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Workshops for Warriors Holds Successful Inaugural Gala

Thursday, May 18th, 2017

On April 20, 2017, over 300 people attended the Workshops for Warriors Inaugural Gala that was held on the USS Midway Carrier Museum in San Diego, California. Former California Assembly member Nathan Fletcher, now a Professor of Practice in Political Science at the University of California, San Diego, was the Master of Ceremonies.

The WWII tribute trio, the American Bombshells, sang the opening national anthem and provided the entertainment later in the program. Founder and CEO of Workshops for Warriors, Hernán Luis y Prado, gave the welcoming remarks and showed the latest short video featuring testimonials by students on how WFW gives them a sense of potential again.

He said, “This evening’s celebration is in honor of the 388 Workshops for Warriors’ veterans, wounded warriors, and transitioning service members who have earned over 1,500 national recognized certifications. Our graduates work in advanced manufacturing centers throughout the U.S.A. and contribute $27 million to America’s economy every year. This number continues to grow. We are proud of their successes and contributions to our community, the manufacturing industry, and our nation as a whole.”

He briefly described how he and his wife, Rachel, had self-financed the training they began providing in their own garage in 2008 while Hernán was still in the service. He said that he heartsick at seeing too many veterans unable to transition successfully into civilian life and even commit suicide. When he ran into one of his buddies from his service in Iraq confined to a wheel chair after losing both his legs from an IED, he and his wife decided to invest all of their assets to expand into their first small building in early 2011. He had previously told me that they got their first outside funding from Goodrich Aerostructures, so that they were able to move into a building twice the size in October 2011.

Hernán said, “Many of you understand our Double Funnel dilemma…a waiting list of over 500 students but over 2,500 jobs available nationwide for each one of our graduates…The Challenge? There is only funding for 50 students every semester. Now is the time to take action to expand Workshops for Warriors with our $21 million capital campaign. This expansion would allow us to train ten times as many veterans and provide them with opportunities to serve America in a new role as they provide for their families and take part in the American dream.”

He extended his heartfelt thanks to Reliance Steel& Aluminum Company, and the Harriet E. Pfleger Foundation for being the Red, White and Blue sponsors for the evening. He said, “These contributors have been our “Champions,” whose dedication and continued support have made a meaningful and profound impact in helping Workshops for Warriors grow while changing the lives of veterans. For example, Reliance Steel provided funding to add 18 welding stations and add a new Computer Aided Design laboratory that allows an additional 18 CAD/CAM students every semester to receive our life changing training and certifications add several stations for CAD/CAM software training.”

He concluded his remarks saying, “I am extremely grateful to those of you who have chosen to take action. I am humbled by your commitment to our nation’s veterans and America’s manufacturing industry. In 150 years, people will look back on Workshops for Warriors as the birthplace of American’s advanced manufacturing renaissance. Thank you for supporting Workshops for Warriors.”

MC Fletcher then introduced Jim Hoffman, Executive V. P. and COO of Reliance Steel & Aluminum Company. He relayed the comments of President and CEO Gregg Mullins, who was unable to attend the event. He said, “Reliance Steel is a proud supporter of Workshops for Warriors, a nonprofit organization dedicated to providing fee training in welding, fabrication, CAD/CAM programming, and advanced machining to Veterans, Wounded Warriors and Active Duty personnel. Their mission is to equip the students with marketable skills and nationally recognized credentials so they can secure careers in manufacturing and achieve success in their civilian lives.”

He continued, “Workshops for Warriors is funded through private donations from individuals and companies like Reliance, and 83% of every dollar donated goes directly to the training programs. Over the years, Reliance has supported Workshops for Warriors by funding equipment purchases, forging partnerships with our industry peers, making donations, and hiring Workshops for Warriors graduate. We have held events among our employees to not only raise funds but increase awareness about the important work being done by Workshops for Warriors to serve a population that has so faithfully served our country. As they transition into the manufacturing sector careers, Workshops alumni continue to serve by contributing to our country’s economy.”

He concluded, “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. As the Capital Campaign Committee Chairman, President Gregg Mullins is personally calling on you for support. A great opportunity is here for us to give back to those who have gone above and beyond to protect us. Let’s do our part to help our men and women in uniform succeed and thrive.”

Next, Darnisha Hunter, Active Duty and Veterans Family Advocate from the Office of San Diego Mayor Kevin Faulconer’s office, read a proclamation in which April 20, 2017 was declared Workshops for Warriors’ Day in the City of San Diego.

This was followed by a short speech by alumnus Scott Leoncini, who had been a Marine. He said, “When I got out I didn’t know what I wanted to do. I met my amazing wife Michelle… [who] told me that I should go to school. Determined not to lose her, I did just that.” He worked in gun shops while going to college and finished college with a bachelor’s degree in criminal justice.

He said, “I went on a ride along one night with a local police department and decided that I needed to become a police officer…. I applied to almost all the agencies near my home, but only to end up with a stack of denial letters…I hit a huge wall, I was depressed, looking for any better paying job as I was making 10/hr as a security officer. ”

Then, he heard that a Marine friend of his was killed in a helicopter crash in Florida after just coming back from receiving the Silver Star for his actions in Afghanistan. Scott said, “It took me 6 years of struggle and Andy dying to realize that I needed to change my path, I needed to identify with something else…”

A few days later, he reconnected with some Marine friends, and one of them, Josh Garcia, “was enrolled at Workshops for Warriors at the time, and he told me about how Workshops helped him get into a welding career. Josh told me that they had a Machining program too. The only thing knew about machining is that it was the process used to make guns. I decided that’s what I would do because honestly, I didn’t know what else to do, this was my last effort. Not sure how I would end up, I took a leap of faith.”

Scott went to school in the day and worked nights at a local gun store as he had to work to support his family. He said, “We had a small class of about 10 students, a few of us were vets, and the rest were active duty. I loved working with vets and active duty marines again… All the guys in class had somehow found their way to Workshops… we all were struggling with transition but had the same goal…create a new identity…”

He graduated in spring 2015 with eight certifications in Mill, Lathe, Solidworks, and Mastercam and was offered a job as a Workshops for Warriors Teaching Assistant and be a part of the train-the-trainer program.

Scott said, “I found that I loved teaching and helping students get through the program…I love to come up with new ways of teaching material, and motivating students to push through when it gets hard. I am grateful for the Train-the-trainer program, and opportunity to help students. I am thankful to Hernan and Rachel for helping me discover my passion. To further my abilities, and to ensure that Workshops continues to be the greatest Advanced Manufacturing  school in America, I recently enrolled at Point Loma Nazarene University School of Education where I am earning a Master’s in Education Teaching and Learning  which will allow me to grow even more within Workshops for Warriors. The train-the-trainer program has given me a new path and allowed me to connect with the veteran community. I am helping other veterans not go through what I did when I got out of the military.”

After this inspiring testimonial, the American Bombshells performed while guests were invited to view and bid on the many silent auction items on display.

Afterward, Special Guest Speaker Donald “Doc” Ballard, Metal of Honor Recipient, gave his remarks. After a brief description of how he earned the Medal of Honor during the Korean War, I took note of the fact that he said, “Too many times, we preach to the choir of those who have served in the military and already have an appreciation for what veterans have done to serve their country. We are missing the mark; only 1% has served our country…The military is a family-owned business that we hand down from generation to generation. Not everyone can serve in the military, but we do have an obligation to this country to thank veterans for the freedom they fought for…We thank a teacher for our ability to read, but we can thank a veteran that we can read and write in English. We can thank veterans by supporting Workshops for Warriors so they can expand to other states. Everyone can serve the military by taking care of the people who are doing the job they can do or won’t do for whatever reason…”

The event closed with more entertainment from the American Bombshells while the guests whose bids won were notified and presented with their auction item.

During dinner, I asked the man sitting next to me why he supported WFW. Doug Davis, General Manager at Kearny Mesa Ford & KIA, said, “Workshops For Warriors is simply an amazing program that is helping Veterans make a living for the rest of their lives. All of us know when we have a skill in the work place, our individual self-esteem improves greatly, and we can go home to our families with a sense of accomplishment. Workshops teaches the manufacturing trade to our Veterans, and when they graduate with a welding or machinist certification, a job is waiting for them 100% of the time! That’s exactly what Workshops for Warriors does for our Veterans. I am lucky enough to support Workshops for Warriors through three channels:  personally, my dealership, Kearny Pearson Ford & KIA, and finally through the Ford Motor Company as Chairman of the San Diego Ford Dealers Ad Association Board in selecting recipients of charitable donations.”

Whether or not you have served in a branch of the military, you can help change the life of veterans and Wounded Warriors by support their training in manufacturing skills by donating to the Workshops for Warriors Capital Campaign.

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MEPs are Essential to Rebuilding American Manufacturing Competitiveness

Tuesday, April 18th, 2017

Last month, President Trump submitted a “Skinny Budget” with the goal of removing some of the “fat” within Washington DC. Unfortunately, one of the programs eliminated in his budget is not “fat.” The Manufacturing Extension Partnership (MEP) is the only federally funded national network dedicated to serving small and medium-sized U. S. manufacturers. The MEP program was re-authorized by both Houses of Congress by unanimous consent earlier in January when the MEP program went back to 1:1 cost matching. The reality is that the MEP network is essential to helping manufacturers be competitive in the global marketplace and rebuilding American manufacturing. Eliminating the MEP program seems contradictory to President Trump’s focus on manufacturing.

The MEP website states, “Since 1988, the Hollings Manufacturing Extension Partnership (MEP) has worked to strengthen U.S. manufacturing. MEP is part of the National Institute of Standards and Technology (NIST), a U.S. Department of Commerce agency…MEP is built on a national system of centers located in all 50 states and Puerto Rico. “Each center is a partnership between the federal government and a variety of public or private entities, including state, university, and nonprofit organizations. This diverse network, with nearly 600 service locations, has close to 1,300 field staff serving as trusted business advisors and technical experts to assist manufacturers in communities across the country.”

This public-private partnership provides a high return on investment to taxpayers. “For every one dollar of federal investment, the MEP national network generates $17.9 in new sales growth for manufacturers and $27.0 in new client investment. This translates into $2.3 billion in new sales annually. And, for every $1,501 of federal investment, MEP creates or retains one manufacturing job.”

The top challenges reported to MEP by manufacturers are:

  • Cost Reduction 70%
  • Growth 54%
  • Employee Recruitment 47%
  • Product Development 45%

In FY 2016, the MEP national network interacted with 25,445 manufacturers and achieved these results through their wide range of services:

  • $9.3 Billion New and Retained Sales
  • 86,602 New and Retained Jobs
  • $3.5 Billion New Client Investments
  • $1.4 Billion $1.4 Billion Cost Savings

I have long been aware of the work of the California MEP, California Manufacturing Technology Consulting (CMTC), headed up by Jim Watson, but when I visited Cincinnati, Ohio last fall, I had the pleasure of meeting with Scott Broughton, Director of the Advantage Kentucky Alliance (Kentucky’s  MEP), and David Linger, President & CEO of TechSolve, one of the Ohio MEP affiliates.

I contacted all three for input for this article, and Scott Broughton was the first to respond. He said, “AKA has generated over $88 million in impacts with 50 clients working with over 1,300 employees in the past 12 months alone. We are currently working with small manufacturers in Eastern Kentucky, who used to work in the coal industry to identify, vet, and implement change allowing them to work in non-coal industries and helping them to be sustainable in the future. These companies have worked with other entities with mixed results. AKA’s programs are centered on AKA facilitators mentoring and training employees, allowing them to be the driver of change with continued support. This allows the employees to ‘learn by doing’ with the support and assistance of AKA’s specialists. AKA’s average engagements are over 12 months with monthly interactions allowing for sustainable support, change, and implementation.”

He added, “For every federal dollar spent, it has resulted in $170K in impacts in Kentucky! Specific impacts in the past 12 months are below and that does not include the 762 new jobs created/retained:

  • $9.9 million in new sales
  • $21.6 million in retained sales
  • $10.8 million in cost savings
  • $40.3 million in investments made”

Broughton provided me with case studies for six clients, which are too lengthy to cite in detail in this article. Three of the six received training in Lean manufacturing through AKA, two were helped to find new markets, and two were helped with new product development. Highlights of the results are:

  • Skillcraft Sheetmetal, Inc. – “a reduction in labor equating $27,000 in 2014 alone”
  • Post Glover Resistors – ” 12% reduction unnecessary Labor”
  • Outdoor Venture Corporation – “Increased sales by $500,000 and increased cost savings by $1 million”
  • Cumberland Mine Service, Inc. – “Uncovered 17 potential industries/business opportunities and 21 potential future customers”
  • RT Welding & Fabrication, Inc. – “Uncovered 21 potential industries/business opportunities other than mining and identified 13 potential revenue streams”
  • Taper Roller Bearings – “$10 Million in retained sales, $200,000 in cost savings, and $20,000 in new product development”

David Linger responded, “The Ohio Manufacturing Extension Partnership, located in Columbus, OH, provides technical services for small and medium-sized manufacturers to drive productivity, growth and global competitiveness; and can ultimately help Ohio’s manufacturers become more profitable and competitive. From October 2015 – September 2016, the Ohio Manufacturing Extension Partnership served 439 Manufacturers resulting in new and retained sales of   $277,900,000, created and retained 2,399 jobs, facilitated cost savings of over $41,700,000, and created new investments of $132,600,000.”

He commented, “An often overseen benefit of the relationship of a MEP and their regional clients is the two-way information exchange. That is, the MEP receives constant Voice Of the Customer information from the regional clients throughout the year. This allows the MEP to proactively develop new solution packages that meet those needs,  needs that are often unique to small and midsized manufacturing firms. This feedback loop drives the MEP to be current with the latest technology or methods and be an ongoing subject matter expert to push this new know-how back out to the manufacturing community. A few great examples of this are the work MEP’s are doing in regards to Cyber Security as it relates to manufacturing, Additive Manufacturing or 3D Printing, Data Analytics, and System Integration (Industrial Internet of Things, IIOT).”

Jim Watson responded, “Last year, CMTC was awarded a five-year agreement to be the California MEP. In 2016 CMTC served 1,065 small and medium-sized manufacturers, creating or retaining 8,575 high paying jobs statewide resulting in $169 million in cost savings, $647 million in total sales, and $305 million in total investment. For every manufacturing job, there are 3-4 full-time jobs created elsewhere in the United States to support manufacturers. Manufacturing is critical to the California economy, employing more than 1.2 million workers at more than 39,000 companies.”

He added, “CMTC’s services provide innovation, growth, technology and operational solutions that foster profitable growth for small manufacturers impacting personal income, tax revenues and the California economy. A study by the LAEDC Institute for Applied Economics indicated that the annual economic contribution from California MEP projects with customers surveyed in 2014 was an estimated $1.8 billion to California’s GDP and more than $450 million in federal, state and local tax revenues. The California MEP program is a valuable partner for manufacturers and generates a significant dividend for the State of California.”

There were four client case studies mentioned in their 2016 end of year report, which I have briefly summarized below:

Amflex Plastics – a woman-owned company making polyolefin co-polymer formulated plastic hoses and spiral hose equipment. Amflex needed help getting prepared to get their ISO 9001:2008 certification to retain current business and get new customers. After CMTC coaching, they passed their audit and got their certification, resulting in $675,000 in projected increased sales, $300,000 in retained sales, three new jobs, 10 jobs retained, and $209,000 in cost savings.

Summertree Interiors is a minority owned business that builds finely crafted baby and children’s furniture. The company needed help reducing lead times and improving on-time delivery. CMTC provided them with Lean manufacturing training, which resulted in:

  • $400,000 in increased sales
  • 1,000,000 in retained sales
  • 6 jobs created
  • 12 jobs retained
  • $250,000 in cost savings
  • $115,000 in capital investments

Space Systems Loral is a manufacturer of communications satellites and satellite systems. Because former customers are now making their own satellites, “SSL needed programs to reduce costs and lead times as well as provide an in-house team to lead and implement their continuous improvement philosophy. CMTC provided Yellow Belt Lean training and a “Train the Trainer” program, which resulted in $7,500,000 in retained sales, 17 jobs retained, $1,861,000 of cost savings, and $500,000 in capital investment.

OHIO Design is a builder of custom, made-to-order, modern furniture and interiors. The company needed help with their manufacturing processes, finding qualified workers, and access to capital. CEO coaching helped OHIO to understand and implement business metrics a cost structure to track their manufacturing expenses, and a continuous improvement program to focus on solutions to fix problems. As a result, they experienced $500,000 in increased sales, retained 7 jobs, achieved $150,000 in cost savings, and made $55,999 in capital investment.

One of the companies I represent as a manufacturers’ sales rep has been a repeat client of CMTC. President Steve Cozzetto of Century Rubber Company wrote me, “As the business climate has become more demanding, CMTC has been instrumental in providing the training that we need to remain competitive. In the past 10 years, we have used their resources and expertise to develop our Lean Manufacturing procedures, to upgrade our marketing methods, and most recently to take our quality program from ISO: 9001 and prepare us for our AS9100D certification which should occur this year. As a small company, the variety of programs offered by CMTC makes it possible to accomplish goals that would otherwise be difficult to achieve.”

These success stories illustrate why the nationwide Manufacturing Extension Partnership network is essential to the growth of the United States economy. When the President submits his budget, it is the first step in the long process that results in a federal budget. No President’s budget ever gets approved without substantial amendment by Congress, and Congress has the final say on governmental spending. To support the MEP program, you should contact your Congressional Representative to urge them to keep funding for the MEP program in the federal budget.

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SME and NASA’s HUNCH Partner to Engage Youth in Advanced Manufacturing

Tuesday, April 11th, 2017

With thousands of “Baby Boomers” retiring in the next decade and few new employees getting into manufacturing, manufacturers are worried about their futures. The industry is dealing with a severe shortage of workers equipped with the knowledge and skills needed to function in advanced manufacturing workplaces. Thankfully, schools are finally catching on that they are the first step to showing students the opportunities in advanced manufacturing.

SME has been working for years to bring back manufacturing education during a time when there is a big shortage of in-demand skilled talent in positions, such as mechatronics, programming, welding, CNC machining, metrology and more.

To help close the skills gap the “SME Education Foundation announced a new partnership with NASA’s agency-wide HUNCH (High School Students United with NASA to Create Hardware) program, to get more youth engaged in advanced manufacturing and ultimately encourage them to consider and pursue long-term careers in the industry.” This collaboration between HUNCH and the Foundation’s Partnership Response In Manufacturing Education (PRIME) initiative will give high school students an opportunity to build actual hardware that NASA astronauts, scientists, and engineers would use in their training programs and at the International Space Station (ISS).

Today, we have an estimated 600,000 jobs going unfilled because of the skills gap, but this could grow to two million by 2025 as “Baby Boomers” retire. This new collaboration will attract and introduce more high school students to career opportunities in the industry and prepare them to become the next generation workforce for jobs that are in high demand.

“By combining our PRIME network with NASA’s HUNCH program and working together to further expand the number of schools in the combined network, we can provide more students with access to a STEM and manufacturing focused education using hands-on learning experiences,” said Brian Glowiak, vice president of the SME Education Foundation. “Through this partnership we are motivating youth to consider careers in manufacturing and preparing them with the skill sets and knowledge to succeed.”

When I interviewed Brian last week to find out more about the partnership, he said, “PRIME connects regional manufacturers with local high schools to establish or build exemplary manufacturing education programs that prepare students for skilled careers in their communities. We work with schools to provide industry-driven training for teachers as well as curriculum for the students, while giving teachers and students access to real-world manufacturing equipment and resources.

This process begins by meeting with local manufacturers to gain an understanding of the current and future skills needed by their technical workforce and then working with the administrators and educators of the local school system to help develop a robust and sustainable hands-on training program for students. This program also provides students with opportunities to acquire industry recognized credentials and to benefit from job shadowing, internship and apprenticeship experiences.”

He explained, “Through the HUNCH program, PRIME students will have the opportunity to design and build actual hardware for in-flight astronaut training or for use aboard the International Space Station, bringing real-world project based learning experiences to the classroom. Alternately, HUNCH schools will now be part of the PRIME network, having access to SME student memberships, mentoring programs, and additional technical resources.”

When I asked when the SME Prime schools would start the program, he said, “We presently have 15 of our PRIME schools signed up for projects and eight have already received assignments and materials from NASA. In addition, SME is working with two HUNCH schools in Houston to start to integrate NASA’s HUNCH schools into our PRIME program. Ultimately, we have an opportunity to integrate 105 schools in this collaborative program, with 41 PRIME schools and 64 HUNCH schools. Simultaneously, we are working together to expand this network by adding more schools to the combined PRIME and HUNCH program in order to recruit and prepare more students for careers in engineering and manufacturing.”

He explained, “Manufacturing offers incredible and rewarding career opportunities with strong potential for advancement. Through HUNCH and PRIME we are not only building students’ awareness of these opportunities but also providing them with the skills and hands-on training needed for their future success. Moreover, giving students a chance to design and fabricate hardware for NASA and the potential opportunity to physically attach their signature to an item that could be used aboard the International Space Station is truly inspiring, both to the students and their teachers.”

I learned more about HUNCH from their website, which states that “the idea of HUNCH started when Stacy Hale, the JSC HUNCH project manager, had the innovative idea that maybe high school students could build cost-effective hardware that was needed to help train the ISS astronauts. Bob Zeek at MSFC [Marshall Space Flight Center] and Hale decided to test the feasibility of this idea. Many were skeptical about this idea, but because of the hard work and dedication of Hale and Zeek, HUNCH quickly expanded from 3 schools to numerous schools, in various states; the unique idea of HUNCH was quickly producing extremely positive results to all involved.”

In addition, the website states, “The NASA HUNCH team at JSC [Johnson Space Center]consists of four individuals who visit schools in a four state area that produce training hardware, software, videos and flight hardware and software for NASA. The HUNCH team at Marshall Space Flight Center consists of Bob Zeek, Kriss Hougland and others that visit schools within a five state area.

Under the mentorship of HUNCH personnel last year, “the schools produced stowage lockers, cargo transfer bags, 3 minute educational videos, and experiments proposed to fly on the ISS. They have designed and fabricated a disposable, collapsible, glove box, an organizer for crew quarters on the ISS, as well as black boxes and an EPM Rack. Over the past 8 years, since the beginning of HUNCH in 2003, hundreds of items for NASA have been produced by hundreds of students.”

When I interviewed Blake Ratcliff, NASA’s HUNCH Program Manager, last week, he said that he has been with the program about two years at the Johnson Space Center in Houston. He said, “Stacy Hale is still a Project Manager, and Bob Zeek is a mentor for schools in Huntsville, AL.”

Ratcliff said, “We have gone from making training mock ups to making actual tools and other hardware items that the astronauts use at the International Space Station and when they go on space walks. The students have also made metal lockers in which the scientific payloads are put for the research the astronauts and scientists conduct on the space station.”

He explained, “It is a project based program. We give schools real NASA projects that meet the needs and provide them the materials and instructions they need to complete the work. Quality is the most important aspect of the work, and the schools have done an outstanding job. Every year in April and May, we have Recognition Ceremonies for all the students and teachers that have participated in HUNCH at MSFC and JSC. The students present their projects during the HUNCH Ceremony where some projects are selected to be used in NASA systems and on board the ISS. Every year the number of participants continues to grow as well as the quality, quantity, and diversity of the products that students fabricate.”

When I asked if every school has a project, he said, “There is a wide range of build-to-print, design and prototype projects, but they also have software, communications, and culinary projects. We have a competition every year where students can come up with a new food for the astronauts. This year it is for a new dessert. The winner’s food gets flown up to the space station.”

I told him that I am surprised I had not heard about their program previously because I keep up with news about STEM education programs to attract the next generation of manufacturing workers. He said, “While we get a fair amount of press, it is mostly in local news outlets for the cities where our HUNCH schools are located.”

He added, “There are a couple of people working to do a documentary on HUNCH. We are growing so fast that we don’t need a lot of attention. It is good to publicize what we are doing, but we have been growing by word of mouth and don’t need to advertise for growth. It’s going to take a couple of years to integrate all of the PRIME schools into our program, so we won’t be actively seeking new schools for awhile.”

I asked if they have any schools in California. He said, “We just started in the Bay area and are about to sign up several schools. I asked how a school could get involved, and he said. “Go to the website and apply for a project. Then, one of our mentors will visit the school and determine if it would be a good fit and if they have the facilities to complete a project.”

Both the SME PRIME initiative and NASA’s HUNCH program are promoting student interest in STEM (Science, Technology, Engineering, and Mathematics.) Another benefit is that while students are building hardware and doing other projects for NASA, they are also building their interest as engineers, researchers, scientists and maybe even astronauts, as well as their self-esteem. HUNCH is a win-win innovative solution for inspiring the next generation of researchers, scientists, engineers, and manufacturing workers while providing cost-effective hardware for NASA.

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“Eliminate the Trade Deficit” Resonates in Halls of Congress

Tuesday, March 21st, 2017

 “You were ahead of the curve on trade.” This was the common refrain heard last week by members of the Coalition for a Prosperous America who attended our annual fly-in to Washington, D. C. We had eight teams of members visiting Congressional Representatives and Senators on March 14th and 15th. As Chair of our developing California chapter, it was my fifth year attending the CPA fly-in, and our simple message of eliminating the trade deficit resonated well in the halls of Congress.

No one could deny that we have a huge deficit as shown on the chart below:

 

The annual trade deficit has reduced our U. S. GDP by some 3% to 5.5% each year, and those reductions compound over time.

There is no historical record of any other country in history running 41 years of consecutive trade deficits. Why is this important? Because every billion dollars of net imports costs 4,500 American jobs according to conservative estimates. So last year’s $502 billion deficit equates to 2.25 million jobs lost.

As a result, our Labor Force Participation is in serious decline. The U. S. is the only G7 nation with a DECLINE in LFPR since 1998 for workers ages 15-64. It peaked at 77.4% in 1998 and dropped down five points to 72.6% in 2015, meaning that over 7 million people dropped out of labor force since 1998.

The remedy recommended by the Coalition for a Prosperous America is simple: Congress should establish a national goal to eliminate the trade deficit.

Balanced trade over time is the goal of free trade and of fair trade. Balanced trade will re-industrialize our country, enable massive job creation, grow our wealth and effectively neutralize foreign mercantilism. Trade policy must address true drivers of deficit, these countries and their practices. Many of these countries have export-oriented growth strategies in which they rely upon the US market to consume their exports rather than increasing their internal consumption. China, Germany, Japan and other countries pursue net exports through strategic mercantilism, not free trade. Currency manipulation, value added taxes, state influenced enterprises, and other
tactics are used.

The following top 10 countries account for 90% of America’s 2016 goods trade deficit:

Rank Country 1992 Deficit 2016 Deficit Change 1992-2016
1 China -$18B -$355B -$337B
2 Mexico -$6B -$115B -$121B
3 Japan -$50B -$75B -$25B
4 Germany -$8B -$70B -$62B
5 Canada -$15B -$58B -$53B
6 Ireland +5B -$36B -$37B
7 Vietnam $0B -$34B -$34B
8 South Korea -$2B -$30B -$30B
9 Italy -$4B -$30B -$26B
10 India -$2B -$30B -$28B

Note: These figures are based on U.S. Commerce Dept. data subtracting Imports for Consumption from Domestic Exports which are intended to strip out goods that enter and leave the U.S. simply for re-export, without having any significant value added to them inside the U.S.

Currency manipulation and misalignment are key tactics that the above countries use to gain an advantage in trade. Currency manipulation is trade cheating, because it is both an illegal tariff and a subsidy.

Foreign governments intervene in foreign exchange markets by buying dollars. More than 20 countries have intervened in foreign exchange markets to undervalue their currencies in the past ten years. These countries account for one-third of the world economy and two-thirds of the world’s current account surpluses. Gagnon has calculated that “A country’s current account balance increases between 60 and 100 cents for each dollar spent on intervention.”

“The largest loser is the United States, whose trade and current account deficits have been $200 billion to $500 billion per year larger as a result. The United States has thus suffered 1 million to 5 million job losses.” (Bergsten, 2012) The U. S. economy cannot produce jobs and wealth without addressing this problem. The Coalition for a Prosperous America proposes the following solutions:

• U.S. trade enforcement law should treat currency undervaluation as a countervailable subsidy
• Tariffs should be applied against currency manipulators to neutralize their unearned advantage
• Government policy should pursue a dollar priced at equilibrium rather than accept a persistently overvalued dollar
• Trade agreements should include effective controls on currency manipulation and misalignment

Border Adjustable Consumption Taxes (aka VATs) are a tariff by another name. They are allowed under WTO rules and range from 12% to 24% with the average being 17% globally. This means that virtually all foreign countries tax our exports at this average 17% VAT. They subsidize domestic shipments abroad with rebating the VAT to their manufacturers. The U.S. does not have a VAT to offset this advantage.

Consumption taxes are a tax on consumption as opposed to income, wealth, property, or wages. A Goods and Service Tax (GST) and a Value Added Tax (VAT) are consumption taxes. They are usually a tax only on the “value added” to a product, material, or service. Over 150 countries have such taxes, but the U. S. does not.

The U. S. negotiated tariff reductions or elimination in good faith with our trading partners under NAFTA and the Central America Free Trade Agreement (CAFTA, but Mexico instituted a 15% VAT, and Central America established a 12% VAT.

After 40 years of tariff reduction under various trade agreements, other countries replaced tariffs with VATs, but the U. S. did not. Thus, American exporters face nearly the same border taxes as they did in the early 1970s.

To solve this problem, the Coalition for a Prosperous America proposes that Congress implement a border adjustable consumption tax (VAT) and use the proceeds to credit against the payroll taxes paid by all workers and businesses. The benefits would be:

• Reduce the cost of labor in the U.S.
• Give every worker a raise
• Lower the price of U.S. exports
• Levy a tax on imports

In President Obama’s 2016 budget, Payroll Taxes were projected to be 31% of the revenue or $1.11 trillion. If a 12.9% VAT were set, it would produce approximately $1.45 trillion in tax revenue, completely offsetting the revenue from Payroll Taxes. All Payroll Taxes could be eliminated with a credit. With a 15% VAT, other tax reform or domestic production cost reduction could be funded. European Union countries use their VATs to provide another revenue stream to allow them to reduce their corporate taxes to be more globally competitive.

The benefit of giving a Payroll Tax credit out of VAT funds is that it would offset the regressiveness of a VAT by elimination of the regressive Payroll Tax. There would be no impact on prices of domestic goods and services, but prices of imported goods and services would increase. This would incentivize consumers to buy Made in USA products instead of imports. In addition, it would reduce the cost of production for U. S. producers enabling them to be more competitive in the global marketplace.

Our Coalition members also encouraged Congress to reinstate the Country of Origin Labeling (COOL) that was struck down by an unelected foreign tribunal of the World Trade Organization. Congress caved in to the WTO ruling and passed repeal legislation that exceeded the WTO ruling eliminating COOL for beef and pork, as well as for ground beef and ground pork.

Canada and Mexico want to export their cattle, hogs, beef, and pork to the U. S. without informational labeling that reveals where the cattle and hogs were born, raised, and slaughtered. Right now, meat packers are able to import cattle and hogs and slaughter them to get the USDA stamp. Consumers want to know where cattle and hogs were born and raised, not just slaughtered for reasons of food safety.

Congressional Representatives and Senators need to have the courage to reinstate COOL and vigorously defend our national sovereignty and consumer choice against international interference. COOL legislation enables consumers to Buy American in the grocery store. It prevents consumer deception and empowers consumers to buy food produced under the safety regime of their choosing. It would help to jumpstart America’s ailing rural economy through supporting domestic producers and preventing industry consolidation.

The final message that is critical is that the U. S. must modernize its foreign investment rules to protect American companies that are critical to our national security and economic security. Investors from countries like China, Japan, and South Korea are making strategic acquisitions of U. S. companies and land that threaten our security and future prosperity. These same countries either severely restrict or do not allow 100% acquisition of companies in their country. The Committee on Foreign Investment in the U.S. (CFIUS) can block incoming investment based upon national security concerns, but not for economic strategy reasons as other countries do.

Congress must update the laws governing foreign investment to include economic security and allow longer review periods, beyond 30 days, for CFIUS to review proposed investments. This would allow more time to gauge systemic threats to U. S. interests in addition to individual cases. The legislation should include a “net benefit” test to encompass American economic interests where proposed acquisitions of companies that are important to future U. S. technology and employment are concerned (both civilian and defense related).

The question now is – Will Congress have the courage to take the bold action needed to eliminate the trade deficit, address currency manipulation, reinstate COOL and control foreign investments? Time will tell.

 

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Advanced Technologies being developed at Carlsbad Gateway Center

Wednesday, March 1st, 2017

For the last couple of years, I have been the guest of several economic and Chamber of Commerce organizations to visit their region to tour manufacturing plants and write articles about their region’s industries, but two weeks ago, I was invited to visit an industrial park right in my back yard ? the Carlsbad Gateway Center, a Makers’ place with over 80 businesses in a 16.5 acres business park (Carlsbad is 25 miles north of the City of San Diego).

Courtney Rose of Olive PR introduced me to Toni Adamopoulos, Property Mgr. of the business park. She said, “The tenant mix includes innovation, food production, health and wellness, new technology, in addition to standard and warehouse uses. The park’s small spaces, affordable rents, flexible zoning, and wide array of  allowed permitting makes it a perfect location for small, start up, and incubator businesses to get started on their road to success in a welcoming park-like setting. Besides technology companies, the zoning permits storefront businesses such as a bakery, coffee shop, craft beer, and Kombucha beverage.”

We first visited Emcraft Systems founded by Kent Meyer and colleagues in Moscow, Russia in 2012. Kent said, “We started the company six years ago to design, build, sell, and support ARM Cortex-A and Cortex-M System-On-Modules (SOMs), which are micro controller systems programmed with Linux.” Emcraft is a California LLC headquartered in Carlsbad, and with an engineering office in Moscow, near Moscow State University. Emcraft partners met in Silicon Valley in 1998 while working on a Posix real-time operating system, and the relationship has lasted across several companies and cities. Kent continued, “We have about 6,000 customers in 36 countries, all using our system on modules or Linux/uClinux kits. All of our manufacturing is done in the U.S. We use independent contractors instead of having employees, and we form teams to handle different projects for customers.”

He explained, “We are working to highly automate the effort of embedding Linux and ARM microcontrollers for the coming wave of intelligent systems. Our customers use our system on modules to speed their time to market, and we are optimizing the design and manufacturing processes to meet the pricing needs of the market. We have found a way to be very productive with our team of 20 local and remotely cooperating engineering contractors, with our main office and manufacturing based in the US.”

In addition to Emcraft Systems, Kent is involved in local STEAM education. He has worked with local schools and the Carlsbad Education Foundation (CEF) to teach robotics and programming to youth. CEF is a 501(c) (3) non-profit organization that provides private support for public education programs throughout the Carlsbad Unified School District. The Foundation is also located in the Carlsbad Gateway Center.

We got into a discussion about attracting the next generation of engineers that is too long to cover in this article, but Meyer called the next generation the “Minecraft” generation because of the technological skills and interest learned through the online collaboration and building in that game. He started as a robotics coach over six years ago when his own kids were doing LEGO robotics with the FIRST LEGO League (FLL) for fourth to sixth graders, which was funded by the Carlsbad Ed Foundation. After doing that, he said, “We came up with our own little curriculum where the robotics could be used to teach interested kids in a very productive way, while also trying to find entrepreneurial ways to improve the ratio of students to technology to get as close to a one-to-one ratio with tech as possible.”

He said that they recently developed an “IoT Educational Platform” using Chromebooks, Linux, MQTT and Node-Red to see what kids might come up with when taught IoT concepts. The effort culminated in a presentation to the Carnegie Mellon SATURN conference in San Diego, where the kids showed a highly interactive MQTT platform of over 60 nodes all communicating and collaborating (robots, drones, lights, toys, etc) and connected to Skype and email over Node-Red. The effort won Kent and the team the distinction of “2016 Top Embedded Innovator” by Embedded Computing Design magazine. Click on this link to read the interview with Mr. Meyer after the award.

Next we met with Dr. Robert Boock, CEO/CTO and Co-Founder, of Glucovation. Dr. Boock previously served as the Senior Technical Director of Research and Development at Dexcom where he was responsible for managing the research and development of Dexcom’s CGM membranes and biotechnologies. He was part of the group that developed materials for Dexcom’s SEVEN PLUS. He was a co-inventor of G4 PLATINUM sensor and was a key player in its development and commercialization. He holds more than 44 patents and over 100 pending patents as well as having more than 25 peer reviewed journal articles.

Dr. Boock said, “Our company was formed to develop the most advanced Continuous Glucose Monitor (CGM) that will be affordable to those desiring to monitor their diabetes.” I have several partners, and we are now up to 12 people. They will realize development and work on licensing Agreements. We have signed a deal with a Chinese company and are negotiating a deal with another Chinese company.

He explained, “We are creating a technology that doesn’t require finger sticking. We are trying to develop a simpler but just as accurate method that doesn’t require any action by the user. We want to penetrate the Type II market, which is reaching epidemic proportions. Our product will prevent its escalation. We think that we will have the right product at the right time. Type I is 2% of the population, and Type II has escalated to an estimated 13% of the population. We would rather increase the breadth of our reach rather than make more profit. Outside the U.S., this epidemic of diabetes has the potential to bankrupt countries.”

He continued, “Dexcom and Medtronic are the two biggest players in the continuous monitoring field, which takes a reading every five minutes. They have only penetrated 15% of the Type I population. The future of Type I treatment will be the artificial pancreas (sensors within a pump).

He added, “We can also measure lactate which is a precursor to septic shock, and we could also monitor burning of ketones to know if a person is burning fat when exercising. We are developing a suite of sensors that will monitor five to six of the active metabolites.”

Finally, he said, “We are doing development in cooperation with our licensees, but we are the owner of the core technology. We should be moving into the Chinese market in 2018. The U. S. is more difficult because there is a PMA one-year review cycle after clinical trials, but in China it is only a six-month review cycle. We are doing trials in China, but haven’t started in the U. S. yet.”

Since I am aware of how long it takes to develop any biotech or medical device product before it finally gets to market, I found his last comment very apropos:  “We don’t do it for the money; it’s a calling.”

Our last meeting was with Martin Bouliane, founder and President of R&3D Engineering. He is a mechanical engineer who started his career in 1993 involved in product development. He worked with Cirque du Soleil for a while as a product designer. He was previously the owner of R&3D Engineering in Canada, where the company was primarily focused on consumer product design from 2000-2007. He moved from Quebec, Canada to California in 2007.

Bouliane said, “After moving to California, I worked for two medical device companies before re-launching R&3D Engineering as a U.S. company in 2012. The company was originally focused on medical device design, but some of my customers turned to me to help them get into production. I started working with robots that they purchased from Fanuc. A team from Fanuc visited our company and invited me to become an authorized Fanuc robot integrator. We now focus on custom robotic automation design and fabrication for about 75% of our business, and we have grown to a dozen employees.”

He added, “One of our biggest problems is finding skilled people as we need people who can make things work. We have a customer who makes desalination filters, and we started working with them two years ago and have designed a robot system to move the filters, which were heavy for workers to move around. Some of our local customers have been in the biotech and pharmaceutical industry for high volume production of disposables. We are creating a system for one company that dispenses oil, and are building machines to produce the blister pack for the oil.”

He explained, “One of the big reasons for advances in automation is that machine vision has become more and more advanced, so we can program the robots to do inline inspection. We also design and build the peripheral systems to surround the robots. The robot might be only 10% of the system, and we can configure the robot to do multiple tasks. More and more companies are benefiting from integrating robotics and automation into their manufacturing operations.”

This interview was eye opening to me because I had seen very little automation or use of robotics in local companies with which I do business. The main reason is that 97% of San Diego County Advanced Manufacturing businesses are companies with fewer than 50 employees. Another reason is that I do not do business with biotech companies as they do not buy the type of fabrication services I represent. I recruited Mr. Bouliane to speak at our upcoming March Tech San Diego Operations Roundtable event on the subject of the advances in robots, automation, Artificial Intelligence, and machine vision. He will also discuss the future of automation and robotics and give his opinion on whether jobs will be lost or created. There is a wide divergence of opinions on the answer to this question, so it will be interesting to hear his opinion.

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EPI Report Claims U.S.-China Trade Deficit Cost 3.4 Million Jobs

Tuesday, February 14th, 2017

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 explained that when China entered into the World Trade Organization (WTO) in 2001, “it was supposed to bring it into compliance with an enforceable, rules-based regime that would require China to open its markets to imports from the United States and other nations by reducing Chinese tariffs and addressing nontariff barriers to trade.”

However, Scott wrote, “China both subsidizes and dumps massive quantities of exports. Specifically it blocks imports, pirates software and technology from foreign producers, manipulates its currency, invests in massive amounts of excess production capacity in a range of basic industries, often through state owned enterprises (SOEs) (investments that lead to dumping), and operates as a refuse lot for carbon and other industrial pollutants. China has also engaged in extensive and sustained currency manipulation over the past two decades, resulting in persistent currency misalignments.”

As a result, “China’s trade-distorting practices, aided by China’s currency manipulation and misalignment, and its suppression of wages and labor rights, resulted in a flood of dumped and subsidized imports that greatly exceed the growth of U.S. exports to China.”

He added, “the WTO agreement spurred foreign direct investment (FDI) in Chinese enterprises and the outsourcing of U.S. manufacturing plants, which has expanded China’s manufacturing sector at the expense of the United States, thereby affecting the trade balance between the two countries. Finally, the core of the agreement failed to include any protections to maintain or improve labor or environmental standards or to prohibit currency manipulation.”

These trade policies have resulted in an enormous trade deficit with China. Scott, stated, “From 2001 to 2015, imports from China increased dramatically, rising from $102.3 billion in 2001 to $483.2 billion in 2015… U.S. exports to China rose at a rapid rate from 2001 to 2015, but from a much smaller base, from $19.2 billion in 2001 to $116.1 billion in 2015. As a result, China’s exports to the United States in 2015 were more than four times greater than U.S. exports to China. These trade figures make the China trade relationship the United States’ most imbalanced trade relationship by far…”

He explained, “Overall, the U.S. goods trade deficit with China rose from $83.0 billion in 2001 to $367.2 billion in 2015, an increase of $284.1 billion. Put another way, since China entered the WTO in 2001, the U.S. trade deficit with China has increased annually by $20.3 billion, or 11.2 percent, on average.

Between 2008 and 2015, the U.S. goods trade deficit with China increased $100.8 billion. This 37.9 percent increase occurred despite the collapse in world trade between 2008 and 2009 caused by the Great Recession and a decline in the U.S. trade deficit with the rest of the world of 30.2 percent between 2008 and 2015. As a result, China’s share of the overall U.S. goods trade deficit increased from 32.0 percent in 2008 to 48.2 percent in 2015.” Scott notes that the figures in this paragraph derive from his analysis of USITC 2016 data.”

Previously, the U. S. had a trade surplus in advanced technology products, but now we have lost that comparative advantage. Scott stated, “Global trade in advanced technology products… is instead dominated by China. This broad category of high-end technology products includes the more advanced elements of the computer and electronic parts industry as well as other sectors such as biotechnology, life sciences, aerospace, and nuclear technology. In 2015, the United States had a $120.7 billion deficit in advanced technology products with China, and this deficit was responsible for 32.9 percent of the total U.S.–China goods trade deficit. In contrast, the United States had a $28.9 billion surplus in advanced technology products with the rest of the world in 2015.”

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).

After explaining how EPI calculated the loss of jobs due to the U.S.-China trade deficit, he wrote, “U.S. exports to China in 2001 supported 171,900 jobs, but U.S. imports displaced production that would have supported 1,129,600 jobs. Therefore, the $83.0 billion trade deficit in 2001 displaced 957,700 jobs in that year. Net job displacement rose to 3,077,000 jobs in 2008 and 4,401,000 jobs in 2015.
That means that since China’s entry into the WTO in 2001 and through 2015, the increase in the U.S.–China trade deficit eliminated or displaced 3,443,300 U.S. jobs…the U.S. trade deficit with China increased by $100.8 billion (or 37.9 percent) between 2008 and 2015. During that period, the number of jobs displaced increased by 43.0 percent.”

Scott states, “The growing trade deficit with China has cost jobs in all 50 states and the District of Columbia, and in every congressional district in the United States.” The report calculates job loss by state and Congressional District, stating that “The trade deficit in the computer and electronic parts industry grew the most, and 1,238,300 jobs were lost or displaced, 36.0 percent of the 2001–2015 total. As a result, many of the hardest-hit congressional districts (in terms of the share of jobs lost) were in California, Texas, Oregon, Massachusetts, Minnesota, and Arizona, where jobs in that industry are concentrated. Some districts in Georgia, Illinois, New York, and North Carolina were also especially hard-hit by trade-related job displacement in a variety of manufacturing industries, including computer and electronic parts, textiles and apparel, and furniture. In addition, surging imports of steel, aluminum, and other capital intensive products threaten hundreds of thousands of jobs in these key industries as well.”

It was interesting to note that of the top 20 hardest-hit districts, eight were in California, four were in Texas, and there was one district each in Oregon, Georgia, Massachusetts, Illinois, Minnesota, New York, North Carolina, and Arizona.

The three hardest-hit congressional districts were all located in Silicon Valley in California. The 17th District lost 60,900 jobs, the 18th lost 49,500 jobs, and the 19th lost 39,400 jobs for a total loss of 149,800 jobs. His explanation for why this occurred is “Although the San Francisco Bay Area has experienced rapid growth over the past decade in software and related industries, this growth has come at the expense of direct employment in the production of computer and electronic parts.”

In summarizing the lost wages from the increasing trade deficit with China, Scott stated, “U.S. workers who were directly displaced by trade with China between 2001 and 2011 lost a collective $37.0 billion in wages as a result of accepting lower-paying jobs in nontraded industries or industries that export to China assuming, conservatively, that those workers are re-employed in nontraded goods industries…”
In addition, Scott wrote, “According to the most recent Bureau of Labor Statistics survey covering displaced workers (BLS 2016b), more than one-third (36.7 percent) of manufacturing workers displaced from January 2013 to December 2015 were still not working, including 21.7 percent who were not in the labor force, i.e., no longer even looking for work.”

As I have written in previous articles, Scott concludes, “The rapid growth of U.S. imports of computer and electronic parts from China also represents a threat to national security because it is connected to the outsourcing of U.S. defense products, as explained by Brigadier General John Adams (2015). The outsourcing of the defense industry makes the United States vulnerable to disruption of supply chains for key missile and communications components. Outsourcing has also reduced the quality of military equipment: a congressional report found nearly 1 million counterfeit components in the supply chain for “critical” defense systems (Senate Armed Services Committee 2012). And outsourcing has eroded the capacity of the defense industrial base for cost innovation, knowledge generation, and support for domestic employment (Alliance for American Manufacturing 2016).

Foreign Direct Investment by American companies in factories in China has also played a key role in the growth of China’s manufacturing sector and “the shift of manufacturing production and jobs from the United States to China since China entered the WTO in 2001.” Scott notes that “China is the largest recipient of FDI of all developing countries (Xing 2010) and is the third-largest recipient of FDI over the past three decades, trailing only the United States and the United Kingdom.” He wrote, “For many years, foreign-invested enterprises (both joint ventures and wholly owned subsidiaries) were responsible for roughly two-thirds of China’s global trade surplus…However, due to China’s indigenous innovation policies and other measures that have pushed out foreign investors, often through forced takeovers and illegal theft of intellectual property, this share has fallen sharply to only one-third in 2015…”

However, the most serious consequences of the U.S.-China trade deficit are:
• The United States net international investment position (NIIP) declined from -$2.3 trillion in 2001, before China joined the WTO, to $-7.2 trillion in 2015 (BEA 2016b).
• Each year that the United States runs a trade deficit is a year that it must borrow from abroad to finance this excess of consumption over domestic production.
• The United States ran a trade surplus in nearly every year between 1946 and 1975, and by 1975 had become the largest net lender in the world.
• The United States has run increasingly large trade deficits in every year since 1976, and has become the world’s largest net debtor.

In summary, Scott stated, “The U.S.–China trade relationship needs to undergo a fundamental change. Addressing unfair trade, weak labor, and environmental standards in China, and ending currency manipulation and misalignment should be our top trade and economic priorities with China. It is time for the United States to respond to the growing chorus of calls from economists, workers, businesses, and Congress (Scott 2014b) and take action to stop unfair trade and illegal currency manipulation by China and other countries.”

According to my calculations, our trade deficit with China and other countries since 1994 when NAFTA went into effect has added up to nearly $11 trillion dollars. President Trump has set the goal of reducing the trade deficit. I say we need to eliminate the trade deficit by implementing the smart trade policies recommended by the Coalition for a Prosperous America that address all of the trade misalignment issues mentioned in the EPI report.

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ToolingU-SME Report Reveals Manufacturers Are Not Addressing Skills Gap

Wednesday, December 14th, 2016

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

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

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

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

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

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

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

The highlights of the report are:

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

The key findings are:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Cincinnati’s Cintrifuse Connects Entrepreneurs, Big Companies and Tech Funds

Monday, December 12th, 2016

During my visit to Cincinnati earlier this month, I had to pleasure of meeting key people from Cintrifuse and a few of the regional accelerators. The website says Cintrifuse is “Where Dreamers, Disruptors and Doers Connect” because “the world needs innovation. Entrepreneurs, BigCos and Tech Funds need each other. An active network ensures they can connect. And at the heart of that network is Cintrifuse.”

At Cintrifuse, I met with Wendy Lea, who has been CEO since 2014, and Eric Weissmann, Director of Marketing. Ms. Lea is “an accomplished Silicon Valley executive with deep experience in marketing, sales, and customer experience.” Ms. Lea serves on several boards, including Corporate Visions (San Francisco) and Xyleme (Boulder) as well as still being the executive chair of Get Satisfaction (San Francisco.)

Ms. Lea said, “Cintrifuse was born to answer this question: What will it take to create a thriving startup ecosystem in Cincinnati? Cintrifuse is a not-for-profit public/private partnership that exists to build a sustainable tech-based economy for the Greater Cincinnati region. Our purpose is to advocate for entrepreneurs leading high-growth tech startups– attracting, inspiring, and supporting them on their journey. The goal of Cintrifuse is to lower starting costs of business, especially businesses with the potential for high growth and that are disruptive technology. The Cincinnati Business Committee wanted to see how they could be relevant and formed Cintrifuse in partnership with the City of Cincinnati and EY. They wanted their kids to be able to come back to Cincinnati. The Cintrifuse Syndicate Fund is at $57 million and invests in VC firms outside of the region with the understanding they (VCs) create a regional engagement plan. There’s no stipulation that they invest in Cincinnati startups, but just be involved in the ecosystem. This includes reviewing deals, participating in events, and meeting our Limited Partners (LPs) most of whom they would love to meet with anyway – Procter & Gamble, Kroger, the University of Cincinnati, etc.”

She said, “We own and manage a 38,000 sq. ft. building in the economic area known as “Over the Rhine.” We got the building mortgage free, but put $17 million into improving the building. We opened in 2012. We provide services to 285 members companies – advisory services (such as mentoring and office hours), connections to talent, funding, and customers, as well as operating co-working space in downtown Cincinnati. We are part accelerator, part incubator, and part co-working space to move a company to the next ‘Lily pad’.

Ms. Lea added, ” The ‘headroom’ at Cintrifuse is wide. There is a strong appetite for new technology, new ideas, and disruption. Cintrifuse is a census taker – 300 startups are on our database across industries. We have brought is $160 million into the region for their startups, and we give them lots of exposure to VCs. One of our success stories is Everything But the House, which started in Cincinnati. They just raised $41 million, and Cintrifuse made the introduction to their investors.”

She explained, “Cincinnati has more Fortune 500 companies than anywhere else outside of San Francisco Bay area, so we created a Customer Connections program to share information between large companies and small companies. Our Customer connections program is taking 15 startups to Israel to present “innovation briefs.”

She would like to see Cintrifuse expand all over the world similar to TechStars in Boulder, CO with which she was involved when she lived in Boulder. She said, “Tech Star is the largest global network in the world with 28 centers, and their graduates have created 800 companies. Cintrifuse hosted their   reunion of graduates called FounderCon in the fall of 2016.”

The next day, I met Jordan Vogel, now V. P. of Talent Initiatives with the Cincinnati Chamber of Commerce, who worked for Cintrifuse for three years as director of the entrepreneurial ecosystem., He gave me more background information on Cintrifuse, saying, “It was created by Cincinnati Business Committee, composed of the top 30 CEOs in region and  the Cincinnati Regional Business Committee, composed of about 100 CEOs of somewhat smaller companies. When Chiquita left, the leaders became concerned and asked “What does the future look like? What should it be? They decided they needed to promote the next P&Gs of the world. Entrepreneurship was the key. They commissioned McKinsey & Company to conduct a comprehensive study on what would make the Greater Cincinnati region more attractive to startup entrepreneurs and outside investment. The study revealed the region’s strengths and gaps. Cintrifuse was formed to leverage the strengths and fill in the gaps. There are four universities in the region, but there was no path to commercializing technologies being developed”.

He added, “Funding was needed, so they created a fund of funds. They raised $78 of which $57 million went into a syndicate fund. To be part of the syndicate, Venture Capitalists had to commit to take a look at startups and be committed to engage with two to four trips per year to the region to meet with entrepreneurs. The purpose was to create a food chain.”

According to its StartupCincy Resources page, “Cincinnati lays claim to one of the most vibrant startup ecosystems between the coasts.” Home to The Brandery, one of the nation’s Top 10 accelerators; HCDC, the #1 incubator in the State of Ohio; CincyTech, one of the Midwest’s leading seed-stage investors; Queen City Angels, a private, seed-stage venture capital investor ranked #2 in the nation; four universities committed to innovation; and now the country’s only faith-based accelerator – there is a ton of innovation activity in this town!”

The Cintrifuse webpage lists the following accelerators as collaborative partners:

  • ArtWorks CO.STARTERS (formerly SpringBoard) “is a nine-week business development program that helps aspiring and seasoned entrepreneurs examine assumptions and turn business ideas into action.”
  • Bad Girl Ventures “is an educational and micro-finance organization dedicated to inspiring and supporting women entrepreneurs in all the key elements of their business.”
  • The Brandery “is a seed stage startup accelerator ranked as one of the top programs in the United States. It runs a 4-month program in Cincinnati, Ohio, focused on turning your great idea into a successful brand driven startup.”
  • First Batch ”It is a five-month accelerator that is the first business accelerator in the nation to focus on scaling physical product companies using local manufacturing. Cincinnati’s long history as a center for consumer products, branding, and manufacturing make it THE place for growing a business creating and selling tangible goods.”
  • MORTAR was started by three minority community members in the downtown area called “Over the Rhine.” “It is called ‘Mortar’ because people are the mortar between the bricks of the buildings and the founders believe that the neighborhood’s residents have the potential to create booming enterprises – just footsteps from their homes.”
  • Minority Business Accelerator – “its mission is to help accelerate the development of sizable minority business enterprises and to strengthen and expand the regional minority entrepreneurial community. It works with companies under $1 million in revenue to connect them with large companies who want to diversify their supply chain.”
  • Ocean is a faith-based “accelerator for startup growth by focusing on the purpose that drives founders…and their companies.”
  • UpTech “is designed to attract and accelerate entrepreneurs who have the next big idea to make the world a better place. Its mission is to create an informatics industry in Northern Kentucky. It is especially well suited to support entrepreneurs who benefit from our partnership with the NKU College of Informatics.”

It lists the following incubators in the Cincinnati region, which also collaborate with Cintrifuse:

  • bioLOGIC is a life sciences incubator.
  • Hamilton Mill “is a Southwestern Ohio small business incubator for green, clean, water, digital and advanced manufacturing technologies. Conveniently located between Cincinnati and Dayton in the original pioneer town of Hamilton, OH.”
  • Hamilton County Development Center (HCDC) “is a nationally recognized startup incubator in Southwest Ohio that helps entrepreneurs launch successful innovative businesses. It just spun off an accelerator called Pipeline for water product development.”
  • The Northern Kentucky ezone (NKY ezone) – “It works collaboratively with several organizations that provide funding assistance to fast-growth, high-tech companies. Its team will work with you in assembling the necessary information, plans, and presentations to apply for these opportunities.”

Over dinner at Cintrifuse, I met with the heads of three of the accelerators, Matt Anthony and John Spencer with First Batch and JB Woodruff with Uptech. Two entrepreneurs also joined us for dinner, Konrad Billetz, CEO of Frameri, and Paul Powers, CEO of Zoozler LLC and Physna LLC. Frameri makes the world’s first interchangeable prescription frame and lens system. Mr. Billetz was previously part of the Brandery four month accelerator program in 2013. He said, “We got $20,000 as part of the program, and then we did an Indiegogo crowdfunding and got about $100K to get into full production. We were on Shark Tank in 2015, but we turned down the deal we were offered. We found a lens manufacturer in Dallas, TX, but still do some production in-house.

Mr. Powers said, “Physna is a member of Cintrifuse. I started Physna in December 2015, and we are developing software that will lead the revolution in 3D printing. I am also the CEO of Zoozler LLC that is about two years old. Zoozler is a tech development company (including websites, apps, digital marketing and media) and has an initiative for local startups requiring help in tech development.”

I connected with Matt Anthony by phone after I returned from my trip to find out more about First Batch. Mr. Anthony said, “I founded the accelerator in 2013 to overcome the gap between a well made early prototype and being able to make the first batch of product at manufacturing scale. Over the next four years we grew the program to educate and connect entrepreneurs to overcome the additional hurdles to scale, including legal, marketing, distribution, and more. We’re unique nationally in that we’ve focused on utilizing the strength of our local manufacturers, which tied with the heritage in physical consumer products and branding make for a perfect set of resources to grow new physical product companies. We operate out of a 10,000 sq. ft. maker space on the 4th floor of a former brewery, located in the “Over the Rhine” area. The program itself is five months of rigorous learning from regional experts, product testing, development, one-on-one mentorship, and $10,000 in funding to get into actual production. Companies must all come in with a working prototype and an understanding of their business to really get the most of the five short months. Some of our companies have been making their product for years and are looking to expand their production beyond themselves. The goal of the program is to get the companies into the first stage of production and actually selling products in order to set them up for future growth and funding.”

For example, one of their companies, Textile House, used the funding to make a couple hundred garments for their fall fashion line. They already raised an additional round of funding through a Kiva micro loan to bring their spring line to market in early 2017.

 

He added, “We started out with two companies in 2013, four in 2014, five in 2015, and six this year. We started this year in June and our 2016 class just culminated in a Demo Day on November 9th. We try to check in with graduates to continue to ensure growth, and about half of the companies each year choose to stay on as members of the maker space.”

When I asked him to describe how their program works, he said, “After an open application, our companies are selected through a series of interviews that end in a final juried selection. Once the program starts our cohort meets as a group twice a week, and one-on-one at least once, often with speakers, manufacturer visits, branding support, and other individual consultation sprinkled in between. We start the week on Monday mornings reviewing business concepts and readings, ranging from learning more about the types of entrepreneurial personalities via E-Myth, and later how to start prototyping and quickly testing product ideas via Lean Startup and marketing channels via Traction. We are primarily funded through grants and donations of time and materials, and don’t currently take an equity position in our companies. We look to help grow companies by connecting to resources down the line from ECDI, Queen City Angels, Cintrifuse, even other accelerators.”

With so many accelerators and incubator programs to nurture startup companies, Cincinnati is off to a good start to achieve its goal of re-industrializing the Cincinnati region. Other cities in the United States that were formerly major industrial centers would do well to follow the example of Cincinnati in setting a goal of re-industrializing their city to create more higher paying jobs and restore prosperity.

 

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Cutting Edge Technologies Power Cincinnati Industries – Part 2

Sunday, December 11th, 2016

T, sensDuring the second day of my visit to Cincinnati, Ohio November 1st – 4th, I had the pleasure of meeting with Tony Canonaco, CEO, and Tom Rosenberg, Director of Marketing, at Balluff’s North American headquarters based in Florence, Kentucky.

Mr. Canonaco said, “With over 50 years of sensor experience, Balluff is a leading global sensor specialist with its own line of connectivity products for every area of factory automation. Our global headquarters is based in Germany, and our North American headquarters was established in Florence, KY in the early 1980s. Our products include  a wide variety of sensors, mechanical limit switches, rotary and linear measurement transducers, machine vision and RFID systems, and distributed modular I/O network solutions.  Our products are involved in making the Industrial Internet of Things (IIoT) work.”

As we toured the plant, I saw their sensors being used right on their own production and packaging lines, as well as for inventory control of finished goods. With IIoT’s promise of total visibility, we saw a great example right on their plant floor. IO-Link technology, an advanced point-to-point connection technology, was integrated into all their automated systems providing operators and management a continuous view of the process. With faster response to workload variations, Balluff now has a much leaner operation. Lean examples were also evident in their single-piece flow work cells. Products were produced in a surprisingly small footprint with high efficiency.

Mr. Canonaco said, “Many of our internal transitions towards Lean began during the recession in 2009. It was during this time, we realized that in order to better compete in the future, we needed to eliminate all types of waste and raise the level of productivity of the company. In addition to the change in their own mindset, we accelerated our New Product releases that focused on Automation and Sensing Solutions to help our customers shrink the size of their control panels, reduce their engineering time, and speed up troubleshooting on their machines. We started our journey to become “Leaner” and our customers were provided with new products to help them realize performance and productivity machine enhancements as a result of the recession. Nearly a decade later, this path has proven to be a win-win for us and our customers.”

An additional customer-focused effect of their Lean journey is with one of their most watched metrics inside of Balluff ? On Time and In-Full Delivery to the customer promise date. They consistently plan to achieve greater than 97%.

When I asked if they had a problem of finding people to hire with the right skills, he responded, “Finding people with the right skills and the right mindset is always a challenge and makes all of the difference. We require production associates for manufacturing as well as engineers who work in technical sales, marketing, support, and operations. We are involved with local work force development efforts to help ourselves as well as surrounding manufacturing neighbors. Balluff is an active supporter of National Manufacturing Day to highlight the attractiveness of manufacturing as a career choice. This has proven to be very popular with local middle and high schools. We utilize co-op students from select universities and have started our own Technical Sales Training program for recent college graduates that focus on how to best help manufacturers apply automation in innovative ways.”

We have our own accredited laboratory and a quality management system certified according to ISO 9001:2015 to form a secure foundation for optimized added value for its customers.

Our products increase performance, quality and productivity around the world every day. They satisfy prerequisites for meeting demands for greater performance and cost reductions on the global market. We deliver state-of-the-art solutions no matter how stringent the requirements may be.”

Our last plant visit was to TSS Technologies, located in West Chester, Ohio where we met with CEO, Marc Drapp, followed by a tour of the facility. TSS Technologies provides complex electro-mechanical assemblies and turnkey contract manufacturing solutions to the aerospace, life sciences, energy, semiconductor, solar, sports, consumer, automotive, as well as food and beverage sectors. TSS also builds automation equipment for themselves and other companies.

Mr. Drapp said, “TSS Technologies has been in business for over 65 years and is family owned and operated. We have a machining facility totaling 110,000 square feet and an assembly facility totaling 210,000 square feet. We have approximately 225 employees. We are ISO 9001:2008 and 13485:2003 Certified, as well as AS9100C Certified and won the GE Healthcare Excellence award.”

As we toured the plant, we saw examples of many of the above products being assembled or being staged for assembly for a couple new products coming online. Contrary to most contract manufacturers, Mr. Drapp likes to get involved with early stage companies to help them get into batch production and ramp up to full production. We saw a complete “bakery” producing shelf-stable pretzels that is an example of working with a start-up company to ramp up into full production within his facility. We each gratefully accepted two packaged pretzels and shared one when we returned to the conference room.

When I asked Mr. Drapp how the Great Recession had affected them and what they did to recover, he said, “The recession was tough on our company, especially our machine shop. We lost a lot of contract machining work to our customers that brought the work back inside their plants. On the other hand, it really allowed for us to right size our operation and allow for us to be more nimble in the coming years.

We capitalized on the tough times by reorganizing our structure and tightening our manufacturing processes. This allowed us to become more lean and efficient. Ultimately allowing us to come out of the recession quicker and better able to respond to customer needs.

The recession really allowed for us to take a look at TSS and what we wanted to be. It allowed us to focus on the right customers for our business. It also allowed us to focus on the right areas for growth. From a lean perspective, we have always practiced lean manufacturing. The recession didn’t really change that.”

From these stories, we can see that cutting-edge technologies and unique capabilities have been the key to these three companies surviving the Great Recession and now thriving. The rebuilding of manufacturing in the Cincinnati region is being  helped by the innovative technologies being developed at the University of Cincinnati and the other three regional universities and colleges. The collaboration of public and private entities and far-sighted leaders will enable Cincinnati to achieve their vision of re-industrialzing Cincinnati to create jobs and prosperity.

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Cutting Edge Technologies Power Cincinnati Industries – Part 1

Sunday, December 11th, 2016

During the first day of my visit to Cincinnati, Ohio November 1st – 4th, I had the pleasure of meeting with key personnel from the Intelligent Maintenance System Center (IMS) at the University of Cincinnati:  Dr. Hossein Davari – IMS Center Post-Doctoral Fellow, Patrick Brown – IMS Center Program Director, Chao Jin – IMS Center Graduate Researcher, and Michael Lyons – IMS Center Program Coordinator.

Prior to my visit I had been provided with background information on how the University of Cincinnati evolved into what it is today:  “The Ohio Mechanics Institute (OMI), parent name of the College of Applied Science, was founded in 1828 as a private educational institution and the first school west of the Alleghenies dedicated to technical education.” This struck me because this was about the same time as the Lowell Machine Shop in Lowell, MA first started producing interchangeable parts for firearms sold to the Springfield Armory. I did not realize that Cincinnati was industrialized so early in the Industrial Revolution period.

“OMI operated exclusively as an evening college until 1901 when day courses on a pre-college level were added. In 1919 the day courses were revised into collegiate programs…In 1958 the college designated separate names for its day and evening operations, the day school became the Ohio College of Applied Science (OCAS) and the evening school was named the Ohio Mechanics Institute Evening College (OMIEC). The college merged with the University of Cincinnati in 1969 and offered programs in the engineering technologies and related areas with the aim of preparing individuals for careers as engineering technologists, engineering technicians, and managers in industry. The college began offering bachelor’s degrees in the early 70s. The name of the college was changed in 1978 to the OMI College of Applied Science and was shortened to the College of Applied Science in 2000.

In 2009, the UC Board of Trustees approved the creation of the College of Engineering and Applied Science (CEAS)… [to integrate] two predecessor colleges —The College of Engineering and The College of Applied Science… During the late 50s…advanced studies in engineering and research became the focus…to strengthen the college’s focus on graduate education. A joint project with the Engineer’s Council for Professional Development (ECPD), and local industry provided opportunities for young professional engineers to pursue graduate degrees without leaving their jobs. Both colleges and the City of Cincinnati have shared long and productive partnerships…through cooperative education assignments, research funding and graduate placement…”

Dr. Davari told me that the “IMS Center is a leading NSF Industry/University Cooperative Research Center (I/UCRC) that consists of the University of Cincinnati, the University of Michigan and Missouri University of Science & Technology.”

He said, “The Center has over twelve years of experience in developing and delivering Prognostics and Health Management (PHM) solutions for a wide-range of applications. The IMS Center’s mission is to enable products and systems to achieve and sustain near-zero breakdown performance, and transform maintenance data to useful information for improved productivity and asset life-cycle utilization. Since its inception in 2001, the Center has conducted over 100 successful industry and NSF supported projects, and has attracted over 80 members from all across the globe. The IMS Center was recently identified as the most economically impactful I/UCRC in NSF’s recent study titled Measuring the Economic Impacts of the NSF Industry/University Cooperative Research Centers Program: A Feasibility Study. According to this study, the Center delivered its members $846.7 million in combined benefits over the last ten years.”

Dr. Davari explained the work of their Masters in Science and PhD students, “Graduate students in the IMS Center focus on developing innovative technologies and tools for health assessment, degradation monitoring and prognostics of machinery. Graduate students work both towards conducting fundamental research along with developing specific tools to address the needs of the industry. Graduate students get the opportunity to work closely with industry members ranging from manufacturing to energy and transportation applications. With a unique set of skills and experience in the field of Prognostics and Health Management (PHM), they continue to develop innovative tools and technologies and bring value to both industry and academia. The IMS Center researchers have also won the PHM Society Data Challenge five times since 2008. It is an annual competition organized by the PHM society and is open to researchers in academia and industry worldwide.”

Dr. Davari stated, “In 2012, National Instruments awarded the Prognostics Innovation Award to IMS Center for the development of Watchdog Agent Prognostics toolkit. Watchdog Agent consists of a set of algorithms and tools developed for degradation assessment and failure prediction of machinery and processes. The toolbox has been implemented in various industrial applications and has been commercialized by National Instruments as an additional toolbox for the LabVIEW software package.

I told him I could see how important preventing failure is healthcare because a failure could result in serious harm to a patient and even be fatal. When I asked him to explain what a “Digital Twin is, he said, “It is a digital representation of the physical system, generated by data-driven and physics-based models. IMS Center has developed a Cyber-physical Interface, through which the data is being collected from a machine continuously. This data is then processed and converted to machine health information using tools in Watchdog Agent toolbox. This health information is used to make informed decisions for optimum maintenance and near-zero breakdowns. It also continuously seeks for possible variations in the machine performance and provides insight into the current performance of the machine compared to its past performance, or its peers doing the same job. Digital twin basically connects the physical world to cyber world for improved visibility and transparency in machine operation.” He later forwarded me a link to a video describing IMS technologies.

Next we visited the Ceramic Matrix Composite Laboratory at GE Aviation and met with Jon Blank, Composite Matrix & Advanced Composite Section Leader, and Perry Bradley, Communications Leader, GE Aviation, followed by a tour of the lab.

From the material I was provided in advance, I learned that advancing the use of ceramic matrix composites (CMCs) has challenged industry for decades. In my day job as a manufacturers’ sales rep for fabrication companies, I had represented a company doing ceramic injection molding and a company making pre-preg layup composite parts for airline interiors in the 1990s. I was aware of the ultra-lightweight and super-heat-resistant properties of CMCs and knew that companies were investing millions to try to win the race to mass-produce this engineered material.

We first toured the Leaning Center where all the engine models GE has produced were on display. It was inspiring to me to see that advancements in technology incorporated into these successive generations of engines. Since I have previously represented companies that produced forgings and investment castings, I understood how advances in metals technology, particularly the use of Titanium, had reduced weight and improved the efficiency of engines. Since Solar Turbines in San Diego was one of my customers, I was aware of their work in the development of using ceramic molded parts in small turbine engines. However, when I saw the complexity of shape and size of the CMC turbine blades that GE Aviation is now making, it was astonishing.

Mr. Blank told me that “For more than 20 years, GE scientists in the U.S. and worldwide have worked to develop CMCs as a differentiating technology in large gas turbines for power generation, and in jet engines for commercial and military jet planes. Now their big bet is paying off as GE leads the charge to industrialize CMCs for large engine applications. GE leads the world in introducing CMCs into the hot section of jet engines and gas turbines and is creating the vertically-integrated supply chain necessary to mass produce CMC components.”

He explained why CMCs are critical to advancing the jet propulsion and power generation industries. “Components made of CMCs allow gas turbines and jet engines to run hotter, and thus more efficient. Ultra-lightweight CMCs also reduce weight throughout the engine, leading to higher fuel efficiency. CMCs in gas turbines and jet engines contribute to lower emissions and improved environmental performance. They create a significant economic advantage. CMCs are made of silicon carbide ceramic fibers and ceramic resin, manufactured through a highly sophisticated process, and further enhanced with proprietary coatings. They are one-third the density of metal alloys and one-third the weight.”

He continued, “CMCs are more durable and heat resistant than metal alloys, allowing the diversion of less cooling air into the engine’s hot section, and thereby improving overall engine efficiency. By using the cooling air instead in the engine flow path, the engine can run more efficiently at higher thrust. The average rate of technology progress for turbine engine material temperature capability increased 50 degrees per decade. With the use of CMCs, GE will now increase the temperature by 150 degrees in this decade, 3x the traditional rate. The benefits of CMCs are a 10% thrust increase and increased temperature using 2400F CMCs.”

He said, “In 2009, GE Aviation ran the first CMCs in the hot section of the F136 military engine. The CMCs were structural shrouds that direct air in the high-pressure turbine section, the hottest area of the engine. The results encouraged us to pursue CMC components with its next-generation commercial jet engines. GE worked to expand its overall CMC production capability. In 2012, Nippon Carbon (NCK) of Japan, a producer of composite fibers, formed a joint venture with GE (25% ownership) and Snecma (25%) called NGS Advanced Fibers, which produces fibers for CMC components such as the CMC shrouds. The next year later, GE Aviation expanded CMC “lean lab” operations in Delaware to develop new CMC components and the plant in Asheville, North Carolina was selected as factory to mass produce CMC components. Their lab was established in 2014, and in 2015, the Huntsville, Alabama factory was selected to produce CMC building-block materials [fiber and tape.]”

As we toured the lab and watched a couple of parts being made, he said “We have now established a fully-integrated CMC supply chain in the U.S. involving CMC raw material production in Huntsville, research and low-volume production here in Cincinnati, the CMC Lean Lab in Delaware, and CMC mass production in Asheville.”

Mr. Bradley said, “The LEAP engine for narrow-body aircraft will enter airline service in 2016 with CMC shrouds [18 shrouds per engine] in the high-pressure turbine section. This is being developed by CFM International, which is a 50/50 joint company of GE and Snecma of France. By the end of the decade, GE will introduce the GE9X engine for the new Boeing 777X under development. This engine will also feature CMC components in both the combustor [inner and outer liner] and high-pressure turbine sections [stage 1 and 2 nozzles, and stage 1 shrouds]. ”

He also said, “GE Aviation continues to run an advanced military engine through the U.S. government-sponsored ADVENT program with CMCs in the combustor and turbine sections – demonstrating the highest core temperatures in jet propulsion history. In 2014, GE Aviation successfully ran CMC turbine blades – a high-speed rotating part – in a F414 military demonstrator. This is a huge breakthrough for GE in pursuing the use of CMC in rotating parts because up to now, CMCs have been limited to static parts in an engine.”

Mr. Blank concluded, “This is all part of GE Aviation’s continuing efforts to further mature CMC technology for future commercial and military engines. The demand for CMCs is expected to grow tenfold over the next decade.”

We ended day one with a meeting with the directors of several accelerators/incubators and a few entrepreneurs in these programs in the region, which I will cover in a future article. I already covered meetings I had with key leaders in my first article last week on “Cincinnati focuses on Re-industrialization to Create Prosperity. Part two of this article will cover the companies I visited on day two of my visit.

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