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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 »

CPA Report Shows Higher China Tariffs Could Increase U.S. Jobs and GDP

Monday, August 19th, 2019

On July 22, 2019, the Coalition for a Prosperous America released an update to their study on the effects of increasing tariffs on all imported Chinese goods to 25% that had originally released in May. The study was conducted by CPA’s Chief Economist Jeff Ferry and Steven L. Byers, Ph.D. The Coalition for a Prosperous America is a non-profit, non-partisan organization working to eliminate the trade deficit with smart trade and tax policies to create jobs and prosperity.

According to the report, “The tariff revenue totals $547 billion over five years. If those funds are reinjected back into the economy each year, this additional stimulus to growth results in a $167 billion boost to GDP and 1.05 million additional jobs in 2024…The results of the Coalition for a Prosperous America (CPA) model show that tariffs will have a sustained, positive impact on the US economy, including jobs, output, and investment.”

The report states:  “The tariff would stimulate the US economy through two channels: first, the relocation of US-bound production from China to other nations would lead to a reduction in the average cost of imports because many alternative production locations ,such as those in Southeast Asia, today have lower costs of production than China; and secondly, because a portion of the production in China relocated to the US, would directly stimulate the US economy.”

In stark contrast, the opinions of professional economists are reflected in an article titled, “Trade Wars Are Not Good, or Easy to Win” in The Atlantic on August 5, 2019, staff writer Derek Thompson, wrote, ” President Donald Trump has stubbornly insisted on Chinese tariffs over the objections of his economic advisers—not to mention the near-universal outcry of the professional economic community. In a University of Chicago poll of several dozen international economists, zero disagreed with the statement that “the incidence of the latest round of US import tariffs is likely to fall primarily on American households.”

Why do the conclusions of the CPA research directors differ so greatly from the opinions of the economic community? The authors explained, “Our results differ remarkedly from other economic modeling efforts regarding tariffs…The differences result primarily from different assumptions about how businesses and consumers react to tariffs. Other models reflect a pro-free-trade bias and assume that (a) no production returns to the US as a result of tariffs (b )prices of US imports always rise when imports move from China to third countries and (c) US consumers react very negatively to higher prices, leading to educed sales and output in the US economy. A close study of the available empirical evidence shows these assumptions are unwarranted.”

The report states:  “Our model consisted of two parts:  a partial equilibrium model, which looked at how production in China for export to the US responded to the presence of a permanent across-the-board tariff, and a general-equilibrium model, based on the widely-used REMI  economic model to explore the effects of production shifts on the US economy over a five-year forecast period.”

The report takes into consideration China’s retaliation against the tariffs and China’s moving manufacturing to the U.S. or other countries. It shows that the tariffs will encourage production relocation out of Asia and generate significant reshoring of manufacturing to the US by American manufacturers who had established plants in China. This opinion concurs with the data collected by the Reshoring Initiative for several year showing that “the location decision for manufacturers is not just about cost: reliable supply, closeness to customers, political stability, and building customer/consumer brand awareness all matter!”

The original May report went into more detail about the benefit of reshoring, stating, “The US job gains from PATB-25-induced reshoring are disproportionately concentrated in the manufacturing sector, with 192,416 additional manufacturing jobs (27 percent of total jobs created by the tariff). This is because the vast majority of US imports from China are manufactured goods. By 2024, our model forecasts that $69 billion worth of annual production will have migrated from China to the United States. While US production costs in many industries remain higher than in China, that is not the whole story. Locating production in the US offers other advantages, including lower transportation costs, more logistical flexibility, and closer connectedness to consumer markets, distributors, and senior management. Relocating in the US also insulates companies against the uncertainty of potential future trade tensions. Some industries, such as apparel, have already seen reshoring due to these advantages. A permanent tariff would speed up the process.”

In a webinar to CPA members on August 1st, Ferry cited several examples of American companies reshoring production to the US; namely, Caterpillar, Stanley Black and Decker, Hasbro, Whirlpool, Optec, and West Elm.  The website of the Reshoring Initiative lists  nearly 3,000 companies that have reshored, and the list grows by the week.  

In an interview for The Epoch Times,  Ferry said: “As time goes by, people are accepting it because they’re seeing that tariffs are not provoking huge increases or any increases in consumer prices. They’re not disrupting our supply chains”

He also said “the goal of the U.S. government is to fix these problems and to restore prosperity to the United States, and he thinks tariffs have their role to play. If the trade deficit continues, and if we want to see certain manufacturing industries grow in the United States, I think we need to do more, and tariffs on all Chinese imports is a good solution…It’s a delicate and dangerous game [the Chinese regime is] going to have to play to pivot from being an economy that’s completely dependent on exports to being a more balanced economy, and it’s anybody’s guess whether they can pull it off.”

I’m betting that the conclusions reached by CPA would prove true if President Trump did impose 25% tariffs on all imports from China because of the strong evidence of the benefit of reshoring to the US economy.  According to the Reshoring Initiative, data from the manufacturing employment low of January 20190 through 2018, 749,000 jobs have been brought back to the US from offshore. In addition, manufacturing jobs pay higher than service and retail jobs, so tax revenue will increase from more people having higher paying jobs.  Another benefit would be that as we reduce our imports, our trade deficit would go down. However, the best benefit is that as we resume making the products and systems needed to defend our country in the US, we will protect our national security.

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Posted in Economy, Manufacturing, Trade Policy | No Comments »

Brookings Recommends New Focus for SBA’s Small Business Investment Corp Program

Tuesday, July 9th, 2019

can better support America’s advanced industries.

On June 26, 2019, Mark Muro, Senior Fellow, Brookings Institution Metropolitan Policy Program submitted testimony to the U.S. Senate Committee on Small Business & Entrepreneurship regarding the “Reauthorization of SBA’s Small Business Investment Company Program,” and particularly on how the Small Business Investment Company (SBIC) program.

Mr. Muro’s expertise is in America’s advanced industry sector, which are the high-productivity, high-pay innovation industries that anchor American competitiveness and are critical to America’s prosperity.

In his testimony, Mr. Muro wrote that advanced industries are identified using two criteria and must meet both criteria to be considered advanced.:

  • “industry’s R&D spending per worker must fall in the 80th percentile of industries or higher, exceeding $450 per worker
  • The share of workers in an industry whose occupations require a high degree of STEM knowledge must also be above the national average, or 21 percent of all workers”

He explained, “Based on this definition, the U.S. advanced industries sector encompasses 50 diverse industries, including 3 energy, 35 manufacturing, and 12 service industries. These prime industries include manufacturing industries such as automaking, aerospace, pharmaceuticals, and semiconductors; energy industries such as oil and gas extraction and renewables; and critical service activities such as R&D services, software design, and telecommunications.”

He wrote, Advance industries matter because they “are in many respects the nation’s core sources of prosperity and economic preeminence.” Specifically, the advanced industries sector:

  • Encompasses many of the nation’s most crucial industries
  • Represents a key site of innovative activity
  • Trains and employs much of the nation’s STEM workforce

In addition, “its sizable advanced manufacturing sub-sector—delivers critical, specific, under recognized value to the nation and its people and places:”

  • Employment – “In 2018, the 50 advanced industries in the United States employed 14 million U.S. workers, or nearly 10%of total employment. Of that, the 35 advanced manufacturing industries contributed 5.7million jobs and 4% of U.S. employment.”
  • GDP – “U.S. advanced industries generate $3.7 trillion worth of output annually, or 18.5% of U.S. GDP in 2018…advanced manufacturing was a particularly sizable contributor of $1.4trillion worth of U.S. output.”
  • Productivity – “Each worker generated approximately $260,000 worth of output compared with $120,000 for the average worker outside advanced industries.3For the advanced manufacturing sub-sector the figure is $250,000.”
  • Pay – “In 2018, the average advanced industries worker earned $103,000 in total compensation, double the $51,000 earned by the average worker in other sectors. And real absolute earnings in advanced industries grew by 63 percent between 1975 and 2013, compared with just 17 percent for other workers…”
  • Multipliers – “Every new advanced industry job creates 2.2 jobs domestically—0.8 jobs locally and 1.4 jobs outside of the region…On average in other industries, new jobs create only one additional domestic job—0.4 jobs locally and 0.6 jobs outside the region.”
  • Innovation – “Advanced industries perform 90%of all private-sector R&D and develop approximately 82%of all U.S. patents.”

Muro explained that these advanced industries need government financial support because “there is now abundant evidence that the primacy of America’s advanced industries, and especially its advanced manufacturing sector, is being aggressively contested—and eroding.”

The challenge is succeeding because China and other competitor nations “are accelerating their investments in the key inputs to advanced-sector competitiveness—basic and applied research and development (R&D), STEM worker development, regional supply chain deepening—just as the U.S. commitment has weakened.”

He asserted, “As a result, the future competitiveness of the U.S. advanced industries sector has become uncertain because the United States is losing ground on important measures of advanced industry competitiveness.” In fact, “the U.S. has since 2000 run negative trade balances with both China and the world on advanced technology products, with the deficit continuing to grow.”

“On innovation, for example, the U.S. share of global patenting and R&D is falling much faster than its share of global GDP and population. While the U.S. lost 1.6 percentage points in its share of world populationbetween1981and 2016, its shares of global patenting and R&D spending both fell by over 15 percentage points.”

He pointed out that “when the ‘Made in China 2025’ industrial policy implies direct support to thousands of firms through state funding, low-interest loans, tax breaks, and other subsidies to the tune of hundreds of billions of dollars according to third-party estimates, U.S. advanced manufacturing firms—especially smaller ones—struggle to access affordable capital.”  

He added that “while the United States has the most developed venture capital (VC) system in the world, that system remains difficult to access for manufacturing firms…the natural biases of VC and other capital sources skew the existing small-firm finance system far away from capital-intensive manufacturing enterprises and are leaving them to face a debilitating lack of access to critical finance in the United States.”

Because “innovative firms engaged in complex, advanced manufacturing production require greater capital and more time to make a profit than non-production firms…most existing small-firm finance sources (especially venture capital) default to the low-risk, high-reward nature of digital start-ups and stay away from the longer profit horizons of manufacturing.”

He explained that “Tech” companies, after all, can produce fast-turnaround, consumer-facing products with little-to-no physical infrastructure. Advanced manufacturing firms, by contrast, require much more time, risk, and capital to develop products, bring them to market, and achieve scale, ensuring they get fewer VC opportunities.”

He concluded that “acute capital shortfalls are likely hobbling the ability of smaller advanced manufacturing concerns to grow their operations, contribute to local supply-chain deepening, and enhance U.S. competitiveness, community by community.”

Next, his testimony focused on how the SBIC could offer the ideal tool for assisting advanced manufacturing concerns in the coming years.  However, the current SBIC program has “several limitations that prevent it from investing as helpfully in growth as it might.” He stated that “the lack of sectoral specificity in SBIC loan-making means that public funds are not always channeled toward the highest public benefit—most notably that of advanced industries…[and}

its repayment structure, which begins immediately and is comprised of an SBA annual charge plus interest due semiannually, is not conducive to the nature of the longer-term product development timelines that advanced manufacturing firms require. In general, the SBIC’s offerings are not “patient” enough to optimally support advanced manufacturing business models.”

In order for the SBIC to help fill the void and maximize the program’s benefit to U.S. competitiveness through the support of U.S. advanced industries, he recommended that policymakers should:

  • “Explicitly prioritize advanced manufacturing growth in the SBIC’s equity capital toolbox.”
  • “Encourage robust and patient capital in SBIC funding.”

He explained that these actions are needed because “advanced-sector production enterprises are not specifically mentioned in program policies and criteria. They should be, because as of now they are losing out.” And “currently the program favors low-risk, high-reward, relatively short-term enterprises, which discriminates against advanced manufacturing concerns.

Accordingly, the committee should amend the Small Business Act to create within the existing SBIC a program that will offer preferred financing terms to VC firms that invest in advanced manufacturing firms. To determine eligibility for participation in this funding activity. manufacturers’ ‘advanced’ status could be confirmed by their location in designated NAICS codes, employing the same definitional methodology and industry list as employed in this testimony…Funding, therefore, should be growth-oriented, as much as possible—not time-bound. Changes can include tying repayments to a percentage royalty from sales, as well as denoting full repayment as a multiple of the original loan amount, rather using the current fixed payment-plus-interest model.”

In conclusion, he stated, “American’s medium-and long-term competitiveness and economic prosperity will be determined by success in a few select, but significant, industrial sectors: namely, the nation’s advanced manufacturing, energy, and digital industries. Success or failure there, meanwhile, will be determined by our choices, both what we choose to do and choose not to do, in world of state competition for valuable industries. Fortunately, one tool for which we can make good choices is the SBA’s SBIC program. Given its important role in enterprise finance, it is well worth the time and effort to make sure it is optimized to serve as a tool for national competitiveness. If rigorously targeted to investment in America’s advanced manufacturing sector, it will absolutely help us reassert national competitiveness, support vibrant communities, and promote dignified work.”

I’ve worked in the advanced manufacturing sector my whole career and was part of the team of a startup technology-based manufacturing company in the past. I’ve been a volunteer mentor for startup entrepreneurs for the San Diego Inventors Forum for the past ten years and was also a mentor for entrepreneurs in the CONNECT Springboard program simultaneously for three years. I know how hard it is for entrepreneurs to raise seed capital, but the crowd funding programs such as Kickstarter and IndieGoGo are greatly helping.  I’ve seen entrepreneurs raise all the money they needed to get their product into the marketplace, but it’s raising the funds to scale up to full production that is the problem.  Investors are looking for quick profits or the kind of company that will be able to do an IPO rapidly.  I believe that the Brookings recommendations for expanding the scope of the SBA SBIC program will be beneficial in helping to rebuild America’s advanced manufacturing sector.

Posted in Legislation, Manufacturing | No Comments »

Unique Maker Skills Academy launches in California

Tuesday, June 25th, 2019

On June 11th 2019,  I received a press release announcing the launch of the Vocademy Maker Skills Academy (MSA) — a one-of-a-kind, hands-on skills training program. This intensive program covers many of the vocational, career, and soft skills that are no longer taught in our schools. The kinds of skills thousands of employers are seeking. The program is available to anyone over the age of 16, with no prerequisites, transcripts, or GPA requirements.  The first ten-student MSA team starts July 8th, so enrollment is now open.

It is well documented that there is a massive skills gap in traditional and advanced manufacturing in America today. In past articles, I’ve mentioned that an estimated one to two million good-paying manufacturing jobs are going unfilled due to a lack of people with the right skills. There are also thousands of young adult makers looking for effective alternatives to college. The press release states: “An ideal solution has not existed …until today. This truly unique type program addresses the desperate needs of thousands of employers.”

In 2016, I wrote an article about Vocademy when it was essentially a traditional makerspace open to the public and beginning to offer skills training classes to high school students during the day. During that visit, founder and president Gene Sherman told me, “I started Vocademy because I had witnessed the demise of hands-on skills teaching in this country over the past 20 years. Schools have done away with these critical classes that taught practical life skills like woodworking and metal shop. These were the classes where people learned how to use tools and technology and develop the mindsets necessary to create new and amazing things.

When I saw ‘makerspaces’ springing up, I wanted to combine that type space with teaching the kinds of skills that were previously taught in ‘shop’ classes. I wanted to create a place for those who want to use their hands, in addition to their minds ? makers, inventors, and dreamers. I believe that if our country loses its ability to make and build things, we will have lost what made America great.

I wanted to provide access to these tools, but with proper and practical instruction on how to use them correctly and safely. I wanted a place that teaches the most state-of-the-art manufacturing techniques, not just traditional shop skills. I wanted to teach these important skills without the bureaucracy of academia because many more Americans should have the same opportunity to innovate, collaborate, learn, and create their dreams.”

 I visited Vocademy, located in Riverside, CA, on June 20th and interviewed Gene to find out more about the transformation from a makerspace to a skills discovery and training center.  Gene said, “Employers today are looking for those with a breadth of hands-on and soft skills. They want generalists and not specialists because the economy and workplace are changing at a rapid pace.  We have created the Maker Skills Academy to meet the needs of a career-centric workforce. Our goals are to teach real world skills, get our students career ready, and show them the amazing opportunities in the world of making. We’re looking forward to changing lives and creating the makers of the future. The program only takes six-months to complete. We do this by including over 90 fundamental classes in real-world subjects,” such as:

  • 3D Printing and Computer Aided Design
  • Laser Cutting and Engraving
  • Sewing and Textiles
  • Plastics, Vacuum forming, and Composites
  • Costume, Prop, 3D Papercraft, and Model Making
  • Fundamental Electronics, Soldering, Raspberry Pi and Arduino.
  • Robotics, Automation, and Hardware Programming.
  • Machine Shop Basics and CNC machining
  • Welding, Fabrication, and assembly
  • Wood Working.
  • Hand Tools, Power Tools, and support equipment 
  • Life and career soft skills for manufacturing, engineering, entrepreneurship and many other jobs

He emphasized that “by including the soft skills classes employers are seeking, the Maker Skills Academy is the perfect way to prepare for jobs in advanced manufacturing and other maker careers.

And unlike any other training programs or schools, MSA students will also have access to using our equipment every single evening to practice their skills, collaborate, create amazing resumes, and build capstone projects.”

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As Gene led me on a tour of their facility, he explained, “Classes have minimal theory or history and lean heavily toward hands-on, practical skills learning. There are only eight to ten students per MSA team. We have a high instructor-to-student ratio for effective and intimate learning of skills. Our modern facility has over $500,000 of traditional and state-of-the-art manufacturing equipment.

During the tour, I saw that Gene had upgraded the 3D printing lab with all industrial machines rather than the hobby-type machines previously in the lab.  He had also upgraded to industrial sewing machines from the home-type machines he had previously, and there were now two cutting machines in the laser workroom. There were two new park bench projects in the fabrication workroom that the students had built themselves to utilize their metal fab and woodworking skills. He showed me the Little Free Libraries projects that are being placed in front of homes in neighborhoods, which are the capstone projects for the woodworking class.

Gene said that the Maker Skills Academy is perfect for those looking for:

  • a unique alternative to college, with real job and life skills
  • an ideal learning program to explore a multitude of maker skills
  • an effective pre-engineering program before entering university
  • an intensive course in maker skills for entrepreneurs or inventors
  • a set of job skills that will make STEM or maker careers future-proof

The website provides the following description of what is included in the Maker Space Academy program:

  • Six months of subjects and classes designed by industry experts and based on real-world needs of companies.
  • All raw materials, tools, and supplies the student will need for the classes in this program.
  • Six months of maker lab access with use of all equipment the student has been trained to use. 7-days-a-week, 5-10pm.
  • A Vocademy Maker Academy work shirt, basic measuring and hands tool set, a shop apron, and safety glasses.
  • An incredibly creative environment, surrounded by other makers, students, and engineers.
  • An Intellectual Property (IP) free facility. Student developed products or inventions are the property of the student.
  • A unique learning experience for anyone seeking to become more valuable to the world.
  • To develop an amazing set of skills for a career, personal enrichment, or for entering engineering schools.
  • Student graduates will receive Vocademy Certificates of Completion for every subject completed.
  • The opportunity to collaborate and work on your projects or ideas using modern and traditional industrial equipment.
  • To create an incredible resume full of projects, practical skills, and hands-on experience.

I asked what was expected of students, and Gene replied, “There are no mid-terms or finals. Students must commit to classes, self-guided learning, and the creation of projects. They sign a Commitment Pledge to put forth their best effort to ensure a successful learning experience. Students must be willing to continue self-guided depth learning and skills practice during maker lab hours and personal time. And, students are expected to complete a final capstone project for their maker portfolio/resume either solo or as part of a team.”

When I asked what his future goal is, he said, I want the Maker Skills Academy to be the choice of manufacturers for training employees, both existing and those being hired.  I want the MSA to be considered as the “Olympic training center” for manufacturing skills. I envision local manufacturers becoming partners with Vocademy for their employee training.”

I told him that I hope he realizes his goal because programs like his would go a long way in solving the skills gap and attracting the next generation of manufacturing workers.  It is critical that we get back to being a nation of “makers” as manufacturing is the foundation of the middle class, and our middle class has been shrinking for the last 30 years as we moved more and more manufacturing offshore.   

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Posted in Education, Manufacturing, Training, Workforce Development | No Comments »

The High Cost of Trade Deficits

Tuesday, April 9th, 2019 
 
 

Free trade has resulted in enormous trade deficits in goods for the United States for over 40 years. Our last year of a positive trade balance was 1975. At best, free trade has benefited large, multinational global corporations that have manufacturing facilities located in other countries. At its worst, it is the primary source of our trade deficit and loss of good paying manufacturing jobs.

Even with the tremendous resources we have, what was once the world’s largest manufacturer of products has accumulated $14.379 trillion worth of deficits in goods for all countries since 1991.

A fact sheet generated by the Coalition for a Prosperous America for 2018 show ten countries account for 97% of our trade deficit: China, Mexico, Japan, Germany, Ireland, Vietnam, Italy, India, South Korea, and Malaysia. Our trade deficit with China alone was $419 billion, representing 47.9% of our trade deficit.  Since 1991, we have accumulated over $9.144 trillion worth of trade deficits with just the top four countries. If we had fair trade, we would not have these constant trade deficits.  The drastic effect China has had on our trade deficit is demonstrated by the fact that in 2001 when China joined the World Trade Organization, we had a total $412 billion deficit in goods, but in 2018, we had a $879 billion deficit in goods. 

 

For every $1 billion of trade deficits in goods, it’s been estimated that 6,000 – 7,000 jobs are lost, at about $80,000/job. This means that 8 – 10 million more Americans willing to work could have a comfortable middle-class job in America. Instead, we lost 5.8 million manufacturing jobs from the year 2000 to 2010. 

 

In terms of purchasing power, workers’ wages in the U.S. have been stagnant since the 1970s. The significant collapse in the income of average Americans can be attributed to the vast decline of jobs in the U.S. manufacturing sector. This is the reason average U.S. wages have fallen over time, especially since 2001. From 2001 – 2013, the average U.S. wages fell by 3.5%. In contrast, as Chinese workers flocked to cities for manufacturing jobs, wages have grown substantially, averaging an 11 percent increase per year from 2001 to 2015. 

 

According to the Pew Research Center, 61% of American households were part of the middle class in 1971, but by 2015, only 50% of Americans were part of the middle class. “In 2002, China’s middle class was only four percent of its population. A decade later, this number had climbed to 31 percent, constituting over 420 million people. In contrast, in 1999, only 2% of the Chinese population was a part of the middle class, but by 2013, 39% of the Chinese population was in the middle class.

 

Since China joined the World Trade Organization, the bi-partisan, 12 member U. S.-China Economic and Security Review Commission (USCC) has been required to submit annual reports to Congress. These reports document China’s non-compliance with the WTO and the effect it has on the U. S. economy.

For example, the 2007 report included a case study of the local impact of trade with China on North Carolina. The USCC report stated “the accelerating decline in North Carolina’s manufacturing employment is due in large measure to increasing competition from imports mostly from China . . . The combination of China’s 2001 admission to the World Trade Organization (WTO), which gave it quota-free access to U.S. markets for its textile and clothing exports, and the subsequent U.S. grant of Most-Favored (Trading) Nation status that lowered most tariffs on Chinese imports, battered North Carolina’s textile and apparel industries, and they never recovered.”

Because a greater proportion of North Carolina’s workforce had manufacturing jobs than any other state, North Carolina’s workforce was more vulnerable to competition from imports than the workforces of other states. North Carolina’s manufacturing economy was made even more vulnerable by its concentration in the import-sensitive sectors of textiles, apparel, and furniture. North Carolina is one of the southeast states that had a large number of textile companies, and as a result, North Carolina has been the most impacted state in the nation by layoffs due to trade. Between 2004 and 2006, almost 39,000 North Carolina workers were certified by the Trade Adjustment Assistance program as having lost jobs to trade, more than 10 percent of the U.S. total of 387,755. 

According to the Social Science Research Institute (SSRI) of Duke University in North Carolina, there were 2,153 textile and apparel plants in North Carolina employing 233,715 people in 1996. By 2006, the apparel industry had experienced a 70% decline in jobs and 55% loss of plants. The textile industry by comparison had only lost 63% of jobs and 32% of plants from 1996 to 2006. 

The loss of these well-paid manufacturing jobs in North Carolina’s textile industry may have resulted in families losing their homes and/or being forced to relocate to other areas of the country to find jobs. Taking lower paying jobs in their own communities may have resulted in families no longer being in the middle-class income range. And, those who have not been able to find any work or only part-time work may have even dropped down to the poverty level.  It is not just people losing jobs and not being able to find other employment that pays as well as their former jobs, “hundreds of small towns throughout North Carolina impacted by plant closures are dying.”

Remember that it takes taxes paid by three to four working Americans to pay for the unemployment benefits of a non-working American. The cheaper China price of goods that we import instead of producing here in the U. S. results in a cost to society as a whole. We need to ask ourselves:  Is the China price worth the cost to society?  I say a resounding NO! We need to stop shooting ourselves in the feet. We need to stop benefitting the one percent of large multinational corporations to the detriment of the 99% percent of smaller American companies.

China, Germany, Japan, and many other countries have built their currency value around making certain all of their countrymen have a good job, even if that destroys America’s work force. As a result, these countries have maintained constant trade surpluses with the U. S. for many years, which would not have happened if we had fair trade.

 

It is impossible for the U.S.to remain competitive if our currency is not fairly valued. In order to move manufacturing jobs back to the U.S., we need to move our currency value down by at least 27% because the currency of Germany and Japan are undervalued by about that same amount.  China has rigged its currency between 15%-40% below its fair value since joining the WTO, and this gives a subsidy to their imports to the U.S. and imposes a direct cost on U.S. exports to China.

Devaluing our currency would allow many more products that we import from overseas to be made here. Unfair trade practices of currency manipulation, government subsidies, product dumping, and state-owned enterprises have allowed China to buy our raw materials and our low-cost energy to become the largest producer in the world of paper, aluminum, and steel even though labor costs are small compared to the cost of raw materials, energy, and transportation.

We need to focus on eliminating our trade deficits and achieving balanced, reciprocal trade in all future trade agreements. The last thing we need is to increase our trade deficit more than it already is.

 

In addition, we need to continue on the path of returning more manufacturing to America by reforming our tax policies and making regulations less onerous to manufacturers, without compromising our commitment to protect our environment. This is the only way that we will be able to simultaneously reduce our trade deficit and the national debt.

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Tariffs Benefit the American Manufacturing Industry

Wednesday, February 13th, 2019

Most people are unaware that for over 150 years, the American government protected the development and growth of its manufacturing industry with high tariffs, ranging from a low of 5% to as high as 50% in some cases. The first tariffs were imposed by the Tariff Act of 1789, whose purpose was to raise money for the new federal government, slash Revolutionary War debt and protect early-stage American industries from foreign imports.

Prior to achieving its independence, Americans were dependent on goods imported from England, France, and Holland, so it was critical to develop their own manufacturing base to maintain independence as a country in the event of future wars.

These protectionist policies enabled its fledgling manufacturing industries to grow until the United States became the preeminent industrial nation in the 20th century.  American manufacturing dominated the globe for over 70 years.

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, reflecting the failure of negotiating governments to create a proposed International Trade Organization. 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.

By the 1970s, Japan’s economy was flourishing to the point that Japan became a major exporter to the U. S. for consumer electronic goods such as cameras, stereos, radios, and TVs. During the 1980s, Japan further expanded its U. S. market share with automobiles and machine tools for the manufacturing industry, such as mills, lathes, and turret presses.

Germany focused on high-end products in all of the same markets as the Japanese, so that American products faced stiff competition at the low end and high end.

Manufacturing employment in the U. S. reached a peak of 19.5 million in 1979, and slid down to 17.3 million by 1993 from the effects of job losses from increased imports from Japan, Germany, and other countries because of free trade policies and lower tariffs.

By 1995, when the World Trade Organization replaced GATT, 125 nations had signed its agreements, governing 90 percent of world trade.

Another major blow to the American manufacturing industry took place when the North American Free Trade Agreement (NAFTA) was negotiated under President Bill Clinton and went into effect in January 1994. The agreement was supposed to reduce market barriers to trade between the United States, Canada, and Mexico to reduce the cost of goods, increase our surplus trade balance with Mexico, reduce our trade deficit with Canada, and create 170,000 jobs a year. Twenty years later, the fallacy of these supposed benefits is well documented.

According to the report “NAFTA at 20” released in 2014 by Public Citizen’s Global Trade Watch, “More than 845,000 specific U.S. workers have been certified for Trade Adjustment Assistance (TAA) as having lost their jobs due to imports from Canada and Mexico or the relocation of factories to those countries.”

In 1994, GATT was updated to include new obligations upon its signatories. One of the most significant changes was the creation of the World Trade Organization (WTO.) The 75 existing GATT members and the European Community became the founding members of the WTO on January 1, 1995. The other 52 GATT members rejoined the WTO in the following two years, the last being Congo in 1997. Since the founding of the WTO, a number of non-GATT members have joined, and there are now 157 members.

The loss of jobs accelerated after President Clinton granted Most Favored Nation status to China in the year 2000, and China was able to join the WTO. As a result, the U. S. lost 5.9 million manufacturing jobs from 2000 to 2010, and manufacturing employment dropped from 17.3 million down to 11.4 million in depth of recession in February 2010. In addition, an estimated 57,000 manufacturing firms closed.

On January 31, 2017, the Economic Policy Institute released a report, “Growth in U.S.–China trade deficit between 2001 and 2015 cost 3.4 million jobs,” written by Robert Scott.

Scott stated, “Due to the trade deficit with China, 3.4 million jobs were lost between 2001 and 2015, including 1.3 million jobs lost since the first year of the Great Recession in 2008. Nearly three-fourths (74.3 percent) of the jobs lost between 2001 and 2015 were in manufacturing (2.6 million manufacturing jobs displaced).”

Why were so many jobs lost? A large percentage of the people who lost jobs were in industries decimated by Chinese product dumping and below market pricing; i.e., textiles, furniture, tires, sporting goods, and garments. In addition, American manufacturers chose to outsource manufacturing offshore as the U.S. Department of Commerce data shows that “U.S. multinational corporations… cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million.”

Thankfully, manufacturing employment increased to 12.8 million by December 2018 as shown by the chart below. This was the result of a very slowly improving economy, reshoring (returning manufacturing to America), and increased Foreign Direct Investment (foreign manufacturers setting up plants in the U.S.) Notice that it took six years to increase by 904,000 under the Obama Administration, and it’s only taken two years to increase by another 441,000 jobs under the Trump Administration. While an increase of 1.4 million jobs is good news, at this rate, it would take about 30 years to recoup the 5.8 million jobs we lost from 2000 to 2010.

 

We need to accelerate the growth of manufacturing jobs, and that is what the tariffs imposed by President Trump are designed to do.  In the only few short months since the tariffs went into effect, I’ve seen the following headlines about job growth in the past week:

“U.S. Steel Corp. Restarts Texas Plant That Closed in 2016,”  IndustryWeek, February 5, 2019

“Tariffs Helping US Manufacturers Add Jobs, Says Group,” IndustryWeek, February 7, 2019

“US Steel Resumes Construction on Idled Facility,” IEN, February 11, 2019

On December 04, 2018, the article “Contrary to popular belief, Trump’s tariffs are working” by Jeff Ferry, Research Director for the Coalition for a Prosperous America (CPA), stated,  “The tariffs have contributed to this growth directly and indirectly. Directly, we’ve catalogued some 11,000 US jobs that are being created by companies in the four tariffed industries, and that’s not including any of the Section 301 industries. Since that 11,000 tally in August, more investments and jobs have been announced, like the massive $1.5 billion steel plant to be built by Steel Dynamics, which will create some 600 new jobs in the southwest. Solar Power World lists a dozen solar companies now investing in US production of solar modules.”

“At CPA, we built an economic model looking at the effects of the tariffs on the US economy from 2018 through 2021. We found that the tariffs boosted US economic growth, adding $9 billion to GDP this year. Further, our growing economy leads to growing US imports each year. In other words, by boosting our own economic growth, we buy more goods from our trading partners, not less.”

If we want to protect our national security and maintain our national leadership in the 21st Century, we cannot continue down the path of increasing trade deficits and increasing national debt by allowing countries with predatory trade policies to destroy the American manufacturing industry.  I support the new path the Trump Administration is forging by developing and implementing a national strategy to win the international competition for good jobs, sustained economic growth, and strong domestic supply chains.

 

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Tax Cuts Act Hurts Small Corporations

Wednesday, January 30th, 2019

When we attended the Christmas party for one of the small fabrication companies we represent in December 2018, the owner announced that employee bonuses would be less this year because his corporate tax rate went up from 15% to 21%. As manufacturers sales representatives, we wondered if other small corporations were being similarly hurt.

When President Trump signed the Tax Cuts and Jobs Act on December 22, 2017, business and economic experts lauded the reduction in corporate tax rates as one way to help American companies be more competitive in the global marketplace. The National Association of Manufacturers and the U. S. Chamber of Commerce had long complained that the U. S. had the highest corporate tax rate in the world at 39.1 percent, which the Tax Foundation explained was “a combination of our 35 percent federal rate and the average rate levied by U.S. states.”

Doing research, I found an article titled “Trump’s Tax Plan and How It Affects You” on The Balance website.  I learned that the Act permanently cut the corporate tax rate from a progressive rate of 15 percent to as high as 35 percent down to a flat tax rate of 21 percent beginning in 2018, the lowest since 1939. Besides C corporations, the corporate tax rate also applies to LLC’s who have elected to be taxed as corporations. This rate does not apply to S corporations, partnerships or sole proprietorships, which are taxed at the personal tax rate, ranging from 10% to the new limit of 37%.

Most people didn’t realize that while the previous tax rate for corporations started at only 15%, and went up to 35 percent, the average “effective rate was 18.6 percent,” according to a 2017 report by the Congressional Budget Office.

At the Small Business & Entrepreneurship Council’s website, it states that “according to the Census Bureau’s Statistics of U.S. Businesses for employer C corporations in 2015, 99.0 percent of all business are small businesses” with fewer than 500 employees as defined by the Small business Administration; “96.4 percent of firms had fewer than 100” and “84.9 percent of firms had fewer than 20 employees.”

This means that the majority of C corporations paid tax rates well below the maximum tax rate of 35%. Therefore, the flat tax of 21 percent replacing is hurting low-earning corporations that were paying a lower rate and benefiting high-earning wealthy corporations.

The Balance website also states: “The Act allows companies to repatriate the $2.6 trillion they hold in foreign cash stockpiles. They pay a one-time tax rate of 15.5 percent on cash and 8 percent on equipment.”

The reason corporate monies need to be repatriated is that according to Wikipedia, “tax deferral is one of the main features of the worldwide tax system that allows U.S. multinational companies to delay paying taxes on foreign profits. Under U.S. tax law, companies are not required to pay U.S. tax on their foreign subsidiaries’ profits for many years, even indefinitely until the earnings are returned to U.S.”

Thus, repatriation benefited wealthy corporations because they are the ones that shifted manufacturing to subsidiary plants outside of the United States in the past 20 years. It is unlikely that any small business has a plant outside of the U.S., and thus wouldn’t have any profits stockpiled offshore to repatriate.

In the last two years, I wrote two articles about corporate tax reform at the federal level based on the Sales Factor Apportionment Framework proposed by one of the members of the Coalition for a Prosperous America, Bill Parks. Mr. Parks is a retired finance professor and founder of NRS Inc., an Idaho-based paddle sports accessory maker. He asserted that “Tax reform proposals won’t fix our broken corporate system… [because] they fail to fix the unfairness of domestic companies paying more tax than multinational enterprises in identical circumstances.”

He explained that multinational enterprises (MNEs) use cost accounting practices to transfer costs and profits. “Currently MNEs manipulate loopholes in our tax system to avoid paying U. S. taxes… MNEs can legitimately choose a cost that reduces or increases the profits of its subsidiaries in different countries. Because the United States is a relatively high-tax country, MNEs will choose the costs that minimize profits in the United States and maximize them in what are usually lower-tax countries.”

The way his plan would work is that the amount of corporate taxes that a multinational company would pay “would be determined solely on the percent of that company’s world-wide sales made to U. S. customers. Foreign MNEs would also be taxed the same way on their U. S. income leveling the playing field between domestic firms and foreign and domestic MNEs.”

On January 24, 2019. the Coalition for a Prosperous America (CPA) released a Press Release stating that  a letter was sent to both the Senate Finance and House Ways & Means Committees asking “for consideration of both a destination-based Sales Factor Apportionment tax system (SFA) and a Strategic Goods and Services Tax (GST).”

A Goods and Services Tax (GST) is a strategic consumption tax, which would improve America’s trade competitiveness. The Release states: “Currently, foreign governments charge US exporters value-added (VAT) taxes—averaging 17 percent globally—at their borders. Most of these countries have reduced tariffs over the last 45 years—but replaced them with value added taxes. They use this new revenue to reduce other taxes and costs, and to fund national pension systems and health care. The US is virtually alone in not collecting value added taxes on imports.”

CEO Michael Stumo said, “Congress should fix this foreign trade advantage through an innovative and strategic consumption tax called a Goods and Services Tax…a 13 percent GST could raise $1.4 trillion in revenue and fund a full credit against payroll taxes, reduce personal income taxes, and provide a credit for healthcare costs. US companies would benefit from the cost reduction and receive a 13 percent GST rebate when exporting. Foreign companies would pay a 13 percent GST tax when bringing goods into the US.”

Stumo continued, “Tax reform can reduce our trade deficit, drastically reduce complexity and put even more Americans to work in good paying jobs. Congress should tax the profits and sales of all companies selling here and eliminate taxes on exports. The combination of an SFA and a strategic GST is the most pro-American tax system Congress could devise.”

It’s time that small American domestic corporations stop bearing the brunt of corporate taxes that benefit the large multinational enterprises.  Bi-partisan tax reform that benefits all Americans should be made a priority by our newly elected Congressional Representatives and Senators.

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Upcoming Southern California Events

Wednesday, January 16th, 2019

We have a busy first few months of trade shows and conferences for 2019. I will be attending the following shows for at least one day to keep up with the latest technologies and industry news for writing future articles.

I’m also beginning the year with several webinars in January – March.  I am giving two webinars on “How to Return Manufacturing to the U.S. Using Total Cost of Ownership Analysis” on two dates, Tuesday, January 22nd (Register here) and Wednesday, January 30th (Register here).

Then, I’m giving one Tuesday, February 12th, on “How We Can Solve the Skill Shortage and Attract the Next Generation of Manufacturing Workers.” Register here.

On February 5-7, 2019, the UBM Advanced Manufacturing Expo & Conference

will be held at the Anaheim Convention Center, Anaheim, CA

This conference will be part of the five shows being held concurrently at the Center.

Register Here

 Register Here

Expo Hours for all shows:

 February 5, 10:00 a.m. – 5:00 p.m.

February 6, 10:00 a.m. – 5:00 p.m.

February 7, 10:00 a.m. – 4:00 p.m.

 

AFCEA/USNI WEST Conference
Registration Center
11208 Waples Mill Road, Suite 112
Fairfax, VA 22030
(888) 273-5706 / (703) 449-6418
Register

Why Attend AFCEA:

Attend three days of open discussions with defense and maritime leaders. Gain a better understanding of the impacts and implications of the new National Security Strategy. Hear about the current set of challenges facing the Navy, Marine Corps and Coast Guard, and be a part of the dialogue on the opportunities and solutions to address these concerns.

CONNECT

Spend time with military, government and industry ‘out of the office’ and ‘outside of the beltway.’ Engage with speakers, attendees and exhibitors and discuss ideas and insights. Afternoon happy hours on the exhibit floor provide an opportunity to network with thought leaders.

INNOVATE

Explore and experience the latest platforms, leading edge technologies and state-of-the-art networking capabilities that support the Sea Services operations. Visit over 300 maritime exhibits.

 

IPC APEX EXPO 2019 is a five-day event like no other in the printed circuit board and electronics manufacturing industry. Professionals from around the world come together to participate in the Technical Conference, Exhibition, and Professional Development, Standards Development and Certification programs. These activities offer seemingly endless education and networking opportunities that impact your career and company by providing you the knowledge, technical skills and best practices to address any challenge you face.

Exhibition Hours

Tuesday, January 29           10:00 am–6:00 pm

Wednesday, January 30     9:00 am–6:00 pm

Thursday, January 31         9:00 am–2:00 pm

About IPC

IPC is a global trade association dedicated to furthering the competitive excellence and financial success of its members, who are participants in the electronics industry. In pursuit of these objectives, IPC will devote resources to management improvement and technology enhancement programs, the creation of relevant standards, protection of the environment, and pertinent government relations.

Register Here

Conference: April 29 – May 2, 2019 | Exhibits: April 30 – May 1

Long Beach Convention Center, 300 East Ocean Blvd, Long Beach, California

Conference Hours:

Tuesday, April 30, 2019 | 10:30 AM – 4:00 PM

Wednesday, May 1, 2019 | 10:30 AM – 4:00 PM

Thursday, May 2, 2019 | 9:00 AM – 12:00 PM

Exposition:

Tuesday, April 30, 2019 | 10:00 AM – 5:30 PM

Wednesday, May 1, 2019 | 10:00 AM – 5:30 PM

Dates and times for workshops, tours, and networking receptions are being determined. Check back for updates.

Register Now

 

For those of you in San Diego County, you may also want to attend the free Economic Roundtable on Thursday, January 17, 2019.

What does the San Diego County economy look like for 2019 and beyond? Join  the lively discussion with a panel of experts covering the future of the economy, housing/homelessness, military, and diversity and inclusion. Experts will provide predictions and their perspective on what may be in store for San Diego County.

Session One:

Ray Major, Chief Economist, SANDAG

Ryan Ratcliff, Associate Professor of Economics, USD School of Business

Sarah Burns, Director of Research and Evaluation, San Diego Workforce Partnership

Session Two:

Housing/Homelessness: Stephen Maduli-Williams, Community Development Program Manager, City of San Diego

Military: Jesse Gipe, Senior Manager, Economic Development, San Diego Regional Development Corporation

Diversity and Inclusion: Dwayne Crenshaw, CEO and Co-Founder, RISE San Diego

Date: Thursday, January 17, 2019

Time:

Networking: 8–8:30 a.m.

Program: 8:30 a.m.–noon

Location:

University of San Diego—Joan B. Kroc Institute for Peace & Justice

5998 Alcala Park, San Diego, CA 92110

Cost: Free

Save Your Seat

 

 

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MFG Day Motivates Youth to Pursue a Career in Manufacturing

Tuesday, October 23rd, 2018

Since 2012, thousands of manufacturers around the country open their doors to inspire and recruit the next generation of manufacturers on Manufacturing Day (MFG Day), which was held this year on Friday, October 5th.

MFG Day is produced by the National Association of Manufacturers and the Manufacturing Institute. MFG DAY had ambitious goals: “to change public perception of manufacturing, inspire students to pursue manufacturing careers, and strengthen the future of manufacturing by avoiding the talent shortage on the horizon.” According to the MFG Day website, “We wanted to correct the idea that manufacturing involved repetitive, unskilled tasks that happened in dark, dirty factories — a ridiculous idea to anyone who has actually worked in manufacturing — and show people what manufacturing really looks like.”

Those of us in the industry know that today’s manufacturing jobs are high skilled, and take place in clean, well-lit, technologically advanced facilities. The problem was that there was no way to know whether perceptions were changing until Deloitte became a sponsor of MFG DAY in 2015 and conducted surveys of attendees.

The results of the survey of 2015 showed:

  • 81% of students emerged “more convinced that manufacturing provides careers that are interesting and rewarding.”
  • 62% of students were “more motivated to pursue a career in manufacturing”

The 2016 survey results showed that the percentages rose to 84% and 64% respectively.

The 2016 Deloitte report said, “Projections indicate that roughly 600,000 people attended MFG DAY events in 2016 and that 267,000 of them were students. That means that nearly 225,000 students walked away from their MFG DAY 2016 event with a more positive perception of manufacturing, according to Deloitte’s findings…. Based on the 267,000-student attendance figure, that’s potentially 171,000 new members of a next-generation manufacturing workforce.”

The Deloitte surveys showed that “71 percent of student attendees both years said that they “were more likely to tell friends, family, parents, or colleagues about manufacturing after attending an event,” meaning that they weren’t just convinced — they were inspired.”

This year, the MFG Day website listed 2,739 events planned across the country. In California, there were events planned at more than 250 locations throughout the state. The CMTC October 9th newsletter stated, “This year, CMTC and its California’s Manufacturing Network were much more active in sponsoring, organizing and coordinating events statewide. CMTC was also very committed in pairing up schools wishing to attend Manufacturing Day events with manufacturers and other organizations hosting open houses, career fairs, and expos. CMTC and its California’s Manufacturing Network’s efforts directly resulted in over 50 schools attending these events. At these events, students received first-hand exposure about today’s manufacturing technologies in industries that employ highly-skilled and well-paid individuals while offering exciting, rewarding, innovative work environments.”

Since I moved up to Hemet, CA in September, I attended events in Riverside County instead of San Diego County.  There were five events in the city of Riverside, one in Menifee, one Murrieta, one in Perris, and one in Redlands.  This is in comparison to my former home county of San Diego with 22 in the city of San Diego, three each in Carlsbad and San Marcos, two in El Cajon, and one each in Chula Vista, Oceanside, and Vista.

I attended only three events in Riverside County because they were located so far apart, and most of the events were held in the same time period between 10 AM and 2 PM. I began my day by attending the event in Menifee at Mt. San Jacinto College to introduce their new Makerspace to students.  The auditorium was nearly filled with students form Santa Rosa Academy where a panel of business professionals and professors shared the value of their education to their careers.  The event was sponsored by the City of Menifee, the Menifee Valley Chamber of Commerce, and CMTC. The audience was welcomed by Major Bill Zimmerman and Tony LoPiccolo, Executive Director of the Chamber.

Fortunately, I was able to get a private tour of the MakerSpace by Hal Edghill, the MakerSpace specialist, before the students had finished listening to the panelists. The MakerSpace has 15 inexpensive 3D printers and two more advanced 3D printers for students to use for their projects, as well as a small laser cutter/engraver. Mr. Edghill said the MakerSpace just opened in August, so this is the first semester it is available for students to use for projects.

There were so many students that they were divided into four groups for their tour.  Afterward, the students enjoyed pizza and soda before returning to school.

I then drove up to Riverside for a tour of Aleph Group, Inc. (AGI). AGI builds custom bloodmobiles, mobile medical and dental clinics, container hospitals, emergency command vehicles, mobile command centers, and specialty trailers, modular units, and vehicles.  Founder and President/CEO Jales De Mello conducted the tour personally, and we saw four projects in various stages of construction.  One bloodmobile was completed, ready to ship to Saudi Arabia.  Another nearly completed project was a mobile medical/dental clinic being built for a northern California Indian reservation.  The largest project under construction was a modular clinic.

Mr. de Mello said, “I started the company in 2001 with the goal of “making a positive on people’s lives. Our mobile health clinics are custom designed from the ‘ground-up,’ and are fully equipped for turnkey operation. Sizes range from 28 ft. up to 50 ft., and all of our vehicles and units are 100% wood-free construction, so as to eliminate all possibilities of bacteria and fungus growth associated with the use of wood products. The all-aluminum construction is lighter weight, has greater performance and longevity, and improves fire safety.” He believes that “his industry and its leaders must take a proactive approach in solving the needs of mankind.”

Next, I drove to Phenix Technology, Inc., which manufactures high quality fire helmets and other fire safety products and collectibles.  I arrived early for my 2:00 PM tour, so while the formal tour of manufacturing was being conducted, I had the pleasure of getting a private tour of their collectible museum of fire helmets from around the world and memorabilia related to fireman and fire stations. Museum tours are available upon request.

Phenix Technology, Inc was founded in 1972 by Former California State Fire Marshall, Ronnie Coleman and former Assistant Chief of the California State Fire Training Division, Ray Russell to make higher quality fire helmets. Four decades later, Phenix is still a family business who continues to proudly manufacture in the USA, and Mr. Coleman and Mr. Russell “are still there and available to answer any questions you might have about firefighter head protection.”

Tyler Meyer conducted the formal tour, and I saw three different styles of fire helmets being made in the production area.  Tyler said they have gone through Lean training and greatly improved their productivity and reduced lead times.  He said, “We can now make up to 20 helmets per hour instead of four.  Our lead times for most of our products, except for handmade leather helmets. went from 6 weeks to 6 hours in some cases. Our sales went up 51%, and our Net Operating Income went up 1600%+. We reduced our inventory by over $100,000, and our inventory turns are almost unmeasurable as we do everything just in time. We haven’t had any significant price increases in three years though our COGS increased as much as 30% because our controllable costs are down.”

He referred me to their Director of Global Operations, Angel Sanchez, Jr., who emailed me that “it is more important to talk about how Lean has created a culture of continuous improvement and total employee engagement. How Monday is most of our people’s favorite day of the week, not Friday. How we have learned that Lean is about creating a mindset where you see waste in everything and how everyone works together to eliminate it. If you are encouraging people to start a Lean journey, the focus has to be on the pillars of Lean, not the metrics.”

I was happy to get another example of the difference a Lean transformation can make in company performance and how important it is for American companies to become Lean enterprises to help rebuild American manufacturing.

I encourage more manufacturers to plan to participate in MFG Day in 2019.  Open your company to a tour.  Invite the families of your employees.  Invite your customers.  Invite the students of local high schools.  Invite your elected officials.  Many of them have never been in a manufacturing plant.  Let’s make 2019 the most successful MFG Day to date.

 

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Lean Frontier Summit Focuses on Transformation into Lean Enterprise

Tuesday, October 9th, 2018

On September 20-21,2018, Lean Frontiers held their annual Lean Leadership Summits at the Westin Hotel on Jekyll Island.  This was my fifth year to be invited as a speaker at the conference. This year’s summit continued the combination of Lean Management,/Lean Accounting, and Lean H.R./People Development summits that was begun last year.

Co-founder Dwayne Butcher explained last that year that “It’s about time that the whole enterprise be involved in becoming a Lean company. Lean is a business model and must therefore include every part of the business, including those in Executive Leadership, Accounting, HR, Sales, Product Development, Supply Chain. We need to breakdown the silos between these departments.”

Between the keynote speakers, there were four tracks related to Lean Management/Lean Accounting, and Lean H.R./People Development.  Besides giving my own presentation, “How Reshoring and Lean are Helping Rebuild Manufacturing,” based on my new book Rebuild Manufacturing – the key to American Prosperity, I attended the keynotes and several of the sessions in the Lean Management and Lean Accounting tracks.

Lean Frontiers is not a consulting firm. Its sole focus is to provide learning opportunities to

address:  Enterprise?wide adoption of Lean and the foundational skills needed to become a Lean company.

Co-founder Jim Huntzinger, said, “The first Lean Accounting Summit was held in 2005, and out of that summit, Lean Frontiers was born.  Lean is still perceived as a program with short term results by too many, and we need to make the transition to Lean as a business model.  We need to traverse unclear territory — trust the process to go from current condition to the target position. We can use XYZ Thinking:  If we do X, then we will get Y, but if we get Z instead, then we will learn.”

Mike DeLuca of the Lean Enterprise Institute introduced a Lean Accounting A3 for attendees to provide ideas on how to achieve the aspiration of having Lean Accounting be self-sustaining within five years.

Jim announced that the Journal of Cost Management has taken an interest in the summit and has a booth in the foyer. Lean Six Sigma Master Black Belt Gary Kapanowski, who is a Guest Editor for the Journal, invited attendees to sign up to contribute articles to the magazine in the coming year as they are interested in running more stories about Lean in the magazine.

Then, he introduced the first keynote speaker, Karen Martin, author and President of the Karen Martin Group, spoke about her new book, Clarity First.  Clarity was a concept that she introduced in her book, The Outstanding Organization, wherein she looked at common patterns at companies and individual performance. She covered four areas: clarity, focus, discipline, engagement in her previous book and was asked by her readers to expand on the topic of clarity.  She discussed “what is clarity and what it is not,” saying that “it is coherence, precision, and elegance. Information needs to be complete accurate and easy to understand. Think of your target audience as your customer. The opposite of clarity is ambiguity, which complicates, slows, frustrates, increases risk, and is expensive. Ambiguity is manmade and different than lack of certainty. Strategic ambiguity can be useful for certain purposes. “

She asked: “What type are you? Clarity pursuer, clarity avoider, clarity blind” She stated, “Children have a natural curiosity but it gets stamped down when they ask why. Same thing can happen at work. Close to curiosity is humility about how you are communicating and how you are being received. We have 180+ cognitive biases that affect communication. Rushing hampers clarity; take time to be clear. Fear can be underlining lack of clarity. Fear can be biggest reason for resistance to Lean transformation.

She explained that clarity liberates purpose, priorities, process, performance, and problem solving:

Purpose – great way to get people engaged about what you do.

Priorities – defining true north.

Process – Value stream thinking is critical to defining process

Processes: documented, current, followed, consistently monitored, regularly improved; Standard work description is necessary for each task

Problem solving – CLEAR

C = clarity

L = learn

E = experiment

A= access

R = Rollout

In conclusion she recommended, “Infuse clarity into your organization…You need a scoreboard at all levels of company showing how you are doing.”

Prior to the afternoon keynote speaker, Jean Cunningham announced the awardees for the Lean Enterprise Institute’s Lean Accounting professor and student awards.  Professor Laurie Burney of Baylor University and her student, Katie Kearny of KMPG received the award for their research on Lean Accounting that will be published this fall.

Harry Moser, founder and head of the Reshoring Initiative was the afternoon keynote speaker. He spoke on “TCO/Reshoring:  Simplify your Lean Journey, Improve Employee Morale.”  Harry developed the Total Cost of Ownership (TCO) calculator that quantifies he hidden costs of doing business offshore, which is free for companies to use at www.reshorenow.org. Harry highlighted the fact that the tide turned in 2016 between offshoring and reshoring as reshoring increased by 500% and offshoring fell by 75%.  Reshoring and Foreign Direct Investment (foreign companies setting up plans in the U.S.) are responsible for an increase of nearly two million jobs in the U.S.  He reminded the audience that Lean leaders, W. Edwards Deming, John Shook, and Jim Womack all advised companies to identify the “true cost,” and that offshoring multiples the wastes to be eliminated through Lean:  overproduction, waiting transport, overprocessing, inventory, motion, and defects. He stated that among the top ten reasons for reshoring are:  “quality/rework/warranty issues, freight costs, inventory, intellectual property risk, rising wages, and communication problems.”

He said, “By understanding the advantage of producing near the consumer, and the small TCO gap instead of the large price gap, U.S. companies can justify domestic investment, process improvement, automation, training, etc., and they do not have to sacrifice quality, delivery, time-to-market, or employees to be competitive and profitable.”  He announced two awards for reshoring for 2019: the first Sewn Products Reshoring Award and the second Metalworking Reshoring Award.

In conclusion, he invited attendees to cooperate with the Reshoring Initiative by testing Made-in-USA impact on volume and price, incorporating TCO in your lean efforts, and documenting their reshoring cases.

The day ended with a Townhall Conversation on “The Lean Economy” in which panelists Jim Huntzinger, Tom Jackson, Harry Moser, and Bill Waddell discussed how Lean business and practice can be one of the most profound impacts for elevating a strong economy.

On Friday morning, Mike Wroblewski, author of Creating a Kaizen Culture and President of Dantotsu Consulting LLC, was the keynote speaker on the topic of “Leading a Lean Transformation.”  He said, “Most companies measure performance by EBITDA, which he defined as earnings before interest, taxes, depreciation and amortization. Cutting heads is the first thing management does to improve EBITDA by reducing costs. Which path are you on? Lean can be like the path to hell. You need upper management support but you also need lower level support. There are two things you can control – your effort and your attitude.”

He was taught Lean by Shifeo Shinzo from Japan in 1985 when he worked at Hill-Ron. He shared, “We did Kaizen events all week for SMED and after repeated Kaizen events, we got our die change from one hour down to 4 1/2 minutes.” He admonished, “ Kaizen needs to be your way life. It’s the culture. Lean isn’t meant to find blame faster. What do you do in the course of the day? Check email, respond to emails, make phone calls, plan, etc. How much time should you spend in Gemba? You should be spending 80% of your time in the Gemba. The standard you walk by is the standard you set for others.”

Space doesn’t permit me to highlight all the excellent breakout presentations during the summit.  If you haven’t started on your Lean journey, I recommend that you do so soon. If you are already on a Lean journey,I encourage you to put next year’s Lean Leadership Week on your calendar.

 

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