this year. The young woman knew she wanted to be a welder when she started the program because her family have been employed in the manufacturing industry.

Then, we drove to Browns Summit, near Greensboro, to visit ABCO Automation, where we met with Brad Kemmerer, President   and CEO, and Jack Walsh, EVP Sales and Marketing.  Mr. Kemmerer said, “We build custom automation equipment and are a FANUC and KUKA robot integrator. Our company was started in 1977 by Graham Ricks, but we converted to an ESOP (Employee Stock Ownership Plan) in 1998. We started working with Coca Cola in the beginning to build electrical control systems and custom packaging equipment.  We designed the system that McDonalds uses to pump the syrup into their restaurants.

He explained, “In the late 1980s, we began to diversify our customer base by building custom equipment for a broader range of manufacturers. We began to go beyond packaging projects into manufacturing assembly, material handling, and inspection equipment. Now, our customer base is very diversified — all of the typical industries represented in North Carolina — Aerospace, Automotive, Chemical, Food & Beverage, Electronics, Healthcare, Pharmaceutical, Tobacco. Most of our customers have 25-30 plants around the world, and the average price of a system is $1 million.”

He added, “We have 150 employees, but added 23 employees in the last six months and 40 in the last 18 months.  We need to build a supply of future workers if we want to continue to grow. We have supported the robotics competition, For Inspiration & Recognition of Science & Technology (FIRST). For two weekends in January, we host more than 60 students from six local high school robotics teams to help them kick-start their FIRST Robotics Competition. After learning the theme of the competition, each team has just six weeks to design, build, and ship the robot to the FIRST national competition. We provide guidance from our mechanical engineers, electrical engineers, and project managers to assist students, their mentors, and coaches.

When we heard about the Guilford Apprenticeship Partners (GAP) program, we hosted the meetings and helped with the high schools. We currently have four apprentice students learning the skills of an electrician, mechanic, fabricator, and machinist. Two are first year apprentices and two are second year apprentices. We believe this a win-win for all—we supplement our current manufacturing team, and the students gain paid on the job experience while earning a college education.”

By this time, it was late afternoon, so we headed back to Greensboro to enjoy dinner at Natty Green’s Kitchen + Market, which is a combination micro-brewery, farm-to-market restaurant, and store located in a redeveloped textile mill.  Natty Green’s is in one of the buildings of Revolution Mill, a 45-acre historic textile campus that brings apartments, restaurants, events, history, and innovation together as the “Place of Choice to Live, Work and Create in Greensboro.”

Nick Piornack, Business Development Manager, gave us a tour of two of the former textile mill buildings — one that has been re-purposed for offices and studio space, and the other as an apartment building.  Between two of the apartment building is an outside event space where one of the finalists of The Voice was performing.  There is one classic building yet to be redeveloped on the property.

From the website, I learned that Revolution Mill is “a historic textile mill campus encompassing the Revolution Mill and Olympic Mill sites, with adjacent land connected by North Buffalo Creek. Located just north of downtown Greensboro, Revolution began operations as the South’s first large flannel mill in 1899 and for decades anchored a thriving community of workers and craftspeople. The facility included over 640,000 feet of working space before the textile industry decline led to its closure in 1982. For the next few decades, limited sections of Revolution were renovated into office space, while other parts of the property fell into disuse and disrepair. In 2012 Self-Help assumed ownership of Revolution Mill and is completing the property’s transformation into a mixed-use development…Self-Help is a development credit union and lender headquartered in Durham, NC.”

After the tour, we met with co-founder, Kayne Fisher, of Natty Green’s Kitchen + Market, who gave us a behind the scene tour of the restaurant. Mr. Fisher told us that he had dreamed of owning his own chop house and neighborhood market since childhood. So, when the opportunity to open a restaurant in the Carpenter’s Shop at Revolution Mill came around, his brain-child came to life. The market included a butcher’s counter where you could buy cuts of meat the restaurant used in its menu. As a non-beer drinker, I actually enjoyed tasting a beer that had chocolate in it. Besides the usual steak, chicken, hamburgers, and salads, the menu offered pork chops, lamb chops, and braised brisket, the latter being my choice. All of our diners were delicious.

At the end of a very fully day, it felt good to have seen the results of the redevelopment of an important industrial region with new industries, the re-purposing of old textile plants, and the creation of an apprenticeship program to foster the development of the next generation of manufacturing workers.

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North Carolina Rebounds from Effects of Offshoring and Recession

Saturday, November 11th, 2017

After spending two jam-packed days in Charleston, I drove to Greensboro, North Carolina as I didn’t want to fly there through Miami, FL and spend six hours sitting in an airport or on a plane. Since I had never been to either North or South Carolina, it gave me the opportunity to see some beautiful country. I drove by cattle ranches, tobacco farms, and tree farms of Curly Pines, which I learned are the best pines to use for furniture.

I had written about the devastation of the textile and furniture industry in my book published in 2009. I wrote, “North Carolina has been the most impacted state in the nation by layoffs due to trade.  Between 2004 and 206, almost 39,000 North Carolina workers have been certified by the Trade Adjustment Assistance program as having lost jobs to trade, more than 10 percent of the U.S. total of 386,755. Thus, I was very interested in visiting North Carolina to see what had happened to the textile mills and furniture factories and what new manufacturing sectors had developed.

My host for the trip was the Greensboro Chamber of Commerce, which is actually a combined Chamber and economic development agency, and Brent Christensen, President and CEO, was my main tour guide. The Piedmont-Triad consists of the area within and surrounding the three major cities of Greensboro, Winston-Salem, and High Point. The metropolitan area is connected by Interstates 40, 85, 73, and 74 and is served by the Piedmont Triad International Airport. Long known as one of the primary manufacturing and transportation hubs of the southeastern United States, the Triad is also an important educational and cultural region.

These cities closely collaborate, so Loren Hill, President of the High Point Economic Development Corporation and Robert Leak, Jr. President of Winston-Salem Business Inc. shared the tour guide task. Mary Wilson, Communications & Public Relations Manager for the Economic Development Partnership of North Carolina drove over from Cary, NC to join us on the plant tours.

On Thursday, I was delighted that our first visit was to a company occupying a 100-year old former textile mill in High Point.  We met with Tom Van Dessel, CEO of BuzziSpace., who said they moved into the building in the summer of 2014. BuzziSpace is a Belgium company that has a manufacturing plant in the Netherlands.  The company makes acoustical furnishings that absorb sound to reduce noise and provide privacy in imaginative designs.

Mr. Van Dessel said, “We have about 40 employees now and will be up to about 115 soon. We are already producing about 30-35% of our products in this plant. We were originally looking for about a 30,000 – 35,000 sq. ft. building, but wound up selecting this 120,000-sq. ft., three-story, red brick building because of the potential. We funded a local printing/silk screen company (Splash Works) to be a tenant on the first floor of our building to be our vendor for digital printing on their fabric and felt furnishings. Our felt is made from recycled PET (soda bottles) mixed with 5% virgin industrial felt. We started with five colors of felt and now we have 12 colors.  We have a sole-source contract with the company that makes the felt. Some of our products are acoustical panels, furniture, honeycomb screens, lighting, filing cabinet covers, room partitions and various configuration of privacy spaces. Everyone wants open office space for collaboration, but you need to have private spaces for private conversations. Our panels absorb noise in certain wavelengths.”

The various configurations of privacy spaces have names like BuzziBooth, BuzziHood, BuzziHive, and BuzziHub.  Three of us sat in a BuzziHub (two couches facing each other with panels behind the couches), and the other two couldn’t hear what any of us were saying from a few feet away.

He explained, “We wanted to engage the community we are in, so we planted a community garden in the large “front yard” of our building. Our employees planted fruit trees, vegetables, berry bushes, and Muscadine grapes. At first, the vegetables and berries will be shared by our employees, but when the crops are larger, they will be shared with the surrounding community.  We want what we are doing to be an example to others to do similar things. We are surrounded by small “mill” houses that may still be occupied by former workers of the textile mill. Now, we are hiring some as workers.”

As we drove through High Point on the way to our next stop, Mr. Hill explained that while the city is no longer the hub of furniture manufacturing, it is still the hub for corporate offices, design centers, distribution centers, and furniture show rooms.

He said, “When I was growing up, it was an ordinary downtown of shops, offices, and restaurants, but now nearly every building downtown, including the former post office and library, have been converted to furniture show rooms. The city hosts the High Point Market, the largest furnishings industry trade show in the world in April and October, where furniture companies from all over the world display their products. About 75,000 attendees from more than 100 countries come to each market. It’s unbelievably busy during these two weeks of the year, but the rest of the year, the downtown little activity. The city government is now working hard on a public-private catalyst project to revitalize downtown next to the furniture market area.  That catalyst project will include building a multi-use stadium, a convention center, restaurants and shops, office space, a children’s museum, and urban housing.”

At our next stop, we visited the aviation training facility, located near the airport, and met with Kevin Baker, Director of the Piedmont Triad Airport (PTI), and Nick Yale, Director of the Guilford Tech Community College Aviation Training Facility.

Mr. Baker said, “The Piedmont Triad International Airport is at the center of an aerospace boom that has transformed the I-40 corridor into a job-rich center of aircraft manufacturing, aircraft parts supply, and aviation repair and maintenance. The Piedmont Triad region encompasses 12 counties and three major cities:  Greensboro, High Point, and Winston-Salem. The Airport Authority is the largest employer in the aerospace industry in the state and the 8th largest employer in the state. We have 1,000 acres of land available for development. We have been very active in bringing aviation companies to the area and are now home to more than 50 companies.”

He explained, “Honda Aircraft established its world headquarters, R&D, and manufacturing at the airport in 2006, and expanded in 2012 with a customer service facility. Honda Aircraft employs about 1,900 people with an average salary of $75,000, compared to an average salary of $45,000 for other jobs in the region.

HAECO Americas operates 600,000sq. ft. of space for repair and maintenance services for Boeing, McDonnell Douglas, Lockheed, and Airbus aircraft, and HAECO has about 1,600 employees. In July, HAECO announced it will be building a new $60 million hangar at PTI and will add about 500 jobs. Cessna, part of Textron, established their 46,000-sq. ft. maintenance and service center at the airport in 1993, which has grown to a 137,000 facility, employing about 150 people.”

He added, “FedEx chose PTI because of the exceptional highway connections of I-40, I-85 and I-74. Also, there are four state highway connections to these interstates under construction.  FedEx occupies a 500,000-sq. ft. facility at the airport and has about 4,200 employees.”

“What makes our airport unique is that we have land available for development, uncrowded airspace, and parallel runways,” Mr. Baker said. In addition, we have our aviation training facility.”

Mr. Yale, explained, “In 1969, GTCC started its first aviation program, Aviation Management Technology, followed by an Avionics and Airframe and Powerplant mechanics program in 1970.

We have three buildings, totaling more than 143,000 square feet, located close to each other. The T.H. Davis Aviation Center (Aviation I) is a 36,000 square-foot building owned by PTI that we lease. It has seven classrooms, two computer labs, five laboratory classrooms and a large aircraft hangar with several aircraft including a Boeing 737. It has classes in all of our aviation curriculum. It also houses our aviation department administration and several faculty. Our aviation university partner, Embry Riddle Aeronautical University (ERAU), is also housed in this building.

Our Aviation II is a 60,000 square-foot building, located adjacent to the airport and close to several aviation manufacturing and repair companies. While we lease this building from the Samet Corporation, we have upgraded it several times to address special needs for aviation education. It contains seven classrooms, fourteen specialty laboratories as well as faculty office space. It largely supports the aviation systems technology and aviation electronics technology programs, as well as non-credit (continuing education) programs in aviation.

Our new aviation building (Aviation III), was opened in the fall of 2014 next to the Aviation II building. It has 42,000 square-feet and contains general classrooms, computer labs, a flight simulator lab, library and various student services spaces. It supports the college’s Aviation Management/Career Pilot program.”

He gave me flyers describing their aviation training curriculum for the following:

  • Aviation Management & Career Pilot Technology
  • Aviation Systems Technology
  • Aviation Electronics “Avionics” Technology
  • Aerostructures Manufacturing & Repair

He said, “The Aerostructures Manufacturing & Repair Certificate is a 17-week program, and about 90% nine out of every ten people get hired upon completion. We have expanded and tailored our programs to train people exactly the way our aviation industry wants. We are getting ready to work with HAECO on three more programs next year. Delta Airlines came to us because 80% of their employees would be eligible to retire in the next five years. They needed a new generation of trained workers.

We are working with Andrews High School in High Point to train high school students in an aviation technology apprenticeship program funded by the State legislature. We had 23 students sign up to participate in the apprenticeship program last spring. The students go to school in the morning and work for companies in the afternoon. A consortium of local companies is responsible for initiating the program. HAECO just did an interview process for 50 students to be apprentices.

It was a pleasure seeing how industries outside of furnishings and textiles are expanding in North Carolina and how former textile mills are being re-purposed. My next article will feature more about the apprenticeship program with interviews with a couple of manufacturers that started the program and highlight more about the redevelopment of former textile mills.

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From Boats to Tires: Global Manufacturing is Thriving in Charleston, South Carolina

Thursday, November 2nd, 2017

During day two of my visit to the Charleston, South Carolina metro area, we visited Scout Boats in Summerville, S.C., which as a boat builder, is a more traditional type manufacturer you expect to find in a deep-water port community.  A family-owned business, Scout builds luxury center console sort fishing and bay boats.

I had the pleasure of interviewing Steve Potts, who founded the company in 1989. Mr. Potts said, “I have been in the boat business since I was 14 years old, and my wife and I made a decision to start making 14-15 ft. fishing boats in a garage we rented after planning for years and saving $50,000.

We got off to a good start, and then Hurricane Hugo hit and leveled our building.  We salvaged what we could and started over. The next winter, we got 11 inches of snow and the roof partially collapsed while we were developing a 17-ft. sized boat. This boat put us on the map, and we sold this model for years. We displayed this boat in the local boat show and came out of the show with a list of 31 dealers that we developed into a dealer network.  We sell exclusively through dealers.

In 1990, I prepared my plan for 1991 and predicted that we would do $750,000 in sales, and we did.  The only year we lost money was 2009. In 1992, we moved down the road to a 12,000-sq. ft. custom-built building.  However, we couldn’t expand, so in in 1995, we bought 16 acres of land and built Plant A. We added another building (plant B) and then added Plant C. Plant A build boats in size from 17-25 ft. Plant B builds boats 27-35 ft. in size, and Plant C builds 38-42 ft. models. built. Plant D will be a 100,000-sq. ft. building to build boats up to 53 ft. in size. We also have a small plant for R & D. We are a debt-free company, so we build when we have the cash.

Today, we have 28-30 models, and our annual sales will be $100 million this year.  For many years, we focused on 25-30 ft. boats, but we are expanding to build up 53 ft. sized boats.  We export 17-18% of our boats. Canada and Mexico are our two top markets, but from 2003-2008, our largest dealer was in Athens, Greece.

We have 380 employees now, and our five-year plan is to grow to 680 employees by 2020. We strive to be as diverse as we can be.  We sell yacht tenders for the large luxury yachts that are towed behind the large yachts. Our three adult children are part of our business and are very involved. Consequently, we have had an ongoing succession plan in place for more than ten years. I want Scout Boats to be a dynasty for years and years to come.”

Mr. Potts is the epitome of the exemplary American entrepreneurial spirit that once made our country the dominant manufacturing center of the world. To think that his company survived three recessions in his 28 years in business without going into debt is extraordinary.

Our next meeting was with Mark Fetten, president and CEO of Cooper River Partners, LLC that manages the Charleston International Manufacturing Center (CIMC) at Bushy Park in Goose Creek, S.C.  CIMC is a wholly owned subsidiary of Pacolet Milliken Enterprises. CIMC is a 1,750-acre industrial complex in a heavy industrial zone, as well being a Foreign Trade Zone.  It has deep-water access to the Atlantic Ocean via the Cooper River with barge slip access and rail access via a rail spur. CIMC is located less than 10 minutes from two major highways in the region (I-26 and I-526) for trucking products.

In addition to the existing tenants, it has 300 acres of developable land.  The site is currently home to the following manufacturers:

AGFA Corporation – medical x-ray and technical imaging regional distribution center

Evonik – manufacturer of silica for tire production (under construction)

Kemira Chemicals – paper dyes, specialty chemicals for ink jet applications

Lanxess Rubber Chemicals – vulcanization for tires and peptizers used in rubber manufacturing

Nexans – high voltage underground and submarine cables

Philips Industrial Services – industrial and marine painting, fireproofing, hydroblasting, water jetting, epoxy floor systems, and industrial vacuuming

Sun Chemicals – organic pigments for paints, plastics, and cosmetics

Symrise – flavors and fragrances, menthol, sunscreens, and aroma esters (expansion project under construction)

Mr. Fetten discussed the biggest advantages CIMC offers are the utility services and other support functions that allow tenants to focus on their core business. “CIMC enables companies to get their products to the market faster with the existing infrastructure within CIMC, while minimizing CAPEX and risk,” he said.

Located only 1.5 miles from a major power station, CIMC has a one MW solar farm on the property that feeds back into the power grid. A second solar farm is in the final stages of planning. A wide variety of utility services are provided, including electrical, steam, compressed air, nitrogen, refrigeration, natural gas, and waste water treatment. Other services include on-site security, environmental management, and emergency responders.

CIMC was originally built up by Bayer Corporation over a period of 30 years, but in 1999, Bayer started divesting companies.  In 2009, Bayer sold the park to a privately held company of which Marc Fetten was a partner with two other gentlemen. Marc previously worked in M&A for Bayer, so he saw the opportunity.

The driving tour around CIMC showcased the advanced manufacturing legacy of the southeast. In addition to the $250 million in CAPEX I saw under construction, I got to see a gem of heavy industrial manufacturing.  The former General Dynamics and subsequent Jacobs Engineering plant was purchased by Cooper River Partners, LLC in the summer of 2016. This 94-acre facility located adjacent to CIMC, appropriately named CIMC North produced some amazing examples of advanced manufacturing, the nose cones to U.S. Navy Trident Class Submarines and later modular assembly and pipe fabrication.

CIMC North consists of 400,000 square feet of manufacturing and warehouse space, 800,000 square feet of open-air assembly, an array of welding, assembly, blasting, painting and handling equipment, as well as a barge slip and rail access.  Also of note, are the ten bridge cranes, eight of which are rated for a 40-ton load. The two 20-ton bridge cranes have infrastructure in place to support transloading to and from railcars. According to Marc, “CIMC North expands our footprint and facilitates bringing prime industrial, warehouse and distribution space to the market immediately, which is in high demand in the Charleston region. Providing a dock, rail access, large capacity cranes and a 200-ton shuttle lift is a big cost saver for companies looking to minimize CAPEX. This model aligns perfectly with our sustainable approach of minimizing environmental impacts.”

Afterward, we met with Robert Brown, Communications Manager, and Arthur Dube, Business Director, Precipitated Silica & Rubber Silanes. of Evonik Corporation, the U.S subsidiary of Evonik Industries AG, which is a German company that is one of the world’s leading specialty chemicals company. Evonik Industries produces chemicals for a variety of applications, including adhesives, cleaning products, construction materials and employs more than 33,500 people worldwide in more than one hundred countries.

Mr. Brown said, “Evonik Corporation was formed in 2007 in Chester, PA and has 33 plants in the U.S., Canada, and Mexico. We have about 5,000 employees in the U. S.  The new plant we are building in this Center will open in June 2018 and produce precipitated silica to supply the tire industry. We will hire about 50 people for this plant. This business park offers the existing infrastructure we need, and there is a high level of skilled workers in the region for the higher paying jobs we offer. There are also workers at other plants that may transfer to this plant. David Elliott will be the Manufacturing Director for the new plant.”

He explained, “Evonik helps improve consumer and industrial products, and this plant will make tires run better, longer, and be stronger. He said that South Carolina has become home to several major tire manufacturers, such as Michelin, Bridgestone, and Continental, so they are following their customers. Another reason for locating in South Carolina is that the Sumter area mines produce 99% pure silica sand that is used in producing our precipitated silica.

Wanli Tire Corporation, a Chinese tire manufacturer, is investing $1 billion to build a new plant in Orangeburg County, South Carolina.  Also, Giti Tire, based in Singapore, announced a new plant last year that is being built just south of Rock Hill, SC.”

These two additional tire plants will further boost the state’s status as America’s tire-producing capital and create over 3,000 new jobs for the region when they are at full employment.

I was given a brief explanation of how they make precipitated silica by mixing silica sand with sodium carbonate and melting them. Then, they dissolve the mixture in water and precipitate it. The resulting white precipitate is filtered, washed and dried in a proprietary manufacturing process. Any further detail exceeds my technical expertise to explain. I was shown samples, which looked like pieces of fluffy popcorn that were a great deal lighter than you would expect from what started as a piece of silica. As an additive to tires, the precipitated silica produces fuel-efficient tires with wet grip properties, which can save up to eight percent in fuel consumption compared to conventional car tires.

This two-day visit to the Charleston region confirmed what Harry Moser of the Reshoring Initiative has been telling me about the increase of manufacturing jobs from Foreign Direct Investment. The favorable business climate, low state taxes, developable land, and skilled workforce has made South Carolina an attractive location for European companies from Germany, France, Belgium, the U.K, and Denmark to expand their U. S. manufacturing presence. If the U.S. would lower the national corporate tax rate, we would not only attract more Foreign Direct Investment, but would attract more American corporations to return manufacturing to America.

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