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Manufacturing USA is Working to Rebuild American Manufacturing

Tuesday, March 5th, 2024

The manufacturing sector has an unrivaled ability to boost the nation’s global economic competitiveness. If the United States wants to remain a world leader and super power, it needs a cutting-edge manufacturing sector that is a step ahead of the competition.  This is why the National Network for Manufacturing Innovation was formally established in 2014, now called Manufacturing USA®.

The website states, “Manufacturing USA® is a national network created to secure U.S. global leadership in advanced manufacturing through large-scale public-private collaboration on technology, supply chain and education and workforce development. The network comprises the U.S. Departments of Commerce, Energy and Defense, their sponsored manufacturing innovation institutes, and six additional federal agency partners, creating a whole-of-government, national effort to drive innovation in manufacturing.”

   The following 17 institutes are now part of the Manufacturing USA network:

“While each institute is established by a sponsoring federal agency and has a unique advanced manufacturing technology focus and identity, they also seek to advance the bigger Manufacturing USA network mission to improve American manufacturing’s global competitiveness….Each institute includes members from industry, academia, and state and federal governments with a shared interest in advancing manufacturing [and]…collectively worked with over 2,500 member organizations to collaborate on more than 670 major technology and workforce applied research and development projects and engaged over 106,000 in advanced manufacturing training. “

The website describes the background of why and how it was formed.  “In June 2011, the President’s Council of Advisors on Science and Technology recommended the formation of the “Advanced Manufacturing Partnership” (AMP) (report). The partnership was led by Dow Chemical Company President, Chairman, and CEO Andrew Liveris, and MIT President Susan Hockfield. The Advanced Manufacturing Partnership was charged with identifying collaborative opportunities between industry, academia and government that would catalyze development and investment in emerging technologies, policies and partnerships with the potential to transform and reinvigorate advanced manufacturing in the United States. In 2012 it issued its first set of recommendations, “Report to the President on Capturing Domestic Competitive Advantage in Advanced Manufacturing.”

After a nationwide outreach and engagement effort, “The National Network for Manufacturing Innovation: A Preliminary Design,” was issued in January 2013.

In September 2013, an AMP 2.0 final report focused on a renewed, cross-sector, national effort to secure U.S. leadership in the emerging technologies that will create high-quality manufacturing jobs and enhance the United States’ global competitiveness. The steering committee, whose members are among the nation’s leaders in industry, academia, and labor, was a working group of the President’s Council of Advisors on Science and Technology.

In December, 2014, Congress passed the Revitalize American Manufacturing and Innovation Act (RAMI Act) into law, which gave Congressional authorization to the Advanced Manufacturing National Program Office and authorized the Department of Commerce to hold “open-topic” competitions for manufacturing innovation institutes where those topics of highest importance to industry could be proposed.”

The key initiatives of Manufacturing USA® are:

Advanced Manufacturing Technology Leadership – The institutes “convene private sector companies, academic institutions, government entities, and other stakeholders to pursue collaborative research and development, test applications, and train workers.”

COVID-19 Manufacturing Recovery – It “helped facilitate the production of Personal Protective Equipment (PPE) and helped empower U.S. manufacturers to reinvent the domestic PPE supply chain.”

Future Manufacturing Supply Chains – “It is engaging in projects that make domestic manufacturing processes more innovative and efficient to strengthen the competitiveness and resilience of U.S.-based manufacturing.”

Manufacturing Workforce Development – It is “helping to define the skills and training needed to satisfy manufacturers’ future requirements…retraining and upskilling the current workforce, and developing STEM talent for the future.”

Clean Energy Manufacturing – “It is fostering the development of energy efficient and clean energy technologies that will lead to major reductions in manufacturing energy costs and increases in innovative new green products in emerging clean-energy industries.”

Manufacturing USA® has developed a national education and workforce development roadmap to revitalize the manufacturing workforce by bringing together the public and private sectors to create opportunities for existing and prospective workers to find their pathways into the advanced manufacturing workforce. The roadmap is bu8ild upon three key priorities:  equip with skills, broaden access, and spark interest.

The February 2024 edition of SME’s Smart Manufacturing magazine featured an article titled “Manufacturing USA, Stronger than Ever” outlining some the of the recent accomplishments of a few of its network institutes.  It also mentioned the Modern Makers campaign that was “launched in 2023 to showcase individuals whose sense of purpose embody the Manufacturing USA mission to secure the future of U.S. manufacturing through innovation, education and collaboration.”

The article reported that “two institutes received significant funding from the Department of Commerce’s Economic Development Agency (EDA) Build Back Better (BBB) initiative, three institutes recently received EDA grants associated with the CHIPS and Science Act, and another institute’s parent organization got a grant from the Department of Defense’s (DoD) funding from the CHIPS and Science Act.”

For example, the Advanced Regenerative Manufacturing Institute (ARMI) received a “BBB grant to create a Robotics Manufacturing Hub and support four innovation accelerators in an 11-county region of Pennsylvania.”

The article reported that “America Makes is a partner in the new Sustainable Polymers Tech Hub, which is led by the Greater Akron (Ohio) Chamber of Commerce… the Akron area has the largest concentration of plastics and rubber manufacturing plants, machines and materials in North America and is positioned to establish global leadership in sustainable technology in those areas.”

In addition, CyManII led the Secure Manufacturing in South Texas Strategy Development Consortium of 13 organizations in San Antonio, Texas and “was awarded a Strategy Development Grant to develop a regional coalition and innovation roadmap to mature cybersecurity and secure manufacturing technologies…CyManII’s efforts are in advancing research through development and testing…[the consortium] will develop an innovation roadmap for cybersecurity and secure manufacturing technologies.”

Also, “PowerAmerica’s home institution, North Carolina State University, received a $39.4 million DoD grant to build the Commercial Leap Ahead for WideBandgap Semiconductors (CLAWS) semiconductor research hub, which will create a semiconductor research foundry to advance next generation chips and fabrication technology. CLAWS is one of eight federal research hubs around the U.S. created from the CHIPS and Science Act.”

The Manufacturing USA institutes are creating a better climate for manufacturers to help them adopt the innovative applications of Industry 4.0 technologies that will strengthen and grow their businesses. The economic development activities of the institutes are designed to strengthen the supply chain and improve the competitive position of U.S. manufacturing companies. In turn, this will provide pathways for Americans seeking rewarding, higher-paying jobs and contribute to stronger local, regional and national communities. Be sure to check out which institute is focused on your industry.

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ITIF Report Assesses Competitiveness of North American States

Tuesday, July 5th, 2022

On June 21, 2022, the Information Technology & Innovation Foundation conducted a webinar entitled, “Assessing the Competitiveness of North America: The North American Subnational Innovation Competitiveness Index,” based on a report by Luke Dascoli and Stephen Ezel of ITIF, and prepared in collaboration with the Macdonald-Laurier Institute, Fundación IDEA, and the Bay Area Economic Council Institute.

I was unable to attend the webinar, but later read the 49-page report with the goal of identifying examples of the vision of Industry Reimagined 2030 to convert the narrative of American manufacturing from one of “inevitable decline” to “vibrant opportunities.”

The purpose of the report was “to identify economic differences among states and provinces and highlight regions needing more federal attention, identify cross-national innovation performance, and track the continent’s overall competitiveness in the innovation-driven global economy.”

A vibrant opportunity was identified in the first paragraph of the Overview: “North America—Canada, Mexico, and the United States—represents one of the world’s most economically vibrant regions, accounting for 28 percent of global economic output. The region also forms one of the world’s largest free trade zones, with deeply integrated supply chains…the three nations form a high-wage/low-wage partnership, bringing complementary labor forces, infrastructure, innovation capacities, and industry strengths together to create a highly competitive economic region. This relationship is poised to make North American manufacturing value chains globally cost competitive with Asian ones and thus make North America a leading global innovation and manufacturing powerhouse.”

“This report assesses how prepared North American states are to compete in today’s increasingly innovation-driven economy. The North American Subnational Innovation Competitiveness Index (NASICI) uses 13 measures across 3 categories to quantify the extent to which each state’s economy is knowledge based, globalized, and innovation ready and form composite scores (between 0 to 100) that identify each state’s level of performance in the innovation economy.”

Knowledge Economy

•Immigration of knowledge workers – number of highly educated foreign-born residents as a share of total state population
•Workforce Education – total workforce finishing postsecondary education (including universities, trade schools, and colleges)
•Professional, scientific, tech – total employment enrolled in professional, scientific,
and technical activities

•Manufacturing Gross Value Added per worker – measures the average GVA per manufacturing worker

Globalization

•Inward foreign direct investment – flow of funds into a state from foreign-based enterprises to purchase that state’s existing facilities or to develop new ones
•High tech exports – (NAICS 333, 334, & 335) as a Share of GDP

Innovation Capacity

•R & D Intensity – Total R&D Investment Relative to GDP
•R & D Personnel – as a Share of Total State Employment
•Patents (per capita) – PCT Patents Issued per Million Persons
•Venture Capital Investment – shows a state’s total VC investment (based on VC-receiving firms located therein) relative to the size of its GDP.
•Broadband telecommunications – Share of all Households Subscribing to Broadband Internet

•Decarbonization (CO2 emissions) – Tons of CO 2 Emissions per Capita

The Composite NASICI scores for the top ten states/provinces are:

RankingState/ProvinceCountryNASICI SCORE
1MassachusettsUnited States91.5
2CaliforniaUnited States83.9
3OntarioCanada75.2
4MarylandUnited States75.0
5WashingtonUnited States74.2
6British ColumbiaCanada70.4
7New JerseyUnited States70.2
8New MexicoUnited States68.3
9QuebecCanada68.1
10OregonUnited States66.0


Notice that Canada has three provinces in the top ten, but Alberta was the only other Canadian province to rank in the top 30. Arkansas, Mississippi, and South Dakota came in last for U. S. states, with South Dakota at number 60.  The ranking of Mexico’s states was “concentrated at the low-scoring end of the subnational index (61–92).”

The report commented that “Massachusetts ranks first due to the state’s massive network of software, hardware, and biotech firms in the Greater Boston area. Boston also holds one of the country’s most densely populated clusters of top-performing research universities, many of which focus on science, technology, engineering, and mathematics (STEM) education. California places second due to its bustling tech economy of Silicon Valley and other southern Californian innovation hubs with access to leading research universities such as Stanford, Caltech, and the University of California, San Diego. Maryland earns its spot due to the state’s abundance of D.C.-commuting knowledge workers employed in scientific, technical, and professional activities, alongside its R&D and innovation activities attributable to a plethora of federal contracts. Washington state ranks fifth because of its high-tech exports, cutting-edge tech businesses bringing in foreign investment, patent generation in areas such as artificial intelligence (AI) and cloud computing, and digitalization of the service sector.”

The report goes into some detail regarding the rankings in the 13 subcategories which are too complex for this article to cover. With regard to high tech exports, it discusses the successful cross-border region of the Pacific Northwest states of Oregon and Washington with the Canadian province of British Columbia, as well as the cross-border regions of California, Arizona, and Texas with the Mexican states of Chihuahua, Baja California, and Tamaulipas…These Mexican “states include the major manufacturing cities of Ciudad Juarez, Tijuana, and Matamoros, which together comprise most of Mexico’s
“maquiladora” manufacturing plants.”

The report makes the following policy recommendations for the United States:

Expand the R&D Tax Credit to Be Competitive with Canada – Canada’s “overall federal subsidy rate of 19.1 percent on business R&D investment” is “above the 16.6 percent median among 34 developed countries observed” and considerably higher than the U.S. “sub-median federal-state subsidy rate of 9.5 percent.”

Build Globally Competitive North American Supply Chains – This recommendation advocates the partnering of companies in the U.S. and Canada with the low-wage states of Mexico to “nearshore their production of innovative goods and the low-tech complementary manufacturing of products in high-tech industries into Mexico….This collaboration of complementary labor forces would help North American supply chains perform as a region that’s globally competitive with the supply chains of Asian low-cost competitors.”

Promote Industry-University Partnerships – “Firms on the cutting edge of new research can benefit from tapping the skills of the next generation of scientists and engineers early on by collaborating with neighboring universities via internships, fellowships, and other resource sharing with academic institutions. As federal funding for intramural research in states/provinces lags behind, industry investment in university research is increasingly important.”

Expand Collaborative Research Between U.S. and Canadian Leaders – “Firms engaging in international research collaboration tend to generate more valuable research than firms not collaborating in research or only collaborating among domestic firms do… Firms of U.S. and Canadian states/provinces should thus pursue greater research collaboration and co-patenting, given the proven benefits in international research collaboration and diversifying with new research partners. Doing so would help expand the network of shared research knowledge to drive more frequent and impactful innovations for both U.S. and Canadian states.”

Fully Embrace USMCA’s Commitments to Create a Free-Flowing North American   Digital Economy – The USMCA provided stronger rules for digital services across industries such as finance, e-
commerce, and software, for cross-border data transfers. The United States, Canada, and Mexico must “utilize the full economic value of data and remain competitive in the global digital economy.”

Expand National Place-Based Development Projects – The report recommends thatnational and regional policymakers should use the NASICI rankings to identify regions or states that are lagging behind in economic development.  The authors note that the efforts of the U. S. Economic Development Agency and regional commissions have “fallen off” and that the EDA’s budget had been reduced over time.  “Federal investment to build up economic attractiveness for underperforming states can improve their competitive edge and reduce economic hardships for the populations of those states.”

Improve Economic Indicator Data Availability Among North American States – “…the NASICI, ITIF and its Canadian and Mexican partners were only able to identify 13 indicators for which data was uniformly and readily available across North America’s 92 subnational regions. Statisticians from Canada, Mexico, and the United States should collaborate to make more such indicators available.”

In conclusion, the report states: “Today’s 21st-century economy has different success markers than the post-war economy experienced in the latter half of the 20th century. There are many more global competitors in the space of advanced technology production, R&D, and digital services.”  For the United States, “NASICI scores are helpful to bring to light regions needing more federal attention to support innovation competitiveness.”

Th9is report confirms that the narrative of the “inevitable decline” of American manufacturing of American manufacturing is no longer true and “vibrant opportunities” already exist.  These “vibrant opportunities” need to be expanded to be achieve the goal of fostering 50,000 more world-class companies and creating five million more manufacturing jobs by 2030.

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Made in America 2019 Trade Show Sparks New Revolution

Tuesday, October 22nd, 2019

It was a dream come true to see so many innovative companies making products in America when I attended the first Made in America trade show that was held October 3-6th in Indianapolis, IN. The event began during Manufacturing Week declared by President Trump and the show opened to the public on the national Manufacturing Day. Not only was it the largest-ever public showcase of American made products, the focus was different than any other trade show I’ve ever attended. 

My plane from San Diego arrived too late Thursday to attend the gala kickoff party where the band Big & Rich and special guest Ted Nugent entertained the audience. While at the show, John Rich announced his generous donation of over $50,000 to Folds of Honor, a nonprofit organization that provides educational scholarships to families of military servicemen and women who have fallen or been disabled while on active duty in the U.S. Armed Forces.

Fox News sent Fox & Friend’s correspondent, Carley Shimkus, to report live from the show on Friday and Saturday, and she did an update every hour (watch the videos at foxnews.com).

On Friday, opening ceremonies began at 9:00 AM, an hour before the show opened to the public. After prayer was offered, a color guard presented the flag for saluting, and the national anthem was sung anthem, the audience was welcomed by show’s founder and chairman, Don Buckner, and COO, Brad Winnings, and Indianapolis Mayor Joe Hogsett welcomed everyone.

Then, Lloyd Wood, Deputy Asst. Secretary for textiles, Consumer Goods and Materials made brief comments on behalf of the Trump Administration, noting that 500,000 manufacturing jobs have been created since the beginning of 2017, there are 7,000,000 current job openings, and 300 companies of the National Council for American Workers have signed a pledge to expand apprenticeships  He also mentioned that President Trump just signed trade agreement with Japan and is working on trade agreement with United Kingdom.

Economist Stephen Moore, was the featured pre-show speaker. Highlights of his comments were:  average income has increased by about $5,000 per year since 2017, unemployment is down to 3.4%, and Black and Hispanic unemployment is at record low.  Federal tax revenue was higher than any previous year; regulations are down by 34%, yet air quality is better as CO2 emissions have been reduced by 70-80%. Also, for the first time, we are a net exporter of oil and gas.  

Radio talk show host Mike Gallagher, one of the most listened-to radio talk show hosts in America, broadcast his show Friday at the booth of Mike Lindell of My Pillow fame. Mr. Lindell had a booth for his new venture, My Store, which will feature only American-made products for online sales. He was one of the guests on the show along with economist Stephen Moore and Mike Lindell.

After the show opened, there was a simultaneous schedule of speakers from 11:00 AM to 3:00 PM.  Harry Moser, founder and president of the Reshoring Initiative started off the sessions with “What’s Happening with Reshoring.”  By using the TCO Estimator, nearly 3,000 companies have reshored manufacturing to America since 2010 creating nearly 800,000 jobs.  Next, marketing guru, Steve Schwander discussed “How to listen to the customer.”  After lunch, the afternoon sessions were “Protecting your IP from abuse in China” by Amy Wright and “Stay out of trouble when making Made in the USA claims” by Russell Menyhart. Mark Andol, CEO of General Welding & Fabricating, concluded the afternoon session by telling how his Made in America Store has reached big milestones in its mission to save and create American jobs by boosting US manufacturing for nearly a decade. His store in Elma, NY features over 9,000 Made in USA products.

I didn’t spend my time listening to these presentations as I wanted to see the displays by exhibitors.  Outside of the Consumer Electronics Show in Las Vegas, I’ve never been to a show with so much variety of consumer products.  Of course, most of the products exhibited at CES are made offshore, whereas all of these products were made in America.  It was a pleasure to see American made bedding, mattresses, furniture, rugs, draperies, flatware, dinnerware, cook ware, cabinets, and other kitchen goods. These are all industries that some said were lost forever.  There were also bicycles, sports equipment, tools, and toys.  It was especially nice to see Made in America apparel and make up.

While a few of exhibitors probably exhibit at county fairs for their homemade crafts and food stuffs like candy, popcorn, pickles, and sausage, other exhibitors were the more traditional plastic, rubber, and metal fabricators that exhibit at shows like WESTEC, FABTECH, and the regional Design2Part shows. There were also companies that probably don’t exhibit at traditional trade shows, including a company that builds roller coasters.  With about 300 exhibits, it took me both days to completely walk the show as I stopped to talk to so many exhibitors. 

While Friday’s show ended at 5 PM for the public, it was followed by a dinner and speeches for exhibitors, sponsors, and VIP’s.

First, Don Buckner shared his story of how and why he started the Made in American show.

Mr. Buckner said, “I started a company in my garage 20 years ago and recently sold it.  Now I have the resources, capitol, and desire to finally do something.  We decided to make a difference. So, we came up the idea of a trade show in Indianapolis. We rented the Indianapolis convention center for the first week of October to bring 700-800 manufacturers and celebrate U.S. manufacturing in a way that’s never been done before. If you draw a circle around Indianapolis, about a 200-mile radius, probably about half of our manufacturing is in that circle. And the other thing is the heartland of this country truly does believe in buying American-made products being pro union, pro-labor and blue collar.  The name and brand of Made in America has been around for over 100 years. It has value and means quality.  According to Consumer Reports, 80% of Americans still want to buy an American made product, and of those 80%, 60% of those are willing to pay a premium for an American product….” 

Next, Wahl Clipper Corporation, the household name in grooming, presented a $75,000 check to Jeremiah Paul, spokesperson for Wounded Warriors for the Wounded Warrior Project.

Hernan Luis y Prado, founder and CEO, described Workshops for Warriors (WFW), which is a GuideStar platinum-rated nonprofit that provides training for veterans, wounded warriors and transitioning service members to fill America’s void of qualified CNC machining, 3-D printing, welding and advanced manufacturing workers. Since WFW is located in San Diego, I’ve written three articles in the past to support his mission and goals.

Alfredo Ortiz, President and CEO of Job Creators Network, briefly explained that JCN is a nonpartisan organization whose mission is to educate business leaders, entrepreneurs, and employees and provide them “with the tools to become the voice of free enterprise in the media, in Congress, in state capitals, in their communities, and their workplaces—allowing them to hold politicians accountable to job creators and their employees.”

Paul Wellborn, President and CEO of Wellborn Cabinets, accepted the award for American manufacturer of the year on Friday night because he had to leave the show to attend the wedding of his grandson on Saturday. A whole Made in America kitchen was on display at his company’s booth. The award categories highlighted rebuilding America’s manufacturing workforce through reshoring and innovations in manufacturing techniques. The rest of the awards were presented on Saturday night.

My Pillow’s founder and President, Michael J. Lindell, ended the evening with his personal story of going from being a crack addict to becoming a multimillionaire business owner thanks to the intervention of friends and help from God. The evening event lasted until 9:30 PM and ended with a closing prayer.

There is no way to do justice to the show in one article, so my next article will cover day two of the show.

One of the video promos for the trade show said, “There was a time not too long ago when a little elbow grease and a whole lot of pride defined American made.  We were industrialists driven by determination and innovation. We set the bar for quality and ingenuity, generation after generation. Something changed — Technology, foreign influence, loss of respect for the American worker.  It cost us our jobs, factories, communities, our homes. Some called it a natural evolution.  We call is the spark of a new revolution. We are redefining the next chapter in American made history bringing prosperity to the red, white, and blue behind every man and women committed to returning our country back to its glory days of manufacturing.  We invite you to join us in this monumental revolution.  The power of change belongs to us…” 

I believe this trade show did become the spark of a new revolution and I am joining it. I made it my goal ten years ago when I published my first book, Can American Manufacturing be Saved?  Why we should and how we can to do everything I could for the rest of my life to first save and then rebuild American manufacturing to create prosperity. I am glad I am no longer a lone voice in this cause. Please join us.

Posted in Economic Development, Made in America, Manufacturing | No Comments »

Training for Skills and Lean are Important to San Marcos Region Companies

Wednesday, July 11th, 2018

My time in San Marcos, Texas included visits to more traditional companies, such as Mensor. On my first day, we met with Jason Otto, President of Mensor. He told me that he has been with the company for more than two decades, starting as an engineer, before moving up the management chain as product manager, director of sales, and other positions before becoming President.

He said, “Mensor was started in Houston in 1968 by Jerry Fruit and a small group of engineers from Texas Instruments. Jerry had an idea for designing and manufacturing precision pressure measuring and pressure calibration instruments and systems. The company shipped their first product, a quartz manometer for the aerospace industry, in 1970 and most of the company’s business was government contracts.

The company relocated to San Marcos in 1978, but in 1981, our building caught fire and burned to the ground. The company kept going with the help of vendors and customers while a new 26,000 sq. ft. building was built on the same site in only five months.  The employees kept their jobs by actually working to help build the new building.

Otto explained, “We acquired our control line of products from Texas Instruments and introduced new controller products in 1983, 1992, and 1997. We introduced a Quartz Pressure Calibrator in 2001, and the modern CPC6000 Automated Pressure Calibrator in 2004.

In 2006, we were acquired by WIKA Alexander Wiegand SE & Co. KG, a very large privately held company in Germany, with a U. S. facility in Lawrenceville, Ga. It was time for the owners of the company to “cash out,” and it was a smooth transition.

Our core competency is pressure sensor accuracy, and it is a very niche market.  It is tricky to hire talent, so we have to hire from competitors, as well as engineering graduates.  Texas State University, Texas A &M, and the University of Texas in San Antonio and Austin have provided many of our new engineers.  We also need calibration lab technicians, people skilled in technical assembly, as well as machinists for our in-house machine shop. We haven’t had any trouble hiring machinists.

I asked if the company has been through training in Lean Six Sigma, and he said, “Our Lean training started after our acquisition by WIKA. We currently have two Lean Six Sigma Black Belts, who do about 6 -8 kaizen events per year.  We practice 5S and use QCSD boards for visual management of teams. We put together cross functional teams, use cellular assembly, and have a vendor qualification program. We have never outsourced any of our manufacturing overseas, but we have customers in China and Malaysia. We use the WIKA global sales team, but use manufacturers reps to sell into Mexico and the maquilas because it is a long sales cycle. WIKA has 48 locations around the world, and as part of the WIKA Calibration Line, we represent about 6 percent of the company’s business.”

Next, we met with John Malik, General Manager of Altra Couplings in San Marcos. Malik said, “I grew up working in my dad’s auto parts store. I have been with the company since I graduated with an engineering degree and have survived three sets of company owners.  The company was started in Houston and moved to San Marcos in the early 1980s. We were sold to TH Woods in 1990, and then sold to ATR Inc. in 2007, whose corporate headquarters is located in Santa Ana, Calif. ATR has 28 plants and production facilities around the world, with seven locations in the U. S. We have about 120 employees currently.”

Malik explained, “We are a leading global designer, producer and marketer of a wide range of mechanical power transmission components. Our products control and transmit power and torque in virtually any industrial application involving movement and are sold in more than 70 countries worldwide in industries including: energy, general industrial, material handling, metals, mining, specialty machinery, transportation, and turf and garden. Our portfolio of products includes clutches, brakes, couplings, as well as gearing and power transmission components. However, we don’t do any high-volume couplings for the automotive industry.

When I asked about Lean, he said, “We have a team of company employees who have helped us become lean, and the productive gains are essential. It really comes down to asset utilization of people assets and capital assets.  You want to keep them adding value continuously. The approach we have taken is a value stream approach to our products. We go narrow and deep in an area and develop it, and then move on to another area.”

Malik added, “We have even implemented Lean Accounting.  I spent a lot of time with engineers to understand the true costs. We have some good decision rules for the “make or buy” decision process.  Our biggest promoter is our CFO, but our Lean program goes all the way to the top.”

I asked what Altra’s biggest problem is, and Malik responded, “Finding new employees. This is an area that doesn’t have a long tradition in manufacturing. People don’t know what manufacturing looks like, and the mind set for years has been getting a college degree rather than vocational training.   There are never enough trained applicants, so we train our own workers. We now have second and third generation workers. It is a lot about how we treat people and the opportunities for growth.”

He added, “We make all our own castings in our Erie, Penn. plant and buy the forgings we need.  We have three manufacturing facilities in the U.S. and have a plant in the U.K. We bought a company in Germany and have a plant in China.  That plant makes some parts for us, and we make some parts for them.  We also have a small facility in Brazil in order to have local content and avoid the high tariffs.”

On my last day in San Marcos, we visited CFAN, which was formed in 1993, as a 50/50 Joint Venture between GE Aviation and Saffron (SNECMA) of France. The partnership was created to introduce composite fan blades in a GE90 engine that powers the Boeing 777.  CFAN has leveraged the success of this product to introduce additional fan blades on the GEnx engines that power the Boeing 787 and Boeing 747-8.

We met with Mo Mattocks, who is the President and Plant Manager for CFAN. He is responsible for all plant operations including over 500 employees executing product delivery, quality, and productivity, as well as plant financial results and personnel safety. Mattocks said, “I am originally from New York, but graduated for the University of Michigan and Georgia Tech. I have worked for GE for 21 years and previously worked at the GE Aviation in Kansas City and Atlanta.”

He explained, ”CFAN successfully transferred the composite fan blade manufacturing process from the laboratory to the shop floor and delivered the first production GE90-94B fan blade in September 1994.  At first, our quality level was only about 80 percent, so there were a lot of rejects. We kept improving our processes using the widely recognized Six-Sigma methodology, focusing on eliminating defects and reducing variation in shop floor. Over the years, we kept improving our processes, so that our scrap rate is down to only about 1 percent.

In 2001, we started production of the composite fan blade for the GE90-115B growth engine. The GEnx1B fan blade was introduced to production in 2005 and the GEnx2B in 2007. In 2016, we started to make fan blades for the GE9nx, which had its first test flight last week. We are an approved FAA repair station for the GE90 and GEnx fan blades fan.  We have doubled our volume since 2009 and have produced more than 20,000 composite fan blades at our plant. We produce about 165 fan blades per week, and each fan blade takes about 340 hours. We expanded the plant from 160,000 sq. ft. to 275,000 sq. ft., and the whole plant is temperature controlled to keep the composite material from “curing” on hot days.”

I told Mr. Mattocks that in the past, I sold composite parts as a sales rep for a company located in Post Falls, Idaho so am familiar with the painstaking production methods used for pre-preg layup composite parts. When we walked the plant floor to see the whole production cycle from start to finish, I could see how meticulous the hand layup process is for these very critically dimensioned fan blades. It would be too tedious to describe the whole production process from start-to-finish, but the number of steps it takes to produce a finished fan blade was mind-boggling.

My last stop before leaving the San Marcos region to spend the weekend with my nephew and his family at their nearby ranch was to RSI Inc., located in Kyle, Texas. We met with President Harish Malkani, who founded the company in 1983. Malkani is originally from India where he earned a B.S. (Chemistry) from the University of Poona. He also received a degree in Chemical Engineering from the University of California at Berkeley and a Graduate Degree in Marketing from the University of California at Berkeley. He was employed with Ray Chem Corp. from 1969 to 1983.

While RSI’s website describes the company as distributor stocking and supplying standard mil-spec products including, but not limited to high-speed interconnect solutions and a wide range of electro-mechanical components, Malkani said, “I started the company as a distributor but over the years we became a value-added manufacturer. I can’t tell you about all of the defense and military programs for which we have used our expertise to provide solutions to the government and defense contractors because they were classified programs. We specialize in providing RFI/EMI solutions. We have done work for BAE, Lockheed, Raytheon, Aerojet, and other Department of Defense prime contractors.  We are a Silver certified supplier for Boeing. We also do work for companies in the energy, industrial, transportation, and the oil and gas industries.”

When we toured the shop floor, I could see that the company has the manufacturing, assembly, and test equipment to produce custom assemblies and systems for a variety of applications.

Malkani noted, “Our biggest problem is getting qualified workers.  I have hired from Texas State University, but I need more help in finding people with technical skills who are not engineers.  We are going to train some teachers at the local high school in our technology.”

He was assured by Dr. Cara DiMattina-Ryan, Director of Existing Business & Workforce Development at the Greater San Marcos Partnership (GSMP) that they would help him get connected to the local programs at the Austin Community College’s local Hays Campus.

Since finding technical skilled workers is critical to all of the companies I visited, I was happy that my hosts arranged for me to have lunch the first day with Dr. Hector Aguilar, who is the Executive Dean of Austin Community College’s Continuing Education division. He said, “Maintaining a talented and productive workforce in a growing local economy requires a commitment to employee development. ACC meets the training needs of businesses by partnering with them to tailor a custom learning curriculum that can be delivered on-site to employees. We have seven campuses in the western Austin region and have about 60,000 students enrolled.  Each community college in the Texas system specializes in training for the types of industries in their area. Houston specializes in oil and gas. Austin specializes in semiconductor, aeronautical, and sensor industries, and San Antonio specializes in training for automotive. “

He explained, “The Texas Workforce Commission is responsible for helping companies get training for their employees, and Texas pays for the training. Samsung was the first large manufacturing company for which we provided training when they came to the region. They received a grant of $3 million for the training. Samsung came up with 12 techniques to be taught in an around the clock program under a three-year program (24-hours a day, seven days a week).  The original 12 topics became 63 topics, and we trained 1,530 employees in the three years. We had to hire specialists in industries and then cross-train each one so they could teach multiple topics. We did a pre-test and post-test for students. The average pre-test score is 20 percent, and the average post-test score is 85 percent.

He added, “Under our Workforce Solutions Rural Capital Area, training for future employees is provided for free.  For example, when EPIC Piping bought an existing facility in San Marcos in 2014, they needed to hire new employees. They do specialized welding of pipes. GSMP came to us to help set up training for new employees.”

I was informed by Ashley Gossen, Vice President of Marketing & Communications for GSMP that underemployment is high in the region – a selling point for companies looking for talent. She said that the greater San Marcos region has more than 5,400 workers with bachelor or graduate degrees working in jobs that don’t require them.

It is obvious that the San Marcos region has a great deal to offer startup, existing, and transplant manufacturers: a good business climate, low taxes, skilled workers, and the educational facilities and programs to train new workers.

 

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New Material Technologies Spur Growth in San Marcos, Texas Region

Thursday, June 21st, 2018

During my visit to San Marcos in March, I visited a diverse group of manufacturers both as to products and size of company.  The first company I visited, Urban Mining Company, is still in Austin waiting to relocate to San Marcos when their 100,000-square-foot building is ready later this year.

Right after being picked up from the airport by my hosts, we met with Scott Dunn, who is the CEO of Urban Mining Company. Dunn said that he had attended the United States Naval Academy and then received a degree from the University of Southern California. He said, “I started the company in late 2015, and we moved into our first space in January 2016.

We sought major investors from around the county because we wanted to be able to commercialize our technology very quickly. Out of 90-100 investor groups, there were only a few that fit our bill.  We spent a lot of time and money protecting our Intellectual Property with patents. We knew that we had original technology and had to be able to protect it. In June 2016, we secured $25M Series A Funding for to build our recycled rare earth magnet manufacturing facility.  After careful consideration, we chose San Marcos because it offers the skilled workforce and infrastructure needed to support our fast-growing operation. Once the facility is complete, we will be adding more than 100 manufacturing and technology jobs to the region.”

He explained, “I spent a lot of time in China to build relationships and skills to be able to buy down time from factory owners in China that had over capacity. Because of where we are right now, we are able to get a supply of components to use for recycling the rare earth materials. We are the only company producing Neodymium Iron Boron (Nd-Fe-B) rare earth permanent magnets in the United States. Our company’s patented Magnet-to-Magnet process repurposes domestic source materials from end-of-life products, such as hard disks or motors, to manufacture high-performance Nd-Fe-B magnets, using zero chemical inputs and wastewater. The magnets are then used to support the development of technology applications across the consumer, medicine, defense, aerospace, clean energy, and industrial sectors.

He added, “Most people don’t understand the ubiquity of magnets. The only rare earth mine and production facility in the U. S., MolyCorp Inc., went into bankruptcy in 2010, and the assets were bought by Chinalco’s subsidiary, Shenghe Resources in 2011.  The equipment was dismantled and moved China.  It’s critical that we develop this technology because China has the goal of controlling the supply of rare earth products by 2025.  If they succeed, then they could control the world. “

He concluded, “We are working with Tesla, GM, Ford, and many other OEMs like Raytheon, Northrop Grumman, and Boeing to develop products for the commercial and military/defense industries. I believe that reusing rare magnets is critical to a cleaner future, and we have created a closed loop supply chain to upcycle these materials into products that can have a positive impact.”

When we visited Texas State University’s incubator, STAR Park, we met with Dr. John C. Carrano, founder and CEO of Paratus Diagnostics, a firm that specializes in medical devices for point-of-care diagnostics.

 I asked Dr. Carrano how long he has been in the incubator. He responded, “We have been here just over two and a half years, but I actually founded the company in 2012. We are well past the startup phase and are about 18 months away from being cash positive. It’s a long and complex product development cycle for medical devices. Medical diagnostics is not viewed by investors as a get-rich-quick kind of venture, but it is going to be a $10 billion industry in the future. “

I asked him about his background that led him to start the company, and he said, “I retired from the Army in 2005 after 24 years. I am originally from Long Island, NY, but obtained my B.S. from West Point and my Ph.D. in Electrical Engineering from the University of Texas at Austin. I was recruited to teach at the United States Military Academy at West Point in the Department of Electrical Engineering and Computer Science. Then, I was recruited to be a program manager at DARPA where I led several major Defense Department programs related to bio-sensing after the Anthrax attacks occurred in Washington, D. C.  Prior to founding Paratus, I was Vice President of Research and Development at Luminex Corporation., a medical device company, and developed an implantable device to diagnose a medical threat.

He explained, “Our goal as Paratus Diagnostics is to develop point-of-care diagnostic solutions to make healthcare more accessible and affordable. Our hand-held Paratus PreparedNow® System and the ParatusSDS® Cartridge, allows clinicians to make decisions during a patient visit – resolving issues associated with lengthy delays waiting on lab results and improving patient outcomes. There is a big need to diagnose periodontal gum disease because of the serious health consequences if it goes untreated, so our first diagnostic test will be a periodontal test as there is zero competition in this market. Our device tests for the six highest risk periodontal pathogens and two key cytokines using saliva.  The results are provided in 20 minutes and displayed on a smart phone by color bar graphs.

We have 26 full-time employees and will probably be up to 37 by year end.  We have raised $5 million in private equity from angel investors. We also have grants and plan to launch the product into the marketplace in about 18 months.”

At the STAR Park incubator, we also met with Tim Burbey, President of Blueshift Materials.

He said, “Dr. Garrett Poe and I founded the company in 2013 with the mission to commercialize Polymer Aerogels. In July 2014, we became a member of the FLEXcon Holdings family of companies. In 2015, we officially launched our AeroZero® line of products, which consisted of rolled film and monoliths. This was the first commercially available Polyimide Aerogel in the world. Its creation derived from customer demand for a clean, lightweight, small footprint insulation material that can easily be incorporated into composites. We wanted to be ale to make the material in a continuous way as it had always been done in a batch process. We call the products aerogels because they are similar to a foam and are 85% air.  It starts out as a polyimide resin and through a proprietary process, it is transformed into the various aerogel products.”

He said, we moved into the STAR Park incubator in the fall of 2016 and also have an applications engineering lab facility in New Braunfels, TX (about 20 miles southwest). We also polymerize our own materials from polyimide at our facility in San Antonio, TX. We have a good relationship with the Materials Science, Engineering, and Commercialization (MSEC) program at Texas State University and have hired graduates.”

He showed me several different shapes and styles of the products they can make now, from blocks to film to powder. It had good properties for thermal management. Since it is 100% plastic, it is very good for incorporating into composites.

He explained, “Our product designs have applications across the aerospace, cryogenic, membrane separation, radio frequency, electronics, and automotive industries. We make a film for a Formula One race car by adding it to Kapton.  We work with a lot of electronics and RF product companies. Our materials have RF transparency, so will allow signals to go through, but they also provide thermal management.  Our polymer aerogels can withstand extremes of temperature from as hot as 300 degrees C down to as cold as -200 degrees C. Our polymer aerogel has a high strength to weight ratio, especially when bonded to other materials and as a composite core. Our new process for make aerogel film will only take minutes to make vs. weeks, which will greatly reduce cost and open new markets.”

He added, “We are developing new products by teaming with a research company in Palo Alto to look at using different polymers besides polyimide. In June 2016, we got a $3 million Department of Energy DOE grant to develop transparent and thermally insulating Aerogel for single pane windows as part of a project to restore historic windows in the Northeast.”

On the second day of my trip I also met with Paul Brown, President of Bautex Systems LLC, which is focused on transforming the building industry by providing builders and architects with smarter, stronger, more versatile building materials and solutions. He is a serial entrepreneur, who earned his undergraduate degree from the Plan II honors program at The University of Texas at Austin and his MBA at Duke University’s Fuqua School of Business. He has enjoyed a diverse career working in industries ranging from technology and telecommunications to construction products.

He said, “I had moved back to Austin, TX during the dot.com bust and was involved in a VOIP company. I love to build and started building houses.  I found a technology very similar to the Bautex technology,” and he invested in the company. But, he wanted to do manufacturing in the right way, and that company needed a better manufacturing process. “Oliver Lee is my business partner, and we did the original research in 2007.

We found the right machine in Europe, so in 2008, we had some custom molds made and took them over to Europe. We rented factory time for two weeks and replaced the wood filler with polystyrene to make blocks. We mixed the ingredients together and poured it into the mold.  It was an expensive and slow process. We added sand to the blocks and reduced cycle time to 30 seconds to make four 32 X 16-inch blocks in the mold. We had a goal of a weight of less than 50 lbs.

We spent a couple of years doing R & D before we moved to San Marcos, TX. We started shipping products in 2013 and now have six plants along the I-35 corridor.”

He explained, “The Bautex Wall System, comprised of a proprietary cement mixture and expanded polystyrene (EPS), is used to build interior and exterior walls for commercial and residential construction. The benefits to the contractor is that it is complete system that simplifies construction by combining structure, enclosure, continuous insulation, and air and moisture protection in a single, integrated assembly. With the Bautex Wall System, architects can specify an integrated solution that can be installed by a single contractor, saving time, effort and cost.  We are two and a half times what the new building energy codes started requiring in 2016.  Our system provides 26% more energy savings.”

He said, “We need a new paradigm for construction in this country. The process of building has to be better. When you analyze building construction, 90% of the work to build a house is non-value-added.  We need to reduce the costs of construction, and the buildings need to perform better. We had five buildings that were within five miles of Hurricane Harvey, and they did well.”

He added, “Six of the ten fastest growing counties are in Texas, but the access to labor for the construction industry is not here. There is a shortage of masons in Texas. Panelization in construction is appealing to a new generation of contractors.  His concern with panelization is that the industry has stayed with the same old technology. In 2020, a new building code will take effect, and each code changes pushes the bar higher.

We are now building one- to three-story buildings, and we can build faster than traditional construction methods using our Bautex Wall System. We have been nearly 99% commercial, but now we are going after residential work.“

Notice that three of the four companies we visited have developed products using new materials for diverse applications. These companies are examples of the spillover of research in technologies related to the MSEC program at Texas State University.

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Texas Hill Country Transforms into Innovation Corridor

Monday, June 18th, 2018

After returning from Washington, D. C. for the CPA conference and legislative visits in mid-March, I traveled to San Marcos, Texas as the guest of the Greater San Marcos Partnership (GSMP).  The Greater San Marcos Partnership is the economic development group representing Hays and Caldwell Counties as a region. San Marcos is strategically located midway between the two major metros of Austin and San Antonio in the beautiful hill country of central Texas. The region is home to a number of other rapidly growing cities, including Kyle and Dripping Springs in Hays County, and Lockhart and Luling in Caldwell County.

I have had a personal connection to San Marcos as my sister lived there for many years, and it is where her youngest son was born. San Marcos is a college town, and the view of the hill above the downtown square is dominated by the campus of Texas State University, only a few blocks away.  My sister actually worked at the university when she first moved to San Marcos.

Dr. Denise Trauth, President of Texas State University is Chair of the GSMP Board of Directors, and Adriana Cruz is President of GSMP. My guides for my visit to the region were Ashley Gossen, Director of Communications and Community Engagement for GSMP and Hanna Porterfield of DCI, the PR firm for GSMP.

The 2017 Greater San Marcos Partnership Annual Report states, “It’s no longer a secret — Greater San Marcos is among the most promising regions in the nation. Hailed by Forbes as ‘America’s Next Great Metropolis’ and ranked among Thrillist’s list of ‘America’s Best Small Cities to Move to Before They Get Too Popular,’ Greater San Marcos is increasingly being recognized by the national media, talent and corporate executives as a region to watch.

The report explains that GSMP “continues to serve as a change agent for smart and purposeful economic growth in the two-county region known as the Innovation Corridor…from welcoming new employers and job creation programs to working major projects and garnering national media placements.”

Compared to the other metropolitan areas of Texas, the greater San Marcos area still offers affordable homes nearly (40% less in housing than Austin), as well as large and dynamic workforce. Each town in the region offers its own unique assets and charm, which provide a strong force in attracting new jobs and investment.

When I met with Ms. Cruz, she said that “A major driver of this progress has been our laser-focus on executing the strategies laid out by Vision 2020, a five-year strategic plan to drive economic development in the region, established in Fiscal Year 2015…For example, 2017 was the first full year of utilizing the Vision 2020 Implementation Work Groups — stakeholder groups that work collectively to maximize the region’s biggest strengths and tackle some of our existing weaknesses in key areas such as infrastructure, workforce and higher education and destination appeal.”

From the annual report, I also learned that “San Marcos, together with Austin, College Station, Fredericksburg, New Braunfels and San Antonio, was selected by the U.S. government to host an exclusive innovation and entrepreneurship event, which brought decision-makers from more than 20 countries to San Marcos to explore partnerships and economic development opportunities. Through the 7th Americas Competitiveness Exchange on Innovation and Entrepreneurship (ACE), Greater San Marcos worked with our neighboring cities to share best practices with this influential international audience and to promote the larger Central Texas region as a leader in innovation. The Greater San Marcos portion of the tour included a visit with many of our major employers, a tour of Texas State University and STAR One and a Glass Bottom Boat Tour at The Meadows Center for Water and the Environment.”

Texas ranks second in the 2018 Small Business Policy Index by the Small Business & Entrepreneurship Council for not charging a corporate or individual income tax or capital gains tax in addition to having low gas taxes and workmen’s compensation tax. Here are some other key facts about the region:

  • 3M Talent Pool within a 45-mile radius
  • 66,087 Population Ages 25-44
  • 34% of Adults have a Bachelor’s Degree or Higher (Master’s, Doctoral)
  • The High School graduation rate for Hays County is 89% and 90% for Caldwell County
  • Only 12% of Adults are without a High School Diploma

The top ten Manufacturers in Hays and Caldwell Counties are:

Company Employees Products
CFAN 700 Composite fan blades for GE engines
Philips Lighting 369 LED lights for outdoor structures & areas
Thermon Mfg. 345 Electric heating cables and control systems
Epic Piping 260 Pipe fabrication including carbon steel, chrome moly, stainless steels, duplex steels, nickel-based alloys
Heldenfels Enterprises 170 Manufacturer/installer of precast/prestressed concrete structures
UTC Aerospace Systems 160 Engine casing and aftermarket support for Boeing 787 and Airbus A350
TXI 145 Provides every step of concrete production, from

mining raw materials to refining the finished product.
Altra Couplings 95 Offers the largest selection of industrial couplings
Mensor Corporation 80 Designs and manufactures precision measuring instruments and automatic pressure test and calibration equipment.
Hunter Industries 75 Manufacturer of hot mix asphalt.

When we visited Texas State University, I realized that the research being done at the university is contributing greatly to the region transforming into the Innovation Corridor of Texas. In 2012, the University was designated as an Emerging Research Institution, working on semiconductors, 3D printing, composite material. This opened the door to major research funding, global research talent, and has contributed to a spike in patent filing activity in Hays County.

I had the great pleasure of being given a tour of the Engineering Technology building that houses the Material Science, Engineer, and Commercialization (MSEC) Program by Dr. Thomas H. Meyers, Associate Dean of MSEC.  Dr. Meyers happened to be home on a break from a year-long sabbatical in Spain. We were joined by Dr. Jennifer Irvin, Director of MSEC, and Dr. Andy Batey, Associate Professor and Chair of the Department of Engineering Technology.

The purpose of the MSEC program is “to train graduate scientists and engineers to perform interdisciplinary research while equipping them to emerge as effective entrepreneurial leadership the advancement of 21sto-century global discovery and innovation.”

We walked through several labs focusing on different kinds of materials research, such as the semiconductor and solar cell materials lab, Dr. Meyers said, “We work with companies like Texas Instruments and First Solar to do materials research. Students, faculty, and industry work together on multi-year, multi-company contracts to solve problems.  We started a Ph.D. program in 2012 to help students and faculty be able to commercialize technology.  We have graduated about 30 students from the three-year program.  We are not a department, but a program within the College of Engineering Technology.  Students are required to work on important projects, such as purifying water from fracking.”

Dr. Meyers said, “We have two levels of clean rooms, a Class 10 and Class 100, and we are working with Hitachi to teach semi-conductor manufacturing and the fundamentals of making a device. We are one of only two universities in Texas to have a full spectrometry lab, which has been certified since 1990, and there are only 20 in the whole U.S.”

When we walked through the machine shop that contained manual, CNC controlled machines, and a 5-axis machining center, Dr. Batey said, “We want our students to get hands on experience in traditional industries during their four-year engineering technology degree program.  Engineering technology degrees focus on the planning, fabrication, production, assembly, testing, and maintenance of products and services. We offer degree programs in Electrical Engineering, Manufacturing Engineering, Mechanical Engineering, Environmental Engineering, and Civil Engineering.

As we walked through the construction materials lab, Dr. Batey said, “We also offer a B. S. degree with a major in program in construction science and management and concrete industry management. We can do chemical analysis of constructions materials and concrete in our lab.”

Dr. Irvin said. “Texas State University also has a 58-acre site off-campus Science, technology, and Advanced Research Park (STAR Park), which is dedicated to the university’s research and commercialization efforts.  The 36,000 sq. ft. facility serves as a technology incubator for startup and early-stage businesses and provides tenants access to secure wet labs, clean space, conference rooms, and office space.  Since 2014, companies located in STAR Park have created over 60 jobs, funded over $1.5 million in university research, hired 14 Texas State graduates, and raised more then $32 million through equity and strategic alliance investments.”

My next article will feature my visit to some of the tenant companies in Star Park, as well as other companies in the region.

 

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Manufacturing Music – Northeast Indiana Brings Harmony to the Rust Belt

Tuesday, May 15th, 2018

To learn more about why there is such a concentration of musical instrument manufacturers in Northeast Indiana, I interviewed John Stoner, president and CEO of Conn-Selmer, Inc., a subsidiary of Steinway Musical Instruments, Inc.  I learned that the history of making musical instruments really started with this one company. Today, Conn-Selmer has a portfolio of musical brands that has made it the leading manufacturer and distributor of band and orchestra musical instruments and accessories for student, amateur and professional use.

I asked Stoner about the origins of the Selmer Company, and learned that the main Selmer Company is still located in Paris, France. The history of the U.S. company dates back to the early 1900s. It has production facilities in Elkhart, Ind., Eastlake, Ohio and Monroe, N.C.

Next, I asked where the Conn part of the name of the company came from, and Stoner said, “C. G. Conn started a company in Troy, Mich., and then he moved to Elkhart, Ind. The company manufactured brasswinds, saxophones and electric organs in the 1950s.”

When the Selmer company acquired CG Conn, the brands Armstrong and King were part of the acquisition. Later, they acquired the LeBlanc Corporation, which brought another family of brand names such as Leblanc, Vito, Holton, Martin, and the distribution rights to Yanagisawa – making Conn-Selmer the largest U.S. full-line manufacturer of band and orchestra instruments.

“We have a strong portfolio of instruments made here in Elkhart. Seventy percent of our products are manufactured here in the United States and sold globally. The other 30 percent are manufactured in France, Japan and other parts of the Asia Pacific and sold in various parts of the world.” Stoner said.

When I asked if the company had implemented Lean principles and tools, he said, “I looked at Lean when working in a previous industry, and I brought the concepts over to Conn-Selmer. We applied Lean principles so that we could be in a position to be more competitive when there was an upturn after the 2009 recession.”

He added, “Northeast Indiana is a hot bed for musical instruments. At one time there were about a hundred manufacturers of instruments. Over the years, people would leave a company and start their own company to make a musical instrument.  Elkhart became the musical instrument center of the country.”

In my interview with Tony Starkey, president of Fox Products, I learned about the interesting history of another musical instrument company.

Starkey said, “I was an owner of a machine shop before I came to Fox Products. Fox Products is located in South Whitley, a small community of less than 2,000 people, about 10 miles from Fort Wayne. I used to mow the lawn for the company when I was 13. The company was founded by Hugo Fox in 1949 after he retired from being the Principal Bassoonist for the Chicago Symphony and returned to his hometown.  He had the goal of making the first world-class bassoon in the U.S.  He started the business in a modified chicken coup on the Fox family farm, and it took him two years to successfully make a bassoon.”

Later, Hugo’s son, Alan, left his career as a chemical engineer and ran the company for over 50 years, applying engineering principles to making instruments. Fox owned the student market because Alan made the instruments much easier to play.

The first Fox oboes came out in 1974. Later that year, a fire destroyed the woodshop and reed-making equipment, so Alan used other sites in South Whitley to keep the company alive while a new plant was being built. The company expanded and started making English Horns in 1999.

Since Starkey became owner in 2012, the company has grown 30 percent. It now has 130 employees.

“When I took over the company, we didn’t have any prints for the instruments. We had 3D models and patterns and tools in Germany. We had to start over and reverse engineer the instruments to create the drawings. Now, we are able to work in Solidworks and have CNC machines to make the metal parts. We even set up our own silver plating line,” Starkey said. “Indiana is a great business state and a great place to have a business. We did a turnkey operation for our silver line without a lot of regulations and delays.”

I asked if they have applied Lean principles and tools to the company. Starkey said, “I hired people who have a Lean background, so we are using technology and implementing Lean wherever we can, taking the human factor into consideration. We are hoping to get to be where we want to be as a Lean company in about two to three years.”

Last of all, I interviewed Bernie Stone, founder and president of Stone Custom Drum Company. Stone said, “I played drums in a marching band in high school. Then, I worked in a musical instrument store and started doing repair of drums and projects for the percussionists of the symphony.”

He explained, “In 2002, I had the opportunity to purchase the drum shell manufacturing equipment, tooling and assembly line from the Slingerland Drum Company, one of the legendary vintage American drum brands. It gave me the opportunity to own the shell-shaping molds and tools, so I invested my money – and my life – into bringing them up to 21st century standards and crafting Super Resonating® shells that surround punchy tom strokes with full, fat tone, make bass drums kick with big and round low-end responses, and snares cut with a crisp articulate ‘snap’ that sings with resonance. I bought some other equipment I needed on eBay and some from the Gretsch Company, another drum company.  I learned how to operate the equipment and reverse engineered the drums.”

He added, “I started my own company as a LLC in 2011. I am now looking to expand into a S corporation to get investors to grow the company. I think the skill set we have as a company is unique as very few people know how to make a great drum set. We manufacture our own Stainless Steel and brass tune lock fixtures to keep the drum in tune.”

I asked what kind of drums he makes – drums for rock and roll bands as well as for the symphony. Fort Wayne has a great philharmonic, which is a stepping stone to bigger and more prestigious symphonies. For example, Pedro Fernandez started at Fort Wayne and then went on to San Diego and is now at the Houston Symphony.

“The reason I am in Fort Wayne to make drums is that all the suppliers I need are within 50 to 100 miles for the wood, metals, tool and die shops, 3D printing, etc.,” Stone said.

From these stories, we can see that the musical instrument industry had developed gradually over the last hundred years or so from one company spinning off from another company or one company acquiring another or buying the rights to a brand name.

The craftmanship legacy of the Northeast Indiana region’s workers has played a big role in the success of many companies, along with a strong supply chain of subcontractors and materials. It is likely that the region will keep fostering the development and growth of new musical instrument companies to support the strong creative musical arts community of Northeast Indiana.

 

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Northeast Indiana Fosters Manufacturing for the Creative Music Community

Tuesday, May 15th, 2018

It’s interesting to find out how certain regions have become centers for specific industries. I recently had the opportunity to interview economic development and business leaders in northeast Indiana to learn about the region’s advantages for manufacturers and what types of industries have flourished in the region. One of these unique industries is musical instrument manufacturing.

During my interview with John Sampson, President and CEO of the Northeast Indiana Regional Partnership, I learned that the region is highly concentrated in manufacturing.

Sampson said, “We cover 11 counties and collaborate with other counties in the south and east.  The business climate is very favorable for the Midwest –  we rank #2 in taxes and are in the top ten for other factors.  We have a very supportive and responsive part-time state legislature to the interests of employers.  The corporate tax rate is down to 6% and is headed to 4.9% in 2021 in a tiered decline.

On our website, we list the target industries [see below]. Back in 2006, we partnered with the regional workforce investment board, Northeast Indiana Works, for a drive to improve skills training. We make sure that all the training is targeted to what industry needs and made sure that students get transportable certifications. We got a $20 million grant in 2009 for a Talent Initiative to align the region’s talent efforts to the direct needs of defense, aerospace and advanced manufacturing industries.  Ivy Tech is the principle partner in providing training, designing skills training for employers.  They have a center for advanced manufacturing and have career technical studies and apprenticeships for high school students.

We have united with other organizations and are trying to better connect students with the trades. We have a statewide organization, called Conexus Indiana, to organize the logistics of the programs devoted to skills training such as CNC machining, welding, etc.  Conexus Indiana brings together a diverse advanced manufacturing and logistics community to build tomorrow’s skilled talent through industry-endorsed classroom curriculum, experiential learning and earning opportunities, and industry partnerships.”

From their website, I learned that there are three major universities:  Purdue U. Fort Wayne (IPFW), Ivy Tech, Northeast, and Indiana Tech. The Indiana Manufacturing Extension Partnership (Indiana MEP) is in Indianapolis, but Indiana Purdue University is satellite MEP site, located about 100 miles from Fort Wayne.

Ivy Tech is the largest public postsecondary institution in Indiana — and the largest singly-accredited statewide community college system in the entire country.  The system has 45 campus and site locations in more than 75 communities, and serve nearly 160,000 students a year.

I asked if the region has any Makerspaces and he replied, “Yes, we currently have two Maker Lab locations as part of the Allen County Public Library: “The Main Library and Georgetown.  Both labs have 3D printers, 3D scanners, electronics workbenches and other specialized equipment.

We also have a new Makerspace in development at the former General Electric campus where GE made electric motors.  The campus and is now being redeveloped as a mixed-use campus, called Electric Works. There is an opportunity for another Makerspace to be incorporated into the 1.2 million sq. ft. campus.” 

From supplemental information I was emailed after the interview, I learned that it’s 47% more affordable to buy a house in Fort Wayne ($116,000) compared to the national average ($222,000), and property tax is capped at 1%.

The region has a high rate of employment in the manufacturing sector:  28.8% compared to the national figure of 8.9%. Also, Indiana was the first right-to-work state in the Great Lakes region of the U. S.

The supplemental information provided more information on training, saying that the Northeast Indiana Regional Partnership is partnering with regional workforce development organizations like Northeast Indiana Works and WorkOne Northeast career centers to invest in the region’s talent. Northeast Indiana Works oversees 11 WorkOne Northeast career centers in northeast Indiana and provides Skill-Link training at little cost to employers. “Skill-Link is a program that offers certification-based training tailored to employers’ specific skill needs. Employers select high-potential employees for the training, which promotes talent retention, career-pathway development, and, in many cases, leads to promotions and pay increases. WorkOne Northeast assists employers in filling positions left open by the promotion of employees who complete Skill-Link training.”

The Northeast Indiana Regional Profile states that Northeast Indiana “serves as a strategic distribution hub for businesses targeting the Great Lakes and Midwest. The region is located only two hours from Indianapolis and three hours from Chicago, Detroit, Cincinnati, and Columbus, Ohio. The region is served by two major interstate highways, I-69 (North/South) and I-80/90 (East/West), also known as the Indiana Toll Road. Fort Wayne International Airport is home to four major carriers: Allegiant Air, American, Delta and United. There are also two Class I freight railroads, CSX and Norfolk Southern, servicing the region.

It states, “The region currently ranks eighth in best tax environments in the United States and the best in the Midwest based on the 2016 State Tax Environment Index by the Tax Foundation. This business-friendly tax climate creates a thriving community for innovative businesses and growth…Due to legislation in 2011, Indiana’s corporate income tax rate fell by 2 percent. This was the continuation of a scheduled multiyear reduction, which will ultimately see the corporate income tax rate reduced to 4.9 percent by 2022, which would make Indiana’s the second lowest corporate tax rate of any state levying the tax.” The current corporate income tax rate is only 6%, and the personal income tax rate is 3.23%.

The profile also states, “The region has an abundance of water and natural gas, as well as a reliable supply of electricity. “The region’s largest municipal water system, Fort Wayne City Utilities, has an excess water capacity of more than 35 million gallons per day. Our excess water supply is a competitive advantage that fuels our growing target industries, such as food processing and agriculture.”

According to a 2016 Target Industry report from Community Research Institute, research identifies the region’s target industries in Northeast Indiana as:

  • Advanced Materials
  • Vehicles
  • Design and Craftmanship
  • Medical Device & Technology
  • Food & Beverage
  • Logistics & E-commerce

 

The top industrial employers are:

 

COMPANY

 

 PRODUCT

 

 EMPLOYMENT

 
Zimmer Biomet

 

 Orthopedic goods

 

 4,370

 
General Motors

 

 Truck manufacturing

 

 3,900

 
Steel Dynamics

 

 scrap metal processing & steel manufacturing

 
LSC Communications (formerly R.R. Donnelly)

 

 

 Book & other specialized printing

 

 1,935

 
BFGoodrich

 

 Rubber tire manufacturing

 

 1,580

 
TI Automotive

 

 Motor vehicle parts manufacturing

 

 

 1,388

 
Frontier Communications

 

 Telecommunications carrier

 

 1,355

 

 

To gain a better perspective about how the relationship of the creative community to musical manufacturing, I interviewed Dan Ross, VP of Community Development for Arts United of Greater Fort Wayne, Inc.

Mr. Ross said, “Arts United is a nonprofit organization that was founded in 1955. We function as both a united art fund and local arts agency, much like a cultural affairs office for the arts community. Arts United provides arts advocacy and promotion, high capacity for creativity through grant support, the arts campus, and creative community development to more than 70 arts and culture organizations in Northeast Indiana. We own the three different facilities – the Auer Center for Arts and Culture, the Arts United Center, and the Hall Community Center for the Arts – and maintain and service the buildings. Arts United cross-promotes events held in our facilities and other arts and culture events available to the community. In addition, resident organizations housed in our facilities receive subsidized rates at about one-fourth of the typical cost for renting office space in Downtown Fort Wayne.

We provide a variety of back office services for 19 arts and culture organizations, including a health plan that provides affordable health care payroll services, and a shared box office.

Arts United works with economic development organizations to utilize the assets of the arts community, because a creative arts community is beneficial for employers to attract talent from other parts of the country. Arts and culture are an amenity and improve the quality of life in a place. Because of the vibrancy of our community, Fort Wayne is drawing more non-residents to the area.”

He added, “In 2016, we had support from the Indiana Arts Commission to commission the Community Research Institute at Indiana University-Purdue University Fort Wayne to conduct a review of the Creative Economy for the state of Indiana.

When I inquired as to how the creative community contributed to the concentration of musical instrument production in the region, he explained that Fort Wayne has one of the United States’ largest dealers in musical equipment for musicians, recording studios, schools, churches, concert sound companies — Sweetwater Sound. Ross, said, “The company was founded in 1979 by Chuck Surack in the back of his VW bus, and since then has outgrown several buildings and constantly expanded its staff to become the leading retailer that it is today.”

From their website, I learned that in 1995, “Sweetwater established an informational website: www.sweetwater.com, and by 1999, most of their inventory was available for purchase online.” The company grew to the point that in 2006, they had a new 44-acre corporate campus designed and built. “The new headquarters, consisting of corporate offices, a distribution center with warehouse, and a retail store, also includes the Sweetwater Productions recording studio complex and 250-seat LARES-equipped performance theater.”

Ross said, “Sweetwater now has over 1,000 employees. Sweetwater attracts employees from all over the country by providing high paying jobs and opportunities for extensive training.  Sweetwater employees are active leaders and performers in the arts community. Employees both gain valuable experience with the variety of arts organizations in the community, and contribute to their success.”

Sweetwater has attracted instrument manufacturers to the area because they are the number one online distributor of musical instruments nationally.  Also, Purdue University is establishing its first School of Music on its Fort Wayne Campus, including a music and arts technology degree program starting next fall housed on the Sweetwater campus.

Ross added, “The history of making musical instruments goes back over a hundred years in the region.  The majority of orchestra and band instruments are produced in northern Indiana.  One local company, Fox Products manufactures 80% of the world’s bassoons and oboes.  Hugo Fox played for the Chicago Symphony, and he moved back to his hometown of Fort Wayne and started to make his own bassoons and oboes.”  These jobs are highly skilled and highly paid because of the craftsmanship required to make many of the complex musical instruments. New technology and scientific research have improved the manufacturing processes.

As we ended the interview, Dan said that he was a musician himself, playing the trumpet.  He plays for the Fort Wayne Philharmonic, and his career has been a combination of arts administration, teaching and playing music. He studied music in college, so it feels good to combine his creativity with community development goals to enhance Fort Wayne’s history of the creative arts and craftmanship.

We can see that northeast Indiana offers a good business climate for manufacturing compared to other states in the Midwest. In my next article, we will learn more about how the region’s focus on design and craftmanship led the development of the musical instrument industry from interviews with three of the companies making musical instruments.

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Restoring the “Maker spirit” to Thomasville that lost an Industry and Jobs to China

Wednesday, January 24th, 2018

After my article that featured The Forge in Greensboro was published, I was contacted by Joel Leonard, who informed me that he worked with the original founders of The Forge as the community developer to help uncover equipment and talent and set up initial programs “to convert Greensboring to Greensciting.”

He said, “We hosted numerous large events to get the community aware of our efforts, such as a Silo Busting Roundtable to connect various groups in our society together to have meaning conversation together about manufacturing challenges. Then, some of the area employers shipped numerous tractor trailer loads of equipment, and we were able to sell what we couldn’t use and generate capital to pay for our lease, insurance, and other operational costs.  In the first year of The Forge, we launched 16 new companies, had 9 patents filed, and helped over 50 get connected to new jobs.”

I asked how he became involved with the Makerspace movement, and he responded, “Fifteen years ago, I decided to make it my life’s mission to build the next generation of skilled technicians (i.e. makers). I realized to reach the masses, a book or magazine may not make the cut, but more may listen to a song.

I wrote the lyrics to the ‘Maintenance Crisis Song,’ which has been played at dozens of engineering conferences all over the globe, on NPR and CNBC, at the Rock and Roll Hall of Fame, and during the U.S. Congressional Forum on how to revitalize the U.S. economy. To reach a larger audience, it has been recorded in 15 different genres, that include rock, opera, hip hop, bluegrass, reggae, blues, funk, gospel, pop rock, and two Greek versions.” After our conversation, he emailed me links to a couple of the versions.

He added, “Once I learned about the Maker Movement, and how it connects directly to all that I had already been doing, I quickly joined in and have been helping connect manufacturing leaders to makerspaces. Organizations around the world come to me to tell them what to do to advance their workforce development strategies, and, even better, sometimes I get paid for it.”

After leaving The Forge in the good hands of Joe Rotondi, he was freed up to consult and support makerspaces around the country like Newton Conover Middle School, Makerspace CT, Make Nashville, NASA Langley, St. Louis, and numerous others.  He is currently involved with developing a makerspace in Thomasville, NC.

When I asked how he became involved with Thomasville, he said, “Last June, Thomasville City Councilwoman Wendy Sellars of Thomasville, NC, asked me to build a makerspace in her community that had been devastated by Thomasville Furniture’s departure to China. I realized that I could not say no to helping revitalize Thomasville’s manufacturing economy because I worked at Thomasville Furniture to pay for college during the third shift starting in June of 1986. It was a great summer job because I was paid $8 per hour, which was much better than other jobs at that time.”

He commented, “If you have any pieces of Thomasville furniture made during the late 1980s, chances are the veneer on the furniture was put there by me and my team. I worked behind a veneer press. The veneer press was an old furnace that was acquired via a WWII military auction from Germany, and it heated the thinly sliced sections of wood veneer to particle board that had been slathered with glue for 10 minutes at close to 1,000 degrees. I worked on the crew that took the 4-feet by 8-feet aluminum sheets out of the oven. The veneers were used for tables, chair seats, armoires, and entertainment centers for televisions.

There was no air conditioning, and the fans didn’t help much, so I had to drink gallons each shift to keep hydrated. But, I had to keep my wits about me and keep up with my assigned partner to synchronize our movements, or one of us would get 2nd degree burns on our wrists.  Although it was hard work, it was great pay for the time and gave me a sense of accomplishment seeing the stacks of veneer we made each shift and then later see the finished goods on display in galleries and sent to the High Point Furniture Market to be sold in retail outlets all over the world.”

Leonard explained, “At that time, Thomasville Furniture offered those with just a little education the opportunity to earn a steady income. Skilled labor was getting paid $15/hour, which would be around $30/hour at today’s rates.  Now, Thomasville is without a middle-class because of loss of job opportunities and is struggling to keep crime under control.  The whole community of 27,000 is at risk of living in poverty.

Continuing, he said, “I was hesitant to agree to commit to building a makerspace immediately because I know that just building a makerspace isn’t always the solution. I visited a mall, and the idea emerged of building chairs like the successful Build a Bear franchise. I went home and put that idea on Facebook and, boom, Andrew Clement, a licensed general contractor and shop teacher at Thomasville High School, committed to making the raw material for Farmhouse Chairs from Bolivian Poplar with his students.

Andrew and I formed a partnership, established a nonprofit corporation, developed a plan, and three months later, on September 9th, the CHAIR CITY MAKERspace  hosted our first BUILD A CHAIR event to get the community familiar with makerspace concepts. Numerous area chambers sent out flyers, posted announcements, shared calendars, and several news outlets joined in spreading the news about chair making returning to Thomasville. More than 40 people gathered in the bandstand behind the famous Giant Thomasville Chair to build a chair.  Peter Hirshberg, co-author of The Maker City: A Practical Guide to the Reinvention of our Cities, even featured our event in MAKE: Magazine.”

Our second event was held on September 23rd. Tom Conley, the CEO of High Point Market Authority, led the lumber guard ceremony by carrying the first chair. This time, a group of about 45 people emerged to build chairs and offered encouragement and support for the Chair City MAKERspace quest to grow skills, jobs, and community unity.”

When I asked what the Big Chair Monument was, Leonard told me that Thomasville is often referred to as the “Chair Town” or “Chair City” because of a 30-foot landmark chair that sits in the middle of the city. Later, I looked it up on Wikipedia and learned that it is a replica of a Duncan Phyfe armchair that “was constructed in 1922 by the Thomasville Chair Company (now Thomasville Furniture Industries) out of lumber and Swiss steer hide to reflect the city’s prominent furniture industry. However, this chair was scrapped in 1936 after 15 years of exposure to the weather. In 1951, a larger concrete version of the chair was erected with the collaboration of local businesses and civic organizations and still remains today.”

The third BUILD A CHAIR event was held at the Big Chair Monument on October 7th in celebration of National Manufacturing Day on October 5th.  Thomasville Mayor Raleigh York even issued a proclamation during the event.

Leonard added, “Three retired employees of Thomasville Furniture, who had over 100 years of experience between them, joined our BUILD A CHAIR event on October 7th.  Brad Myers had been responsible for the production of over 100 chairs per hour, 800 each shift, and when the Boy Scouts and Cub Scouts weren’t listening to him, I told them he was responsible for more chairs being made in one hour than they will ever make in their lifetime. The Scouts had the opportunity to learn important skill sets from making their own chair, and each one had to be carry their own chair back to their car.”

Leonard said, “Because of our efforts over the last five months, we went from just having an idea to getting a city proclamation at the Build a Chair Event to getting a future building under contract.  Andrew purchased a house on 1 ½ acres of land for the facility.  We now have a GoFundMe page to seek donations of money and equipment for our Chairmaker Space”. Contact Joel@skilltv.net if you have any questions.

To put what they had accomplished in perspective, I asked why the makerspace is important to the region. Leonard said, “Thomasville Furniture started as Thomasville Chair in 1904 making chairs and soon became the town’s leading furniture manufacturer and largest employer. The company expanded into making other furniture in the 1960s. With over 5000 employees at the peak out of a community of 27,000, Thomasville Furniture earned an international reputation for producing quality furniture. However, that did not last. Thomasville Furniture fell apart when the manufacturing companies moved manufacturing to China in the 2000s. After the last two plants closed in 2014, all chair and furniture production ceased, eliminating the income of most of the middle class in Thomasville. The only part of the company still located in Thomasville is the Thomasville Furniture Industries Showroom. The entire city’s future became at risk, and the city has had difficulty rebounding. Many city officials have abandoned the heritage of the town and have considered new pathways and identities.”

He said, “A successful Chair City MAKERspace will prove that small communities can participate in the Maker movement and have more of a dire need to do so. That is why the Chair City MAKERspace is not only going to have a community workshop, but I am going to host a series of career development programs, job fairs, apprenticeship programs, and internships to help the local community locate opportunities in Thomasville and throughout the Piedmont Triad region.

We are still going to host regular BUILD A CHAIR events, and may expand to Adirondack Chair designs and then perhaps onto other projects, but we will always work to build on the furniture legacy that made this city world famous.”

I share Mr. Leonard’s opinion about the importance of makerspaces to a city’s efforts to develop new manufacturing companies to re-industrialize their community. In my new book, Rebuild Manufacturing – the key American Prosperity, I equate developing makerspaces as important as developing incubators or accelerators, and inventor forums into regional economic development.  However, I recommend that makerspaces partner with either public or charter skills to provide manufacturing skills training for high school students as part of their career technical training programs. There are still not enough high schools nationwide that have introduced manufacturing skills training (formerly called “shop” classes) into their curriculum. I also encourage manufacturers to find out if their city or region has a local makerspace, and if they do, then get involved to develop relationships with the makerspace to grow more talent for their company and region.

 

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California Economic Summit Sets Goals to Elevate California

Wednesday, January 24th, 2018

The sixth annual California Economic Summit was held on November 2nd – 3rd in San Diego.  The Summit was convened by CA Fwd and the California Stewardship Network, with a long-list of sponsors and partners. More than 500 civic, business, attended the event held at the Hilton San Diego Bayfront.  The theme of the Summit was Elevate California with the goal of achieving:

  • One million more skilled workers
  • One million more homes
  • One million more acre-feet of water

The statewide gathering highlighted higher education as an important component to a new initiative to restore upward mobility in the state. I was only able to attend day two, which began with a welcome by Mark Cafferty, President of the San Diego Regional Economic Development Corporation, and San Diego County Supervisor Greg Cox. Mr. Cafferty said, “California’s brand around the world is remarkable.  We need to prepare and support our most important assets – people. We need to help Californians live in sustainable communities, and we need to create one million more middle class jobs to ‘future proof’ California for Californians.”

Supervisor Cox said, “We now have 1,400 “Blue tech” companies representing 46,000 employees and making a $14 billion contribution to our economic, creating blue collar and white-collar jobs.” He mentioned that according to the recent report, the impact of the military represents 22% of the region’s jobs.

The day started with a panel of millennial and Next Gen leaders discussing their perspective on how California’s economy and the high cost of living are affecting them and their peers. Christine Werstler was the panel leader, and the panelists were:  Assemblywomen Autumn Burke, Sean Bhardwaj, founder and CEO of Aspire 3, and Laura Clark of YIMBY Action. They shared that the major challenges are:  affordable housing, access to fundamental services like health care and education, rapid change, and an unknown future.

Assemblywoman Burke said, “You can only do so much with legislation. We need to provide resources. It’s important to know that we have a college system that doesn’t have room for everybody, even if they qualify, Access to education should be a high priority.” Burke added that many of those are students from disenfranchised communities. Burke said, “We have the data, and now we need to put it into action and work with private industry to provide the opportunities and resources. It is our job as legislators to provide all of the things they need. “

Panelist Sean Bhardwaj said, “We need to teach entrepreneurism as a skill across disciplines in colleges and universities so they are prepared to find and create their career opportunities for the future. Only 19% of millennials see other people as trustworthy, 10% lower than other generations. They need to build personal relationships or they will not engage.

Bhardwaj added, “Each and every one of us has a talent and a skill that we can bring to the world. We need to break out of the thinking of what we link learning is and think what it could be. Technology is a tool to make resources more accessible.  We need to look at what are the tools we can provide so we can use the tools quickly We need to figure out what are the skills needed today and quickly provide the opportunities to learn them.”

Clark said, “Millennials are angry – 20% are living in poverty, and we need to bring them up. It is important to have clustering of industries in regions to provide career advancement.” She urged institutions to make sure college students are registered to vote so they have a voice on issues including funding.

The next panel featured leaders from all three of the state’s public higher education systems: University of California President Janet Napolitano, California State University Chancellor Timothy White and California Community Colleges Chancellor Eloy Ortiz Oakley. Ryan Smith was the panel leader.

“When we think about income inequality in our country and California, the single tried and true tactic that has worked over time has been access to higher education in terms of increasing social mobility,” said Napolitano. “When I remind people that 45 percent of the entering class at University of California are first-generation college students, that’s real opportunity that public higher education presents in California. In the UC system, we have increased enrollment by 10% in the last two years.”

When asked about affordability, the leaders emphasized the widespread use of financial aid to cut tuition and fees, but reminded the audience that the total cost of education also includes California’s high housing costs and other expenses.

Chancellor White said, “There is a capacity problem. We turn away about 30,000 students every year. We need to build more capacity.  If we don’t make this investment, it will be a higher cost in the future if we don’t succeed.”

Ortiz Oakley said, “We are in 114 communities and we need to design for the future jobs, so we looking at what are the job needs of different regions to create upward mobility and train more skilled workers needed across the state. We’ve spent a lot of time and fortunately we’ve had the investment over the last several years through the Strong Workforce to take a hard look at the regions of California to begin preparing ourselves to develop curricula for the jobs of today and the future, not the jobs of yesterday.”

All three of the Democrat gubernatorial candidates appeared at the Summit.  I missed the appearance of Lt. Governor Gavin Newsom the first day, but day two, former Los Angeles Mayor Antonio Villaraigosa and State Treasurer John Chiang were interviewed. Villagorosa said, “If it were a country, California would rank sixth in the world economies, but we rank down with Romania in the level of poverty.”  He agreed with Assemblywoman Burke. “If we’re going to survive and thrive, we’re going to have to do a better job at growing middle class jobs,” adding that 60 percent of high school kids are Latino and African American, but only 13 percent go on to a four-year college. He said, “We’ve got to address that. We’ll be a million and half down in college graduates by 2025 and a million down in people with specialized skills.”

Chiang said, “We have to understand that we ought to celebrate the diversity of our resources. It’s all about the people and I believe we have an area that is the magnet that draws people. It’s the idea of what California is, so we can flourish uniquely because of the extraordinary diversity that we have.”

“The 2017 Summit sought to advance these ambitious themes during the event and in the coming year:

  • Create a unifying triple-bottom-line vision for increasing economic security and upward mobility
  • Expand the strength and diversity of the Summit network to increase its influence on state and local policy decisions
  • Mature the Summit as a formal civic partner with government to advance triple-bottom-line policies:

While I applaud the goals of the Summit co-conveners and partners, I wonder why no one seemed to connect the fact that our losing 33% (618,000) of our higher-paying manufacturing jobs from the year 2000 -2010 might be a major cause of our increased rate of poverty.

According to data from the California Manufacturing Technology Association, we have only regained about 50,000 manufacturing jobs since then.  As shown by the following chart from CMTA Champions of Manufacturing blog by V.P. Gino diCaro, California is lagging behind the rest of the country in regaining manufacturing jobs, and California only attracted 1.6% of reshored jobs from 2013 – 2016.

I also fail to see how we can achieve the goal one million more skilled workers without addressing California’s adverse business climate that is driving manufacturing companies to leave California. Not one speaker even mentioned the topic of California’s business climate.

For 20 years, the Small Business & Entrepreneurship Council has published a report, titled the Small Business Policy Index, by their Chief Economist, Raymond J. Keating, which ranks the states on policy measures and costs impacting entrepreneurship and small business growth. According to the 2016 report, California ranks dead last, and has been dead last for several years. The report “ties together 50 major government-imposed or government-related costs impacting small businesses and entrepreneurs across a broad spectrum of industries and types of businesses, which include: corporate and personal income tax rates, individual and corporate capital gains taxes, property taxes, sales, growth receipts, and excise taxes, death taxes, unemployment tax rates, gas and diesel tax rates, Workers’ Compensation premium costs, energy regulation, State minimum wage, paid family leave, etc.  It even ranks states by the number of government employees, Per Capita State and Local Government Spending, Per Capita State and Local Government Debt, and various categories of lawsuit reform.

A brief look at how California ranks reveals:

  • California has the highest personal income tax rate and individual capital gains tax at 13.3%
  • California ranks 50th in Workers Compensation premiums cost at 3.48
  • California ranks 49th in energy regulatory costs
  • California ranks 43rd in corporate income taxes and 44th in corporate capital gains tax at 8.84%

On the plus side, California ranks first in the lowest unemployment taxes at the low rate of 0.81. Thanks to Proposition 13 still being in effect, California only ranks 22nd in property taxes at 2.835%. In 2016, California only ranked 46th in gas taxes at 0.409 cents per gallon, but would rank 49th now after raising its gas taxes by 12 cents per gallon the week after the Summit.

As long as California’s legislators and other leaders have their “head in the sand,” nothing will be done about improving the business climate of California. I challenge the State legislature to do their job as legislators to provide all of the things business needs to grow and expand employment.

At the conclusion of the Summit, Oscar Chavez, assistant director at the Sonoma County Department of Human Services, announced that Sonoma County will be the site of the 2018 California Economic Summit. He said, “You cannot sit on the sidelines. This state needs you.” I would say, “This state needs leaders who address the issues affecting manufacturing if we want to achieve the lofty goals of the Summit.

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