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California’s Governor Signs Climate Bills that Would Transform State Economy 

Tuesday, October 18th, 2022

At the close of California legislative session, August 31, 2022, the Assembly and Senate passed several climate bills,  signed by Governor Newsom on September 16, 2022. These bills were part of the California Climate Commitment, “a record $54 billion investment in climate action that exceeds what most countries are spending…”

The Governor’s press release states that the California Climate Commitment will:

  • “Create 4 million new jobs
  • Cut air pollution by 60%
  • Reduce state oil consumption by 91%
  • Save California $23 billion by avoiding the damages of pollution
  • Reduce fossil fuel use in buildings and transportation by 92%
  • Cut refinery pollution by 94%”

 These bills are:

California AB 1279 – The California Climate Crisis Act, requires California “to achieve net zero greenhouse gas emissions as soon as possible, but no later than 2045, and achieve and maintain net negative greenhouse gas emissions thereafter, and to ensure that by 2045, statewide anthropogenic greenhouse gas emissions are reduced to at least 85% below the 1990 levels.”

Prior to this new law, the state was required by the California Global Warming Solutions Act of 2006” to ensure that statewide greenhouse gas emissions be reduced to at least 40% below the 1990 level by 2030.”

The very ambitious new target of AB 1279 would require much more drastic tactics to reduce greenhouse gas emissions across all sectors of California’s economy.

A coalition of about 60 chambers of commerce, agriculture, business and industry organizations from across the state opposed this bill as well as AB 2133 that is noted below because these bills would affect new housing construction, agriculture production, energy, transportation, and all manufacturing.

AB 2133) – GHG Reduction by 2030 – This bill “would have increased California’s climate reduction targets to at least 55% below 1990 levels no later than December 31, 2030…it did not receive a majority vote in the Legislature, making it the only Climate Proposal not codified into law.”

In a open letter to the California Senate, the main reason for opposing AB 2133  by the Coalition was:  “Increasing the GHG 2030 emissions reduction target from 40% to 55% below the 1990 level, would require the state to remove an additional 17 million gasoline vehicles off the road by 2030, according to data developed by CARB. Additionally, CARB data shows that CARB’s initial modeling of scenarios in this range concluded them to be “economically and technically infeasible due to the current lack of low-carbon energy infrastructure, unavailability of technology, large job loss and high implementation costs.”

SB 1020 – Clean Electricity. This bill codifies into law a state policy that eligible renewable energy resources and zero-carbon resources will provide:

  • 90% of all retail sales of electricity to California end-use customers by December 31, 2035, 95% by December 31, 2040, and 100% by December 31, 2045; and
  • 100% of electricity procured to serve all state agencies by December 31, 2035.”

To achieve these objectives, “SB 1020 requires that CARB and the California Energy Commission use unspecified programs authorized under existing statutes and employ measures to ensure that implementation of the policy does not cause increases in GHG emissions elsewhere, a concept also known as leakage”

SB 1137  – Oil and gas: operations: location restrictions: notice of intention: health protection zone: sensitive receptors.  The bill “establishes a ‘health protection zone’ of 3,200 feet between oil and gas wells and ‘sensitive receptors’ defined broadly to include residences, schools, healthcare facilities, and any building housing a business that is open to the public.”

It also requires that “all operators of oil and gas wellheads and production facilities must submit sensitive receptor inventory maps that identify sensitive receptors within 3,200 feet of the operator’s wellheads and production facilities” by January 1, 2023. “Health and safety requirements kick in after January 1, 2025, for oil and gas wellheads and production facilities currently located within a health protection zone.”

The bill also “prohibits the Geologic Energy Management Division (CalGEM) from approving any notice of intention after January 1, 2023, to drill a new well within a health protection zone, except under limited circumstances, including when it is for the purposes of plugging and abandoning a well.”

SB 905 – CCUS – This bill instructs the California Clean Air Resource Board (CARB) “to create a ‘Carbon Capture, Removal, Utilization, and Storage Program’ to evaluate the efficacy, safety, and viability of CCUS and carbon dioxide removal (CDR) technologies; facilitate capture and sequestration of carbon dioxide using these technologies; and develop monitoring and reporting frameworks to enforce the proper implementation of these activities.”

The bill “mandates that all CCUS and CDR activities be carried out in a way that seeks to minimize adverse effects on the environment and public health, promote workforce development and employment opportunities, and reduce fossil fuel production in the state, among other goals.”

It also requires “CARB to adopt implementing regulations on or before January 1, 2025, and by January 25, 2025, the state Secretary of Natural Resources, in consultation with CARB, must publish a framework governing agreement …for purposes of managing, developing, and operating CCUS and CDR projects.”

Governor Newsom has faced some criticism from environmental advocates for some of his proposals. Maya Golden-Krasner, the deputy director of the Climate Law Institute at the Center for Biological Diversity, an environmental advocacy group, stated, “Carbon capture technologies are dangerous, expensive and infeasible…It’s creating a ticking time bomb that needed to be addressed before the state goes forward with anything,” she said, referring to the potentially hazardous effects for communities living above any of these deposits.

Of course, the oil and gas industry opposed these bills, warning “that the policies would raise costs for consumers and increase California’s dependence on other countries for fuel.

“It is the California government dictating how and when we can travel and mandating the type of energy we’re using and when we can use it,” said Kara Greene, a spokesperson for the Western States Petroleum Association, a Sacramento, California-headquartered trade group that represents petroleum companies in Arizona, California, Nevada, Oregon and Washington.

“It disregards the livelihoods of thousands of Californians, who still need to drive to work, who still need to drive their kids to school, who still need to balance their household budgets.”

The irony of all of these Climate Commitment bills is that the week after the Governor signed these bills, “the California Independent System Operator (ISO)asked “Californians to not use electricity in large amounts between 4 P.M. and 9 P.M. In particular, they asked residents to voluntarily reduce their power consumption by avoiding using large appliances and charging electric vehicles during peak usage hours of 4 p.m. to 9 p.m.”  The inclusion of “charging electric vehicles” received considerable criticism because of the previously passed ban on gas-powered vehicles by 2035. 

It only took a two-week extreme heat wave to cause this crisis because “the power supply in California has been in a state of constant flux due to the policy of removing oil, gas, and coal plants at a rate faster than wind, solar, hydro, and other renewable sources of energy can replace them.”

At least, there were enough legislators who recognized the problem of the electricity grid in California that they passed SB 846  “to extend the life of the Diablo Canyon nuclear power plant, which supplies nearly 10% of the state’s electricity. Diablo Canyon’s two nuclear reactors were scheduled to close in 2024 and 2025, but SB 846 delays this timeline by five years, to 2029 and 2030, by enabling the United States Nuclear Regulatory Commission and any other state and federal authorities to renew the operator’s license for an additional five years.

All of us want less pollution to enjoy cleaner air and clean water, but not at the cost of not having enough electricity to enjoy the benefits of modern life:  lighting, air conditioning, heating, and the conveniences of electricity-powered appliances.  We also need electricity to produce food, livestock, and poultry, as well as to manufacture the wide variety of consumer goods we enjoy, pharmaceuticals and medical products to protect the health of Americans, not to mention the goods and products needed for our military defense and national security. The goal of our non-profit, Industry Reimagined 2030  to “reduce the environmental footprint by 30% by 2030 is a much more reasonable and achievable goal than California’s unrealistic climate legislation.

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Workshops for Warrior Expands Training Programs

Tuesday, September 20th, 2022

On Friday, August 19th, I attended the graduation ceremony for students in the summer session class at Workshops for Warriors.  I have attended previous graduations and two of their gala fundraising events since I first visited Workshops for Warriors® (WFW) on Manufacturing Day in 2012.

The mission of WFW is to provide quality training, accredited STEM educational programs, and opportunities to earn third party nationally recognized credentials to enable veterans, transitioning service members, and other students to be successfully trained and placed in their chosen advanced manufacturing career field. WFW is a fully audited, board-governed 501(c)(3) nonprofit. Their motto is “Rebuilding American Manufacturing, One Veteran at a Time®.”

In a previous article in 2012, I described how Hernán Luis y Prado and his wife Rachel founded WFW in 2008 and self-financed the training provided in their own garage while Hernán was still in the service. They moved into their first small building in 2011 and moved into their current location in San Diego in 2012.  

Workshops for Warriors is a DoD Skillbridge program offering accelerated four-month courses in spring, summer, and fall semesters in CNC Machining, Welding, and Advanced Welding.

Hernán said students earn nationally recognized portable credentials from The American Welding Society (AWS), the National Institute for Metalworking Skills (NIMS), Mastercam University, SolidWorks, Immerse2Learn, the National Coalition of Certification Centers (NC3), and others.

Including the graduates of this class, WFW has graduated 1070 students in the past 14 years who have earned 11,723 certifications.  There are currently 12 instructors on staff, supported by an administrative staff of three in addition to CEO and Founder, Hernán and his wife, Rachel, who is CFO and Chief Academic Office. 

Director of Operations, Keshia Javis-Jones, is a Marine Corps Veteran who joined WFW in 2017. During the graduation ceremony, she shared some initial concerns that veteran students have in common:

  • Finances – scared because they don’t know what their next money will come from
  • Uncertainty about their future
  • Stressed out

She said these veterans have just taken off a uniform that made them part of an organization that was like their family. She said WFW becomes their new family, and WFW helps them out financially, even providing them a place to live while going through training if needed.

Two graduates were honored during the ceremony for their high scores in achievement for their certifications.  Michael Good received the honor for welding, and Jacob Nichols received the honor for machining.  Michael will continue at WFW for his certification in Welding 2, and Jacob will join WFW as a teaching assistant. Keshia said that many of the graduates have already accepted job offers. She said they have as many as 10 jobs offers for every graduate. 

During the ceremony, Hernán congratulated his wife, Rachel, for being selected as one of San Diego’s 50 Most Influential Women over 50 in July. 

After the graduation ceremony, Adam Jacobs, Director of Marketing of WFW, showed me around. I was pleased to see that they had expanded since my last visit by acquiring an adjacent building on the corner.  The additional space houses a kitchen, dining room/classroom, bathroom, and dressing room full of donated suits for the graduates to wear for interviews.

I asked Adam how WFW had fared during the COVID pandemic lockdowns. He said, “In response to COVID, the Workshops for Warriors team acted with military precision in 2020 and adapted our programs to a remote learning infrastructure in a single weekend.  Practical training was shifted to isolated individual instruction at staggered times, incorporating extensive PPE and cleaning protocols.

We remained open, operational and safe during the pandemic.”

Afterward, I got an update from Hernán on some issues I had written about in previous articles.  In my article of  January 2017, Hernan said “it is a five step process to receive Federal funding, and we are in the middle of step 4 (Operate as a licensed school for 2 years and pass BPPE audit). We hope to be able to accept Federal funding by April 2019.” 

Hernán said, “This did happen, earlier than we expected.  In 2018, Workshops for Warriors received approval from the Veterans Affairs Administration to accept federal monies for authorized students.  This allows students that have GI Bill benefits to use their benefits for the Workshops for Warriors training.”

In my article about the gala event on the Midway that I attended in 2017,  I wrote that Hernán said, “Workshops for Warriors’ Capital Campaign is underway, with a goal of raising $21 million to build a new facility that can accommodate ten times as many students as are currently enrolled.”  I asked Hernán how much money had been raised for the capital campaign, and he replied, “We have raised all but $6.2M of the required funds and are working with some key donors to fund the final portion.  Your readers are welcome to submit their donations to help us reach our goal at: https://donate.wfw.org/give/287011/#!/donation/checkout?c_src=webprimarymenu ”

Hernán explained that they have spent Capital Campaign funds on Capital Campaign related expenses such as:

  • Land Acquisition
  • Architect & Engineer fees
  • Environmental Compliance fees
  • Permits, Fees, Surveys, & Assessments
  • Insurance
  • Site and Construction Appraisals
  • Site Preparation and Development
  • Site and Facility Maintenance
  • Marketing & Advertising
  • Legal
  • Project Management

 He said that the rest of the Capital Campaign money is reserved for:

  • Demolition (expected to start on or about 30 November 2022)
  • Grading and Shoring
  • The construction of the building itself
  • Tenant improvements
  • Acquisition and installation of the required FF&E (Furniture Fixtures, and Equipment) required to run the school

I asked when the groundbreaking will occur that he mentioned during the ceremony. He replied, “We are excited to share that we are finally breaking ground on the Capital Campaign project we have been working on since 2017.  The groundbreaking event will be held on or before the 30th of November.  We are demolishing four existing buildings in order to begin grading and shoring for a new 25,000 sq. ft. facility that is expected to be operational by April 2024.  We have some key elected officials attending so due to security concerns, I can’t give out the exact date yet.  However, I am happy to let you know within a day or so of the event if you are interested in attending.” I told him I would try to be at the groundbreaking event if at all possible.

More good news has happened since the graduation ceremony. Hernán told me that on September 6th, Ms. Isabella Casillas Guzman, the head of the U. S. Small Business Administration, toured their facility when she was in San Diego to meet with local leaders and entrepreneurs to discuss Federal programs that would help the region.  He said that during her visit, “she presented me with the award for “Best Small Business Person in California for 2022.” I congratulated him on receiving this honor and told him he deserved the award for the important work he has been doing in training veterans for good jobs in the manufacturing industry and that the expansion of his training program will be a big help in filling the skills gap in the U.S. 

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ToolingU-SME Works to Close the Skills Gap

Tuesday, August 2nd, 2022

The Deloitte and The Manufacturing Institute 2022 Manufacturing Perception Study reports that “ significantly more respondents believe that manufacturing jobs are innovative and more respondents are likely to encourage their child to pursue a career in the industry” [compared to the 2017 study]…”Further, the pandemic has led to a new awareness of the critical nature of manufacturing in the United States and beyond.”

This corroborates the eBook released last year by American Machinist and IndustryWeek titled, “Closing the Skills Gap – How manufacturers are leveraging new technologies and energizing a new generation to finally close the labor gap,” that was sponsored by Epicor Software Corporation.

The Executive Summary stated: “We are on the cusp of a full-scale digital revolution in the manufacturing industry…[and] on the cusp of an enormous wave of retirements as Baby Boomers exit the job market…we have a perfect storm.”  The result could be that the “500,000 unfilled manufacturing jobs today…[could] balloon to 2.5 million over the next decade.”

The eBook outlined the application of the new tactics that manufacturers are applying across industries: “Over the last few years, manufacturers across the industry have begun systematically attacking the skills gap head-on…”

However, now is the time to be prepared to take advantage of the increased interest in returning manufacturing to America and strengthen our manufacturing base as a result of the weaknesses in the domestic supply chain revealed by the COVID-19 pandemic.

Since 1979, the SME Education Foundation has been inspiring, preparing and supporting the next generation of manufacturing and engineering talent through their Student Summit event series, the SME PRIME® (Partnership Response In Manufacturing Education) initiative, and Student Scholarship program. The Foundation “works directly with the manufacturing community to educate the next-generation workforce through SME PRIME. The partnership provides industry-driven and learner-centered curriculum to high school students at SME PRIME schools across the country. Online learning is a significant component to the tailored curriculum developed for each SME PRIME school.”

I had the pleasure of being connected to Chad Schron, who is the senior director for Tooling U-SME and the Co-founder of Tooling U. I learned that Chad grew up in manufacturing. He started his career working in his grandfather’s machine shop and attended his first IMTS show before he graduated from high school. Chad developed the idea for an online manufacturing training school while working at the shop to combat the manufacturing skills shortage.

I told Chad that I started working as an engineering secretary at age 18 for a small defense contractor that was essentially a machine shop making components such as accelerometers, rate gyros, potentiometers before going to college later.

Chad told me that ToolingU-SME has developed curricula that “one in five community colleges and over half of the Fortune 500 manufacturing companies use to train their workforce and their students.” He added, “During COVID we saw significant growth in our education business as schools needed online programs because students were participating online for virtual classes at home.”

From the SME website, I saw that some of the industry-leading companies that work with Tooling-U are: Aerojet General Corporation, B/E Aerospace, BMW Manufacturing Co, Caterpillar, Chrysler Group, Deere & Company, General Dynamics, General Electric Company, Harley-Davidson, Mazak Corporation, Medtronic, Meggitt Aircraft, Raytheon, Senior Aerospace, Siemens, and United Technologies Corporation.

The website states, “Tooling U-SME’s industry-leading online classes and assessments are developed with input from manufacturers and employ the latest methods in instructional design.  “Turnkey Training is a series of predefined online curriculum packages for core manufacturing job roles” that combines classes for targeted learning with on-the -job training (OJT).  “Turnkey Training quickly creates a learning road map and career path for everyone from new hires to tenured employees. Most job roles can be completed in one year with less than four hours a month spent online.”

In addition, “Turnkey Training is ready for immediate use and delivers instruction in the areas needed most by today’s manufacturers. Unlike many other training programs, Turnkey Training requires minimal preparation. It is efficient, effective training that will deliver ROI quickly.”

I asked Chad about the impact of the COVID pandemic, and he said, “COVID impacted a lot of our onsite Instructor led training programs as companies did not allow for in person/onsite training. Most customers have significantly reduced or removed all of their COVID restrictions, and we are back to pre-COVID training programs.”

Chad told me that the COVID pandemic had no real effect on their Apprenticeship and Certification programs. The SME website describes Tooling U-SME’s Apprenticeship Frameworks as “a series of predefined curriculum for common apprenticeship job functions, that provide related training instruction (RTI) using Tooling U-SME online classes…that support common apprenticeship job functions, and provide a flexible model allowing organizations and educators to offer easily accessible solutions in alignment with business needs.”

He explained, “By pairing Tooling U-SME online classes with on-the-job training, trainees can complete their apprenticeships at their own pace from anywhere. Our online classes also provide trainees with the education and theory to help them increase their success. Our Apprenticeship Frameworks are aligned with nationally recognized Department of Labor apprenticeship programs and easily incorporated into a company’s existing programs or used as a foundation for a new apprenticeship program.”

Chad sad that ToolingU-SME also offers Certification programs that “are built by professionals within the manufacturing industry who guide the development and continuous improvement of the bodies of knowledge and competency models upon which the certifications are based.” Current Certification programs listed on the website are:

  • Certified Manufacturing Associate
  • Certified Manufacturing Technologist
  • Certified Manufacturing Engineer
  • Lean Certification (Bronze, Silver and Gold)
  • Additive Manufacturing
  • Electrical Electronics Technology

Chad said, “We are seeing significant grown in our Industry 4.0 curricula as more companies are adopting SMART/Industry 4.0 technologies. This is particularly important as more companies are reshoring and changing their supply chains. They are leveraging these new technologies.”

Chad added, “We have a new Virtual Reality product that we just launched, and there is a video overview to view at https://www.youtube.com/watch?v=g-2MhC3beBY&t=10s and press release to read at https://www.toolingu.com/About/Press-News/Tooling-U-SME-Debuts-Immersive-Virtual-Labs.

He concluded saying, “ToolingU is constantly adding new and updated classes to our online catalog and our upcoming class release schedule can be viewed here.

I told Chad that the training ToolingU-SME provides is crucial to achieving one of the goals of Industry Reimagined 2030; that is, adding 5 million to the manufacturing-related, middle-income workforce by 2030 (a 40% increase.) I told him that I hoped that the ToolingU-SME curricula will expand to being used by four out of five community colleges instead of one out of five to accelerate that rate of training for manufacturing jobs in the U.S. to fill the over 500,000 manufacturing jobs currently open and prevent us from having an unfilled gap of over two million by 2030.

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The Manufacturing Institute Grows FAME’s Technical Training Program

Tuesday, June 21st, 2022

In late 2019, I interviewed Dennis Dio Parker for an article published in early 2020. At that time, Dennis headed up the Federation for Advanced Manufacturing Education (FAME), founded by Toyota as an outgrowth of training that provided for employees when they built their new manufacturing plant for vehicles in Georgetown, KY in 1987. 

I recently reconnected with Dennis and found out the transfer of the program to The Manufacturing Institute had been completed after our interview. He said, “FAME was moved under the leadership of The Manufacturing Institute to gain the infrastructure and network needed to support and grow the program, but Toyota still participates in FAME and uses the Advanced Manufacturing Technician program (AMT) program in its eight manufacturing locations.”

Dennis connected me with Tony Davis, who is now the National Director for FAME USA for The Manufacturing Institute. When I spoke with Tony, he said, “The Manufacturing Institute is the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. The MI grows and supports the manufacturing industry’s skilled workers for the advancement of modern manufacturing. The MI does this through diverse initiatives including FAME. The MI is a separate legal entity from the NAM and is a 501(c)(3) public charity.”

The new website states, “FAME provides global-best workforce development through strong technical training, integration of manufacturing core competencies, intensive professional practices and hands-on experience to build the future of the modern manufacturing industry.”

Tony said, “FAME currently has 37 chapters in the following 13 states:

Tony explained that the chapters denote a collaboration of employers with an Economic Development Corporation or a Chamber of Commerce with a community college or university.  He said, “the Advanced Manufacturing Technician (AMT) program administered under the FAME model leverages a work/learn framework to weave technical knowledge, professional behaviors, and distinct manufacturing core exercises into a focused co-op experience to build global-best, entry-level, multiskilled technicians.”

He said, “FAME is the premier advanced manufacturing workforce education and development program, helping students become highly skilled, globally competitive, well-rounded and sought-after talent that can meet the unique needs and challenges of today’s modern manufacturing workforce.”

I asked what are the requirements for students, and he said “Candidates for FAME should be career-oriented, academically prepared students seeking rewarding work.  All participants must be high school graduates who are ready to participate in a highly regimented, hands-on programs and are aiming to advance quickly in their career. The program consists of five semesters after which the graduates have a debt-free degree as an Advanced Manufacturing technician.  Every year, FAME graduates transition into well-paying, diverse career pathways in critical disciplines across the manufacturing industry and across the country.”

I told Tony that I have written about how important I believe Lean training is critical to rebuilding American manufacturing and is important to enable American companies to become more competitive in the global marketplace.  I asked Tony if the AMT curriculum incorporates Lean training, and if so, how  does it do it?

Tony answered, “There are five core topics in the five-semester curriculum and each core topic incorporates core aspects of Lean:

  1. Safety culture
  2. Visual Management and 5S (housekeeping)
  3. Lean principles and practices
  4. 8-step problem solving
  5. machine reliability

He added, “In the first semester, students make a personal safety commitment that they must always include when giving their personal introduction.  This is part of the learn and live it model of the program. The program uses a mix of lectures, college-level activities, employer activities, and real, added value solutions in project-based exercises. The program also ties in professional behaviors, such as timeliness, dress code, grooming, posture, and working as a team.”

I mentioned that I had noticed the FAME Live event that was held May 24-25 in Louisville, KY. He said, “This was the first live event since 2018.  It is a day-long learning event in which attendees meet and hear from students, instructors, and graduates, as well as employers and community partners to understand how each stakeholder plays a part in making these programs successful. The day allows interested stakeholders to leave with a strong understanding of the model and with solid action items to help them implement this solution to meet the growing demand for skilled workers.”

I asked Tony if FAME is still partnering with Project Lead the Way (PLTW) that I had mentioned in my previous article.  He replied, “We know the vital importance of a pipeline of preparation into programs like FAME AMT, and continue to encourage local partnerships between chapters and programs in their respective schools systems, programs like Project Lead the Way and FIRST Robotics. Industry tours through broad support of initiatives like MFG Day make a huge difference, too, in the awareness of local students relative to opportunities in manufacturing near them.

And of course, we are always exploring new ways to better attract and engage more diverse audiences into manufacturing, whether into programs like FAME AMT or into other manufacturing roles such engineering, technology, management, etc. The MI continues to be a thought leader around DEI in manufacturing and we carry this effort into our chapter training and communications.”

At the end of my interview, Tony said, “We are always looking for industry partners to help expand manufacturing education opportunities to talent across the country. If you are an employer, business leader, city official or industry association interested in learning about the FAME model, joining a FAME chapter, or starting a new FAME chapter, contact our team at FAME@nam.org or schedule an informational session.

I thanked Tony for the information he shared with me and told him that the kind of training FAME provides is crucial to achieving one of the goals of Industry Reimagined 2030; that is, adding 5 million to the manufacturing-related, middle-income workforce by 2030 (a 40% increase.) I told him that I hoped FAME will expand to more states in the West in the near future.

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Becoming a Lean Enterprise is Critical to Rebuilding American Manufacturing

Tuesday, May 24th, 2022

When I wrote the chapter on what manufacturers can do to save themselves for my first book, Can American Manufacturing be Saved? Why we should and how we can, published in 2009, one of my top recommendations was to begin the Lean journey to become a Lean manufacturer.

From 2006 – 2018, I benefited from attending monthly two-hour workshops offered by the Tech San Diego Operations Roundtable. Nearly all of these workshops focused on applying Lean methodologies and tools to manufacturing.  San Diego was blessed with having several Lean experts put on these workshops, such as Steve Ebbing, Ric Van der Linden, Mike Osterling, and Jerry Wright.

In 2014, I met Luis Socconini, Founder and Director of the Lean Six Sigma Institute (LSSI), read his book, Lean Company, and took his Lean Six Sigma Yellow belt class 12 Saturdays in a row to earn my certificate.

Lean methodologies and tools to eliminate waste and improve productivity can enable a company to become a Lean manufacturer, but in his book, Mr. Socconini shows that there are processes in every critical activity within a company that can be made Lean, so that you can become a “Lean company.”

In his training, Mr. Socconini incorporates Lean accounting as “a very simple methodology to make it easy to calculate the real cost every week, every day, and even every hour. This makes it possible to make better decisions in real time and enables all the value stream leaders to understand if they are losing or wining.”

To get started on using Lean accounting, Mr. Socconini recommends that companies “need to select Lean accounting as one of the most important strategies for their business. Second, they need to implement calculating their “box score,” which is a tool to evaluate the financial results every week. Third, by using the box score, they will be able to calculate direct cost of products (normal material) and conversion cost (all the rest of the costs like energy, salaries, utilities, rent, etc. –everything but material or direct cost). With the conversion cost by hour, any company of any size or industry will be able to calculate real cost every day regardless of the mix or complexity. Real cost equals Conversion cost per unit plus material (direct cost).”

Mr. Socconini said, “The benefits of using Lean accounting compared to cost accounting are thata company is able to know what is the real cost and with this knowledge, they really know if the company is making money or losing money in real time. They are able to define correct prices for their products or services, decide which products or services are contributing profits and which of them are losers, prepare quotes with realistic information increasing the possibility of making better deals, and be able to define a target cost and compare it constantly with the real cost to drive the most important kaizen events.”

My appreciation of the importance of Lean accounting greatly increased when I had the pleasure of attending the Lean Accounting Summits five years in a row from 2014 – 2018 as a speaker representing the Reshoring Initiative  on “Returning Manufacturing to American Using Total Cost of Analysis.”
These summits are produced by Lean Frontiers, headed up by founder and President, Jim Huntzinger. Each summit was two days of information-packed presentations and workshops that included case studies showing Lean principles and tools in action. The list of leading experts whom I met is too long to mention, and I would not want to leave someone out.

I share Jim Huntzinger’s belief that it is critical for accountants to be trained in Lean accounting and participate in the company transformation in order to have a sustainable company in the increasingly competitive global marketplace. Each year, Lean Frontiers provides scholarships to a few university and college professors to attend the conference to learn about Lean accounting.

One of the key points emphasized at each summit was “Utilizing Lean tools is not enough to become a Lean company. Lean concepts and principles must become part of the culture. Lean will not be sustainable in the long run unless it does.”

Within the San Diego region, I saw many companies that participated in the Operations Roundtable workshops I attended apply Lean principles and tools to transform into Lean manufacturers, but very few utilize Lean accounting outside of Mr. Socconini’s clients in the region.

The problem is that very few small companies of under 50 employees have begun to adopt Lean principles and tools, and in San Diego, 97% of all manufacturers have less than 50 employees. On a national level, “98.6% of American manufacturing companies are small businesses” (under 500 employees), and “75.3% of those businesses have fewer than 20 employees, according to data gathered by SCORE, mentors to America’s small businesses.”

The sad fact is that in recent conversations with over 20 Lean consultants around the country, there was a consensus that only about 5-7% of all manufacturers have transformed into Lean enterprises. These consultants agree that we need to find a way to make becoming a Lean enterprise less expensive, less time consuming, and easier to do to cross the chasm to the mainstream of small to medium companies

It’s a shame because small companies have the advantage of not having much of a hierarchy to flatten.  However, in a small company, the president has to be fully committed to the Lean journey to initiate the training much less transform into a Lean enterprise.

Only two of the small manufacturers I have represented in the past 20 years have gone through Lean training. The first was a metal stamping company with less than 40 employees. They obtained the training through the College of the Canyons, one of the California Centers for Applied Competitive Technologies the offsets the cost with funding from California’s Employment Training Panel. As a result of the training, average throughput was reduced from five weeks to five days, on-time delivery improved by 70% and work-in-process was reduced by 40%. They did not adopt Lean Accounting and still had a problem with prices being higher than competition.

The other was Century Rubber Company with only 15 employees, and they received their training through the California Manufacturing Extension Partnership, California Manufacturing Technology Consulting. Their biggest benefit was eliminating wasted movement and time by implementing 5S, rearranging equipment, and reducing time to change molds. The cost of their training was also reduced by Employment Training Panel funding.  Century utilizes a modified version of calculating conversion costs like Lean Accounting does, and their pricing became more competitive.

The companies I represent have sometimes lost orders for being two to four times higher than their Chinese competition, so I have a very good reason for encouraging a transition from standard cost accounting to Lean accounting. I firmly believe that if more companies would make this transition, we would be losing less business to China and other offshore suppliers.

Thirteen years and two books later, I have come to believe that any company that becomes a Lean enterprise will not need to offshore manufacturing to be globally competitive.

Therefore, I can’t stress enough the importance of your company beginning the Lean journey. I am certain that becoming a Lean Enterprise is one of the most important actions American manufacturers can take to be globally competitive and is one of the keys to rebuilding American manufacturing to create jobs and prosperity.

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How to Have a Secure Supply Chain

Tuesday, May 10th, 2022

For more than the first 150 years of its history, the United States was a protectionist country in order to protect its fledgling manufacturing industries and then gain preeminence as an industrial nation in the 20th century.  We had secure supply chain until after WWII because we imported very little and were pretty much self-sufficient for consumer goods as well as good for our national defense.

After World War II, the U.S. switched from protectionism to free trade in order to rebuild the economies of Europe and Japan through the Marshall Plan and bind the economies of the non-Communist world to the United States for geopolitical reasons.

To accomplish these objectives, the General Agreement on Tariffs and Trade (GATT) was negotiated during the UN Conference on Trade and Employment. Originally signed by 23 countries at Geneva in 1947, GATT became the most effective instrument in the massive expansion of world trade in the second half of the 20th century.

GATT’s most important principle was trade without discrimination, in which member nations opened their markets equally to one another. Once a country and one of its trading partners agreed to reduce a tariff, that tariff cut was automatically extended to all GATT members. GATT also established uniform customs regulations and sought to eliminate import quotas.

Unfortunately, our government leaders didn’t pay attention to the effect this was having on American businesses, and we started having a trade deficit in 1980 because of greater imports from Japan, Germany, South Korea, Taiwan, and the Philippines. 

When NAFTA went into effect in 1994, it started the trend of moving manufacturing outside the U.S.  When the World Trade Organization was formed in 1995, tariffs were reduced between all member countries.  However, after President Clinton granted China Most Favored Nation status in the year 2000 and China was allowed to become a member of the WTO, the great exodus to setting up manufacturing in China began, and the trade deficit sky rocketed. According to Alan Uke’s book, Buying Back America, the United States has a trade deficit with 88 countries—some deficits are small, but some are enormous, such as China. 

As a result, over 70,000 manufacturing sites closed in the past 25 years, and at the low point in 2010, we had lost 5.8 million lost middle-income manufacturing jobs.

Globalization of U.S. Supply Chains Failed

When the COVID pandemic hit, it sent shock waves throughout the world of manufacturing. Too late, we realized that we had become 70 to 95% import dependent, primarily on China.  It was impossible to scale up our domestic supply chain fast enough for PPE goods and pharmaceuticals.  

In an article, “It’s About Time to Build Regional Supply Chains,” on March 30, 2022 on Industry Week, Christopher S. Tang wrote, “I do believe most global supply chains are going to end. They had a good run over the last few decades, enabling Western companies to grow profitably and helping developing countries alleviate poverty. But concurrent and unprecedented events have blown apart their cost efficiency…Decades of outsourcing and offshoring have hollowed out the U.S. manufacturing sector. Building domestic supply chains in the U.S. can be time-consuming and cost-ineffective…Small and medium-sized manufacturers are facing the reality that there will inevitably be more disruptions in the future and they must prepare themselves now by strategically evaluating and mitigating their supply chain risks.”

This crisis could have been prevented if more American Manufacturers had utilized Total Cost of Ownership Estimator™ that Harry Moser made available for free in 2010 when he founded the Reshoring Initiative. Mr. Moser’s TCO Estimator has been the right tool to facilitate returning manufacturing to America. It actually includes calculations for the “hidden costs of doing business offshore,” such as Intellectual Property risk, political instability risk, effect on innovation, product liability risk, annual wage inflation, and currency appreciation.

In my experience as a sales rep, most companies only consider the quoted piece price or landed cost, at best. Because of inaccurate data, many companies make the decision to offshore on the basis of faulty assumptions. Some faulty assumptions are:  Overseas laws will protect IP, longer lead times won’t affect costs much, travel costs won’t be significant, communication won’t be a problem, and quality will be just as good as USA. The reality is that many companies are saving less than they expected, and in some cases, the hidden costs exceed the anticipated cost savings.

We need to change the main considerations for selecting suppliers from one based on the lowest price to other considerations, such as

  • Location
  • Transportation alternatives
  • Inventory costs and control
  • Quality controls
  • Reserve capacity of supplier
  • Responsiveness of supplier
  • Technological depth of supplier

Choosing the right location is the most critical choice. The choices are: Made in USA, “Offshoring” to China or another location in Asia, or nearsourcing to Mexico or Canada. The location of your customers influences the choice of manufacturing location.  Here are some variables to consider:

  • Where are your customers? USA, Asia, Europe, Latin America
  • How high is your labor content?
  • Is your annual production volume forecast low, medium, or high?
  • Do you have low vs. high product mix?
  • What certifications are required?  Example:  FDA, U/L, Mil Spec, ISO 9100, AS9100, etc.  

There are current manufacturing trends that are also influencing supplier choice.  Some of these are:

  • Wages rising in China
  • Increased “Made in USA” demand by government agencies and American consumers
  • Additive Manufacturing
  • Use of Industry 4.0 by suppliers (Automation, Robotics, Industrial Internet of Things (IIOT)

Some of the advantages of sourcing in the USA are:

  • No Intellectual Property infringement
  • Ease of communication
  • Flexible delivery by means of reliable transportation
  • Smoother design changes
  • Lower cost of inventory
  • Higher quality parts
  • Lower travel expenses
  • Favorable Purchase Order and Credit Terms

In today’s manufacturing supply chain, Reshoring helps companies have:

  • Faster lead times: 49-50% reduction
  • Delivery accuracy: 30-40% improved
  • Ability to respond swiftly to unforeseen disruptions
  • Handle volatile demand as closer proximity to customers drives agility 
  • Increased competitiveness
  • Better serving local markets while maintaining low costs

I strongly believe that if more companies would learn to understand and utilize the Reshoring Initiative’s TCO estimator (free at www.reshorenow.org), they would realize that the best value for their company is to source their parts, assemblies, and products in America.

America is at a crossroads. We can either continue down the path of increasing trade deficits, increasing national debt, and loss of manufacturing jobs by allowing anything mined, manufactured, grown, or serviced to be outsourced to countries with predatory trade policies.  Or, we can forge a new path by developing and implementing a national strategy to win the international competition for good jobs, sustained economic growth, and create a strong, secure domestic supply chain.

Doing this will help us achieve the vision of Industry Reimagined 2030 to change the national narrative of American manufacturing from a prevailing worldview of “inevitable decline” to one of “vibrant opportunity.”

If enough manufacturing is “reshored” from China, we would drastically reduce our national average annual trade deficit of more than $700 billion.  By 2030, we could also add five million middle-income manufacturing workers to the American workforce. 

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Imperial Capital Conference Highlights Vibrant Opportunity for Advanced Manufacturing Sector

Tuesday, April 26th, 2022

The non-profit Industry Reimagined 2030 was pleased to speak at the second annual Imperial Capital Advanced Manufacturing & Supply Chain Conference, held on April 13-14 in Santa Monica, CA and sponsored by Moss Adams, The Association for Manufacturing Technology, Smart Room, and Marsh.

On April 14th, presentations during breakfast were given by Kevin Frisch, Managing Director and Head of Industrial Investment Banking, Imperial Capital, Brian Ruttenbur, Institutional Research Managing Director, Imperial Capital, and Guy Knuf, Partner, Moss Adams.

Mr. Frisch explained that Imperial Capital, LLC is a full-service investment bank offering a uniquely integrated platform of comprehensive services to middle market companies and institutional investor. He said,” We have approximately 150 employees worldwide, across 10 offices throughout the United States and Europe. Our comprehensive and integrated service platform, expertise across the global capital structure, and deep industry sector knowledge enable us to provide clients with research driven ideas, superior advisory services, and trade execution. We have a dedicated focus in Advanced Manufacturing, including additive manufacturing, robotics, automation, laser components, specialty metals, specialty chemicals, semi-conductor equipment, optics/photonics, industrial software, and subtractive manufacturing.”

He provided a brief overview of the $26.3 trillion global Advanced Manufacturing market.

The trending Industry Segments

  • Specialty Materials – new light-weight materials, nanotechnology and carbon fibers and new applications are reducing waste and increasing efficiency
  • Aerospace & Defense – Light-weighting demand for planes, rockets, spacecraft will continue to drive demand for superior materials, AM production and other break-throughs
  • Medical – This industry drives demand for superior material advances and new technologies like AM, advanced laser manufacturing as well as design software etc.
  • Optics & Photonics – This industry cuts across the Advanced Manufacturing landscape
  • MR&O demand
  • Increased Reshoring/near shoring in all sectors

Trending Manufacturing Processes

  • Faster product development and shorter product life
  • Internet of Things – data acquisition and AI-enabled features
  • Digital Factory – data integration and overall productivity increasing
  • Reshoring/next shoring
  • Mass customization in production
  • Faster product development and shorter product life
  • New technologies – 3D printing, software, robotics
  • Light-weighting material demand
  • Internet of Things
  • Reshoring/next shoring
  • New Materials – nanotechnology, carbon fibers, powders
  • Mass customization in production
  • MR&O demand

Sector Valuation and Vibrancy

Deal volume for capital markets and M&A activity hit a record high at the end of 2021, the dramatic increase in deal flow was driven by optimistic executives, cheap financing and a stock market rebound from the 2020 COVID-19 pandemic. “U.S. Private Equity deal making is expected to continue at high levels. Mega-funds are predicted to raise $250 billion in 2022, including some of the largest ever buyout funds.”

Brian Ruttenbur, Managing Director of the Institutional Research Group of Imperial Capital covered macro trends in Advanced Manufacturing that influence their security and industrial research coverage.

Demand for manufactured products is up across most end-markets and private and public valuations have remained solid. The challenge to meet demand is inflation and material price increases, a tight and expensive labor market, and overall supply chain disruption. Industry is adapting through:

  • Automation to alleviate labor shortage issues
  • Niche players filling gaps
  • Rethinking Onshoring or Nearshoring driven by advanced manufacturing technologies, logistics complexity and national health and security sourcing.
  • On-time delivery and just-in-case supply chain resilience are commanding a premium

Guy Knuf, Partner, Transaction Services, Moss Adams was the third speaker covering “The Modern Quality of Earnings (QoE).  He said the “drivers of change are:

  • More intense buy-side process
  • Increased multiples
  • Drive for efficiency
  • RWI [Reps and Warrants Insurance]
  • Credibility”

The benefits of working with a QoE provider are: “maximize value, mitigate surprises, speed (more efficient & effective), prepare management team for buy-side diligence, and credibility.”

After breakfast, the period from 9:00 – 11:50 was divided into Sector Focused Panel Discussions. The presenters in advanced manufacturing technology were:

3DEO Inc. – one of the highest volume metal 3D printing companies in the world

ADDMAN Engineering LLC – metal and polymer 3D printed parts, precision machining to make parts for aerospace and defense, space, medical, and automotive, including niobium parts for hypersonics

Humtown Products – manufacturer of conventional and 3D printed sand cores and molds for the foundry industry

Optomec, Inc. – offers a full range of Additive Manufacturing systems, including their patented Aerosol Jet Systems for printed electronics

Clinkenbeard – specialized expertise in engineering, advanced machining, fabrication and foundry tooling capabilities come together to form a unique mix of services to serve Aerospace, Defense, Heavy Truck, Power Gen and Automotive applications

HB Aerospace Holdings, LLC – provides high quality, specialized aerospace products and value-added services that includes hardware, shims, spacers, handles, brackets, and rubber products such as grommets, seals and gaskets

Tribus Aerospace Corporation – provides precision machining of complex components and assemblies primarily, but not exclusively, for “Power, Propel, Control” applications for turbine engines, auxiliary power units, motion control and flow control

Valence Surface Technologies – provides a comprehensive set of metal processing capabilities and approvals for high-value, mission-critical parts, including NDT, sot peen and blast, chemical processing, plating, painting, and spray coatings

FormAlloy Technologies, Inc. – provides 3D metal additive manufacturing using the Directed Energy Deposition process for making parts, repairing parts, and cladding existing parts

Optomec, Inc. – provides a full range of Additive Manufacturing systems, including their patented Aerosol Jet Systems for printed electronics

pureLiFi – LiFi is high speed bi-directional and fully networked light communications and pureLiFi is the world leader in Light Fidelity (LiFi) innovation

Syntec Optics – offers injection molding, diamond turning, precision machining, optical assembly and coating services for optics and photonics

I was especially delighted to be reunited with Melanie Lang, CEO of FormAlloy as I had the pleasure of being one of her company’s mentors in the CONNECT Springboard program for startup companies in 2017.  I was very proud to hear of the progress the company had made, going from a startup with only two customers in 2017 to doing over $4 million in sales last year.

Tim Shinbara Jr, Vice President & Chief Technology Officer, The Association for Manufacturing Technology, delivered the lunch keynote on “The State of U.S Manufacturing –A Macro Analysis.” He reported that manufacturing technology orders were the highest in two decades for first two months of 2022. The key market trends are higher automation, increased reshoring, and Made in America supply chain focus. The industry segments for 2022 growth are: motor vehicles, agriculture implements, metal valves, and medical equipment and supplies. AMT is predicting increasing demand for commercial aerospace and decreasing demand for defense aerospace. Deliveries are improving with suppliers at 70% capacity.

The afternoon sessions were devoted to single company presentations in two tracks. Each presentation was 25 minutes long, starting at 1:15 PM and ending at 4:15 PM

I gave my own presentation on Industry Reimagined 2030: transforming the prevailing worldview of American manufacturing from ‘inevitable decline’ to one of ‘vibrant opportunity’ brought the theme of the conference home.  The U.S. has a window of opportunity to recognize the importance of manufacturing and to revitalize our investment in plant, equipment and workforce. The common thread of all companies participating in the panels and individual company presentations was one of vibrant opportunity. We can feasibly imagine having 50,000 world class manufacturers by 2030 if the adoption of these trends and technologies crosses the chasm from early adopters to the mainstream of manufacturers.

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Manufacturing Renaissance: Recommendations to Bolster National Security & Economic Prosperity 

Tuesday, April 5th, 2022

In November 2021, the Ronald Reagan Institute released a Report of the Task Force on National Security and U.S. Manufacturing Competitiveness titled “A Manufacturing Renaissance: Bolstering U.S. Production for National Security and Economic Prosperity.”

I came across this article last week, having missed it when it was released because many reports similar to this are ignored by the mainstream news outlets focused on the daily news and don’t reach the large national audience they deserve.

The Task Force was co-chaired by Ms. Marillyn Hewson, Former Chairman, President, & CEO, Lockheed Martin Corporation and Dr. David McCormick, CEO, Bridgewater Associates, and former Undersecretary for International Affairs, U.S. Department of Treasury. The Task Force members represented a cross section of business, government, and elected representatives.

I recently joined the board of the non-profit Industry Reimagined 2030, which is transforming the myriad of well-intentioned efforts to revitalize U.S. manufacturing into coherent, aligned action. Our strategic aim is to shift the implicit national narrative from manufacturing in ‘inevitable decline’ to one of ‘vibrant opportunity.’

What the Manufacturing Renaissance report has to say about ‘inevitable decline.’

In the Introduction, the Task Force “considered the causes and implications of the continued erosion of American industrial and manufacturing capabilities in sectors critical to national security, such as defense equipment, semiconductors, telecom supplies, and pharmaceuticals.”  They acknowledge that the U. S. is at a “dangerous status quo” and as a result, “at the highest ranks of the U.S. federal government, consensus is emerging that the continued degradation of America’s industrial base is creating domestic vulnerabilities and weakening our ability to compete.” 

As I have pointed out in previous articles, the Task Force admitted that “As America moves slowly, China is accelerating ahead. In 2019, China led the world in global manufacturing output at a level 12 percent higher than the United States.” In addition, “China’s push for self-reliance starkly contrasts with America’s increasing dependence on imports…”

To usher in a new era, it is essential that we wake up to the consequences of this prevailing worldview. I participate on the Buy American committee for the Coalition for a Prosperous America, and the members of Congress who have spoken at our virtual committee meetings recently have emphasized the realization that we have become too dependent on imports from China and other nations and urgently need to rebuild the supply chain of American manufacturing to produce critical products in the U.S.

The Executive Summary emphasized the following key points:

  • “The COVID-19 pandemic underscored manufacturing’s essential role in ensuring our national health, safety, security, and economic vitality. It also revealed how vulnerable the global supply chains are to shocks and disruptions.”
  • “Chinese leadership is leveraging state industrial and technological planning to achieve global economic and military power. In doing so, it has made substantial progress in achieving its stated goals of supplanting America as the world’s foremost economy and recasting the rules-based international system.”

What the Manufacturing Renaissance report has to say about ‘vibrant opportunity.’

The Task Force commented that “The daunting challenge before America also brings with it an opportunity to usher in a new era of productivity and economic growth through new technologies, human capital, managerial innovation, and updated business models.” 

  1. Build unprecedented collaboration at the local level to scale the skilling and placement of workers in high demand, high skill jobs. Let’s encourage U.S.-headquartered manufacturers to fund 500,000 apprenticeships over the next decade.  Let’s write policy allowing employers and high school graduates to use federal education grants for credential programs, apprenticeships, and internships.
  • Modernize the Defense Production Act (DPA) for the 21st Century. There are specific “industries that require the establishment of new, enhanced policy measures to support supplier ecosystems and strengthen government coordination.” They recommend updating the DPA to “enable holistic solutions for critical manufacturing facilities.”
  • Stand up a public-private capability to finance investments in domestic manufacturing sectors critical to national security. It could be done by “a new government-sponsored investment entity like the proposed Industrial Finance Corporation, changes to existing institutions such as the U.S. International Development Finance Corporation, direct bond buying programs, a sovereign fund, or private capital funds focused on the on-shore manufacturing ecosystem.”

The Task Force recommends setting the following goals to use as metrics to measure progress over the coming decade:

  • “Bring 2 million new or retrained workers into strategic manufacturing sectors by 2030”
  • “Improve American productivity growth in critical industries to 3.9 percent, which would represent a return to the historic average for manufacturing growth.”
  • Widely deploy and couple modern technology and management practices
  • “Add 35,000 new small- and medium-sized enterprise (SME) manufacturers in critical subsectors by 2030 to strengthen the core of the American supplier base and replace half of the small business capacity lost since the late 1990s.”

It’s amazing how close three of the above five goals are to the goals our board has established for the new non-profit, Industry Reimagined 2030, that I wrote about in my last blog article. It’s also coincidental that the Task Force also chose 2030 as the date for achieving their goals.

We have two distinct futures … It is up to each of us to make a choice and take a stand

The report states that “America stands at a fork in the road, facing a choice between two distinct futures” — “Mounting National Security Risk and Economic Vulnerability” or a “A Better Way Forward: Strength, Renewal, and Prosperity.” The Task Force “is confident that a renaissance of American manufacturing is possible if policy makers and business leaders make the necessary choices for our economy and our long-term security.”

As I wrote last time, we have a choice of continuing “inevitable decline” or choosing “vibrant opportunity” for American manufacturing. As a country, we have the choice of becoming subservient to China or remaining a free, independent nation. The future of our country rests on which choice we make.

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Clarifying Misperceptions about American Manufacturing

Tuesday, March 22nd, 2022

There are several misperceptions about American manufacturing that I will clarify in this article.

The first misperception is Manufacturing is in inevitable decline.

Evidence that this is not true is provided by the latest U.S. Manufacturing Technology Orders Report published by the Association For Manufacturing Technology AMT on March 14, 2022. It states, “Manufacturing technology orders totaled $436.6 million in January 2022…January orders were also the strongest on record since USMTO began tracking orders.

The United States still maintains its second position as the world’s largest manufacturing country by a substantial lead over Japan at third place.

U.S. can’t compete with China

First, rising wages in China are helping U.S. manufacturers be more competitive in the global marketplace.

Second,the Total Cost of Ownership Worksheet calculator developed by Harry Moser’s Reshoring Initiative is helping more and more American manufacturers be competitive domestically so they can reshore manufacturing from overseas back to America. The TCO worksheet is available for free at www.reshorenow.org., According to data provided by the Reshoring Initiative, we regained one million jobs through reshoring and foreign direct investment between 2010 to 2021.

Manufacturing doesn’t pay wages for a middle-class family life

According to the National Association for Manufacturers, “average hourly earnings of production and nonsupervisory workers in manufacturing rose 0.5% from $24.37 in December to $24.48 in January, up from $23.27 in January 2021.” While these wages for production workers may be as low as some retail and service jobs, the wages for skilled workers range from $60,000 to $80,000/year. Salary and supervisory workers in manufacturing “earned $92,832 on average, including pay and benefits.”

The reality is that skilled trade jobs provide an excellent career opportunity for those looking for a stable, high-demand, high-paying job. Workers with the skills needed by manufacturers are in high demand. There were 856,000 manufacturing job openings in December. It was the ninth straight month with openings that have exceeded 800,000, with job postings remaining well above pre-pandemic levels.” The manufacturing industry has forecasted to have 2.1 million unfilled jobs by 2030.

According the 4th quarter 2021 Manufacturer Outlook Survey, “85.2% had unfilled positions within their companies for which they were struggling to find qualified applicants. Companies were addressing the skills shortage by creating or expanding internal training programs (62.7%), utilizing temporary staffing services (50.4%), collaborating with educational institutions on skills certification programs (41.2%) and encouraging possible retirees to stay longer in their roles (39.9%) …”

Manufacturing jobs are boring, dirty, and dangerous

While one picture is worth a thousand words, I can’t include enough pictures in this article to disprove this misperception. I will, however, explain why manufacturing jobs are not as boring, dirty, and dangerous as they previously were.

First, Congress created the Occupational Safety and Health Administration (OSHA) as part of the Department of Labor to ensure safe and healthful working conditions for workers by setting and enforcing standards and by providing training, outreach, education and assistance. “Under the provisions of the Occupational Safety and Health Act of 1970 (OSH Act), employers must provide a workplace free from recognized hazards that are causing, or are likely to cause, death or serious physical harm to employees regardless of the size of business.” OSHA standards cover hazardous chemicals and materials, machine operation, machine guarding, electrical hazards, fall protection, sanitation, indoor air quality, drinking water, ergonomic guidelines, temperature & weather, personal protective equipment, etc.

Second, in the past 20 years, there have been standards established by the International Organization for Standardization (ISO) that cover quality Management, Information Security, Occupational Health and Safety, Medical Devices, among many others. It has become common for companies to be required to get certified that they meet these standards in order to become a vendor or service provider.  Aircraft companies and their supply chain are required to be certified to AS9100, and automobile manufacturers are required to meet TS 16949 standards.

Third, the use of automation, robots, cobots, and sensors are reducing dangerous and physically difficult tasks in manufacturing.  The difference between robots and cobots is that robots are programmed to perform a standalone function and cobots are design to partner with a person to perform a function.

For example, a robot can pick up a slab of hot glass off the production line in making sheet glass and place the sheet in a stack.  Robots have taken over dipping and swirling a sprue loaded with wax parts into the ceramic slurry to make an investment casting. A cobot can rotate a part to allow a person to perform a task, such as assembly of a transmission on an automobile production line. Sensors can detect whether a person’s hand or other body part is in the way of a machine operation and stop the machine.  All stamping machines have such sensors to make sure a person’s hand is out of the way before the punch press stamps out the metal part.

Fourth, processes that would be very boring for a person to do repetitively have been automated.  Some examples are cutting wire to be inserted into a plastic molding part, filling or sealing a plastic bag or bottle, placing labels on bottles, containers, and boxes, as well as placing components on a printed circuit board.   

Although many businesses have labeled these standards as too onerous and expensive, there is no doubt that they have dramatically enhanced the health and safety of American manufacturing workers.

Shifting the Narrative from ‘Inevitable Decline” to ‘Vibrant Opportunity.”

Now that we’ve clarified the common misperceptions about manufacturing, let me introduce you to a vision for the future.  I am now a founding member with Doug Berger of a new non-profit organization, Industry Reimagined 2030. The vision of Industry Reimagined 2030 is to bring about a generational sea-change in U.S. Industry from a prevailing worldview of “inevitable decline” to one of “‘vibrant opportunity.”

Thinking at a national scale is different than thinking at a national level.  Policy is at the national level.  Scaling successful initiatives at a local level to thousands of communities is thinking at a national scale.  In this regard, there are many local successes that I have written about previously that aren’t being scaled.

We are thinking from the future-back for these bold outcomes … standing in the gap to today and asking “What is missing?”  “What needs to happen?”  In this regard, we are advancing the idea of Reimagine Dialogues to engage people to be imaginative first and then develop practical action steps to close the gap.

By 2030 U.S. manufacturing will be revitalized, globally competitive and advancing societal interests.  There will be:

  • 50,000 world-class domestic manufacturers (10x increase)
  • Additional 5 million to the manufacturing-related, middle-income workforce (40%)
  • Environmental footprint to supply U.S. goods reduced by 30%
  • Consumer purchases of US made goods increased by $500 million

It will take unprecedented collaboration between ourselves and other organizations to achieve this vision. If you support the concept of these Reimagine Dialogues, please contact me at michele@savingusmanufacturing.com.

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What is the State of America’s Manufacturing Supply Chain?

Tuesday, March 8th, 2022

It is crucial for American companies to make the right decision on where to outsource manufacturing to have a secure supply chain.  Choosing the wrong company or a company in the wrong location as a supplier can mean the difference between success and failure as a company.  Companies need to learn how important it is to carefully consider all of the factors that impact the decision of where to source manufacturing to be able to handle risks and disruptions in the supply chain to maintain operations in the event of natural disasters or unforeseen events such as the COVID-19 pandemic, as well as prepare for the future.

The Association of Manufacturing Excellence (AME) and Lean DNA “conducted market research to explore the specific areas in which manufacturers are looking to digitally invest, the top challenges inhibiting transformation, and the biggest opportunities on the table for 2022 and beyond.”  On February 18, 2022, they released a report titled, “State of Supply Chain in the New Shortage Economy” that presented the results of their research on the supply chain shortages manufacturers have been experiencing as a result of the COVID-19 pandemic.

The research revealed that new market dynamics are making it evident that existing processes are no longer sufficient.  Some of these new dynamics are: 

  • Supply chains have become progressively more complex
  • Manufacturers are dealing with increasingly customized orders from customers
  • Complex sub-assemblies and parts coming from increasingly global suppliers
  • Burdened planning and procurement teams
  • Volatile demand
  • Global materials shortages

The report states that because of the COVID-19 pandemic, “a majority of manufacturers feel increased pressure to digitally transform” [75%] and “more than three-fourths, also recognize the opportunity to improve customer satisfaction and reduce the number of operational issues through digital transformation. They anticipate that digitization, advanced analytics, and predictive intelligence are their best opportunities to achieve that.”

The report explained that digital transformation means:

  • Deploying advanced analytics and predictive intelligence (54.5%)
  • Ditching manual spreadsheets (19.5%)
  • Deploying data analytics and/or Business Intelligence (BI) (10.4%)
  • Automating and integrating supply chain functions (10.4%)
  • Inventing in ERP/IBP planning and scheduling tools (5.2%)

The results of the survey showed “glaring technology and process gaps that need to be addressed

first before the majority of manufacturers can truly adopt advanced and modern digital technologies. Overall, survey participants responded that they were still very early in their digital transformation journeys…” The biggest technology gaps in technology were identified as:

  • Reliance on spreadsheets and manual processes (32.5%)
  • Lack of connectedness between ERP, MRP, and more (19.5%)
  • Visibility into real-time supply and demand shifts (14.5%)
  • Inability to predict future shifts and make proactive decisions to counter issues (13%)
  • Inability to understand which inventory actions have biggest impact (11.5%)
  • Lack of skilled personnel (9%)

Manufacturers experienced the following challenges caused by the COVID-19 pandemic:

  • 86% Supply chain Disruptions
  • 52% Demand Forecasting Difficulties
  • 49% Working Remotely
  • 42% Demand Increases/Part and Inventory Shortages
  • 27% Demand Increases/Excess Inventory
  • 26% Visibility into Inventory and Shortage Data across sites and ERPs

Key findings of the survey were:

  • 65% of manufacturers are increasing visibility into factory inventory levels and requirements because of COVID-19, with an eye towards managing shortages.
  • 95% of manufacturers are investing in factory automation, but most haven’t automated the factory’s critical data and intelligence aspects.

The top hurdles to factory transformation were identified as:

  • lack of expertise (60%)
  • lack of resources (46%)
  • limited budget (43%)
  • ineffective change management (42%).

The survey identified the following top priorities for the manufacturers surveyed:  “Shortages (47%) and improving inventory turnover (43%), yet procurement and supply chain teams

don’t have the information they need to increase factory efficiency.”

The authors recommended that manufacturers “address this problem by having planning and procurement teams, and even suppliers, work together more efficiently…Digital transformation doesn’t mean rebuilding the technology stack from scratch, rather it can mean leveraging data and harnessing insights from existing systems and investments.”

Specifically, they recommended the follow three steps:

Understand – “collating data from ERP, MRP, and MPS systems, manufacturers can gain visibility across their material inventory levels and see the impact across their factory operations processes from planning to purchasing to manufacturing.”

Prioritize – sift through data “to isolate the most impactful insights and actions that will most

affect business results…identify and resolve critical shortages that prevent production from moving forward…identifying SKUs and component parts that have the highest monetary impact helps buyers to prioritize their time.”

Collaborate – Having a single, up-to-date view of materials inventory and demand is key to having

teams work efficiently together…planning and procurement can work in unison to optimize production, improve cash flow, reduce costs, and mitigate risk in delivering on-time. Collaboration is not only necessary internally within manufacturing organizations, but also with suppliers.”

What was missing from this survey was where their suppliers were located – in the U. S. or another country.  The survey would have been a good opportunity to learn how many manufacturers had suppliers in China and/or whether or not manufacturers had reshored manufacturing to the U.S. from China or another country.  We know that there were many more supply chain disruptions occurring from goods being shipped by container ships from China, especially last fall. In fact, the Reshoring Initiative lists long lead times and supply chain disruptions in the top ten reasons for reshoring manufacturing.

It is important to consider the geographical location of suppliers when a company seeks to establish a secure supply chain and mitigate disruptions as conditions change due to unexpected crises such as COVID-19, natural disasters, and transportation bottlenecks. Some of the advantages of prioritizing “Buy American” and “Buy Local” as a guideline in selection of suppliers are:

  • Faster lead times: 49-50% reduction
  • Delivery accuracy: 30-40% improved
  • Smoother Design Changes
  • Lower Cost of Inventory
  • Higher Quality
  • No Intellectual Property Infringement

It is also important to consider the technological depth, reserve capacity, and responsiveness of suppliers. These capabilities are more readily available from American companies. When demand is volatile, the ability of a supplier to either ramp up or slow down production will affect inventory costs and delivery performance to customers.  Since many Chinese companies require high volume orders to meet target prices, this is difficult to obtain from Chinese suppliers.

I highly recommend that American manufacturers carefully consider these factors in selecting suppliers in the future if they want to have a more secure supply chain.   

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