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

January 24th, 2018

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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California Economic Summit Sets Goals to Elevate California

January 24th, 2018

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A brief look at how California ranks reveals:

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

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

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

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

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Lean Leadership Summit Focuses on Essentials to Becoming a Lean Company

December 12th, 2017

After being delayed for a few weeks because of Hurricane Irma, Lean Frontiers held its annual Lean Accounting Summit in Savannah, GA on October 24th and 25th.  This was my fourth year to be invited as a speaker at the conference. This year’s summit was different in that the Lean Accounting Summit was combined with Lean Management and Lean People Development into Lean Leadership to include the people development aspect of being a lean enterprise. Co-founder Dwayne Butcher, said, “It’s about time that the whole enterprise be involved in becoming a Lean company. Lean is a business model and must therefore include every part of the business, including those in Executive Leadership, Accounting, HR, Sales, Product Development, Supply Chain. We need to breakdown the silos between these departments.”

Between the keynote speakers, there were three tracks related to Lean Management, Lean Accounting, and Lean People Development.  Besides giving my own presentation, “Rebuild Manufacturing – the key to American Prosperity,” based on my new book of the same name, I attended all of the keynotes and some of the sessions in the Lean Management and Lean Accounting tracks.

Lean Frontiers is not a consulting firm. Its sole focus is to provide learning opportunities to address:  Enterprise?wide adoption of Lean and the foundational skills needed by Lean companies. Dwayne announced a new program, the Lean Learning Pod, that will be taught by Jean Cunningham on Lean accounting. Participating companies will meet in a virtual manner on a regular basis, and Jean will be a mentor to the companies.

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

He introduced the first keynote speaker, Art Byrne, former Wiremold CEO, author of Lean Turnaround and now a consultant. He has been practicing Lean since 1982 when he was a General Manager at a General Electric facility. He wrote his book and then wrote the Lean Turnaround Action Plan to show what would happen if a company becomes Lean. The reader is supposed to be management of fictitious company – United Gear & Housing.  He asked, “What is Lean?” His answer was, “It is strategy to run any business to remove waste to deliver more value to customers.”

He described United Gear as a traditional batch company with long set ups of 2-3 hour, a six-week lead time, and a strong management team.  The company is purchased, and the new owner make it clear that everything has to change to with Lean as the strategy.  They will have to:  lead from the top, transform people, increase gross by 5 – 7. Puts, reduce inventory by $70 M increase value, and reduce set up by 90%.  He said, “The present capacity = work + waste., and waste is typically 60%.  I particularly liked his comment. “Think about the stupidity of putting all the same machines in the same department as if the machines liked to be near each other. Instead, we should be putting the machines in the sequence of operations to be performed to go from batch to continuous flow. You could rearrange the machines into cells to go from raw material to finished product. Fewer people would be doing the work, and lead time could drop dramatically from 6 weeks to 2 days.”

He said the Wiremold strategy was to: “Constantly strengthen our base operations, achieve 100% on-time delivery, 50% reduction in defects every year, do 20 inventory turns/year, double in size every 3 to 5 years, use visual control and 5S, do one piece flow and standard work, do Kaizen, use a Pull system, and stretch targets.”

In his concluding comments, he said, “Standard cost accounting and lean don’t go together. The key is for senior management to function as one team.”

In her presentation on “Overcoming Barriers to WOW Results,” Cheryl Jekiel, CEO of the Lean Leadership Resource Center, said that the International Labour Organization for the United Nations asked her to develop and teach a class on Lean HR to be taught in 46 countries.  She had to develop the course for others to use to teach. In developing the course, she used the following working definition of Lean:

  • 7 common practices to improve
  • It’s about the customer
  • Measurable improvement
  • Problem Solving
  • Repeatable processes
  • Overall involvement
  • Visual management
  • Engaging leadership

She said, “HR can make the difference in the results. HR owns the things that are the obstacles. HR has a role in the culture of the company and can weave improvement into activities. HR owns talent strategies: hiring, training & Development, performance management, and reword systems. HR can build lean competencies into job design. The greatest is the waste of human development. Most companies don’t tsp into the power of their people. We define people by the tasks they do and not their capability. People are endlessly creative. The power of the ideas to solve problems is in people. Lean is about building a muscle — the more you do it the better you are at doing it. Lean is a way of expanding capability.  HR tends to engagement, and engagement goes with Lean. Studies show that companies are 7-11% more profitable when employees are engaged. Convert categories into dollars to make the connection of engagement into money.”

One of my favorite presenters is Jerry Solomon, who gave the presentation, “Bridging the Gap Between Accounting & Operations.” He spent 40 years in the manufacturing industry and is now retired in Naples, FL.  His last 14 years were at Barry-Wehmiller in St. Louis as CFO.

He said, “Lean is two pillars to eliminate waste in pursuit of perfection in safety, quality, delivery, and cost.  The two pillars are:  respect for people and continuous improvement. Inspirational leadership and a profound cultural and organizational change are required to become a Lean company. Elimination of waste is driven by Kaizen events, which need to be narrow and deep. The respect for people means no layoffs and requires strong C-level support.”

He explained, “Lean Accounting is using Lean tools in accounting and “plain English” P & Ls. Accounting is one of biggest roadblocks to successful Lean journey. Lean is about being a cash and capacity generator.  We need to change the metrics we use. In the traditional cost accounting pie, overhead is 10-20%, Direct labor is 60-70%, and materials are 20-30%. Today in Lean accounting, overhead is still 10-20%, direct labor is 10-20%, and materials are 60%.  Standard cost accounting is replaced by actual costs and can be understood by everyone. The benefit of Lean accounting is relevant information when you need it that is understandable to the 99% of people and not just the 1% who are accountants. It provides real-time information to run the business.”

On Wednesday, the keynote presentation was “The Continuous Improvement Engine” by David Veech, The Ohio State University, author of Leadersights and The C4 Process.

He said, “The foundation of the continuous improvement engine is trust. Two key things are required: clear expectations with standardized work and leader vulnerability and mastery. Challenges lead us to acquire knowledge and skills. It’s how we lead that sets our stretch goals. It’s a process that occurs with repetition. No one is in this alone, so we have accountability. Learning and coaching is required for mastery. The goal is to have a team of experts.”

He explained, “You need a system for problem solving to find out if ideas work – you can use PDCA, DMAIC, or my C4 system.”  He said, “C4 is short for Concern, Cause, Countermeasure, and Confirm. C4 offers straightforward, easy-to-remember techniques for identifying and solving workplace problems. These four steps-clearly identify the concern, find the true root cause, correct the cause with an effective countermeasure, and confirm that the solution worked.”

He added, “Problem solving builds mastery. Mastery results in self-efficacy, and people that have self-efficacy are willing to try new things and keep trying until they succeed. They need to have intrinsic motivation, which comes from the heart. This intrinsic motivation turns into ideas and generates initiative. The “exhaust” of this continuous improvement engine is:  satisfaction, meaning, awareness, and responsibility. Building relationships in teams is critical to the process.”

In the first breakout session, I attended “Eliminate Standard Cost Step by Step” by Nick Katco, author of the Lean CFO series. He told us that there is nothing in Generally Accepted Accounting Principles (GAAP) that would prevent using Lean Accounting methods. He said, “In GAAP, you need to calculate inventory valuation and Cost of Goods Sold. Using Standard Cost Accounting, you often have to make assumptions whereas in Lean Accounting, you use “Actual expenses incurred to get goods in condition for sale. A major objective of accounting for inventories is the proper determination of income through the process of matching appropriate costs against revenues.  In the continuous nature of manufacturing, there are difficulties in matching specific costs to revenue because products not sold in same period as produced, prices change over time, and production costs change over time.”

He explained how to do a Lean Inventory Valuation for material and production cost capitalization using three different methods:  days of inventory, units of inventory, and days of conversion cost.  He said, “Lean transformation is designed reduce inventory levels in manufacturing companies — 30-60 days is good target. There is no GAAP requirement to value every single product. Average costs replace standard costs. Capitalize total costs, not individual products by a journal entry.”  In conclusion, he advised:  “Design a lean inventory valuation methodology which works for your company and partner with your auditor to create a methodology they will be able to test.”

I had to leave early on Wednesday to catch my plane, so the last presentation I attended was “Lean Transformation from the CFO’s Seat” by CFO  Pete Gingerich of Aluminum Trailer Company. Last year I attended a presentation by the President and CEO, Steve Brenneman, so I was interested in what Mr. Gingerich had to share about their Lean transformation. He said, “In 2007, we did $27 Million and went down to $10 Million in 2009. We had to lay off half of our employees. Steve Brenneman started in 2009, and our first steps were office procedures for handling work folders and then we did 5S on the shop floor. We had lots of problems with material shortages, so we went to a Kanban system. We split into three value streams in 2012 and now have six.”

He explained, “Our big change was in how we pay our workers; we switched from piece rate to hourly and started at a rate of 10% higher than previous year’s rate. We also instituted a profit sharing plan. We didn’t use standard cost accounting, but we did have assumptions for material, labor, and overheads. Now, we know the actual costs for each value stream. Value stream planning is clearer and easier.”

He added, “We thought that our custom trailer was the most profitable, but it is actually our midline model trailer because too many engineers are involved in our custom trailer.

We have an annual meeting for top management, quarterly meetings for managers, and weekly meetings for team leaders. We have switched to rolling forecasts from budgeting, and we do weekly production planning forecasts and weekly P & Ls. Each value stream has its own weekly P& L with more detail. Lean accounting is based on shop floor metrics. We avoid allocations because if you can’t control them, why do you want to see them. We can close a quarter in one day. We clarified the definition of sales and revenue so employees would understand. We have had to work with suppliers on our Kanban system to cut inventory, such as having tires on a rack that is replenished daily. In 2009, we only did five turns of inventory, but in 2016, we did 19 turns.”

It’s always a pleasure to hear about a successful transformation into a Lean company rather than just a Lean manufacturer. I am a big proponent of Lean accounting because standard cost accounting is the biggest obstacle to more companies returning manufacturing to America using Total Cost Analysis.  When costs are divided into separate accounts, the purchasing agents and buyers do not have access to all of actual and hidden costs to be able to do a true TCO analysis. More CFOs need to take the time to attend the Lean Accounting Summit or get training from one of the qualified consultants and learn how to convert to Lean accounting.

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Innovation Spurs Growth in Piedmont Triad Region of North Carolina

December 5th, 2017

My last day in North Carolina began with a visit to The Forge Greensboro, a Makerspace that also functions as an accelerator for startup businesses. My hosts, Brent Christiansen, President and CEO of the Greensboro Chamber of Commerce, Loren Hill, President of the neighboring High Point Economic Development Corporation, Mary Wilson from the Economic Development Partnership of North Carolina, and I with Joe Rotondi, Executive Director, and he gave us a tour. He said, “The Forge was started in 2014 by Andy Zimmerman as an entirely volunteer-run organization in a 3,400-square-foot space building down the street. It was only open three nights a week and was completely volunteer run. As membership quickly grew beyond the capacity of the building, we moved to this 8,000-square-foot space in the fall 2016, and I was hired as the full-time executive director. We are the largest and most comprehensive of the community-type makerspaces in North Carolina. Other larger makerspaces are affiliated with universities”

He explained, “We are a non-profit and have about 190 members. We have about a dozen people who teach classes and help maintain the equipment. Our space is split up into office space, a conference room, and manufacturing space. Most of the equipment has been donated, and all members are given affordable access to machinery for woodworking, machining, welding, sewing, 3D printing, laser engraving, electronics and ceramics.”

We met two members of The Forge during the tour: Marc Pinckney and Sam Rouse. Marc is using the equipment to build custom entertainment centers, and Sam is building custom furniture. Sam said that he moved to Greensboro to start Sam Rouse Furniture specifically because of the woodworking equipment available at The Forge. He has been able to launch his company faster and get new clients. I was pleased to learn that he is even making some wood furniture for BuzziSpace that I visited on my first day.

When I checked out the website to write this article, I learned that The Forge Greensboro launched a “Forge Ahead” fundraising campaign last week on October 11th. “The Forge is an amazing outlet for creative people, as well as a resource for employers looking to hire skilled workers,” said Executive Director Joe Rotondi. “The “Forge Ahead” campaign will equip our makers with the tools they need to actualize their ideas, as well as expand our mentor and career development programs.”

Our next stop was Winston-Salem, one of the three major cities in the Piedmont Triad region. We met Robert Leak, Jr., President of Winston-Salem Business Inc., at Whitaker Park to tour of one of the buildings on the 125-acre, 1.7 million sq. ft. campus that was donated by the R. J. Reynolds Tobacco Company in April 2017. The recipient was the Whitaker Park Development Authority Inc., a nonprofit corporation created in 2011 by Winston-Salem Business Inc., the Winston-Salem Alliance and Wake Forest University.

Bob Leak and Loren Hill commented that the building we toured was the tobacco plant that hosted tours for elementary school children when they were young. Although the building has been closed for a few years, it had been maintained R.J. Reynolds, and the utilities were now being paid for by Winston-Salem Business Inc.  It was mind boggling to walk through this enormous 850,000 sq. ft. building and imagine the millions of cigarettes that had been produced in this plant. Fortunately, the layout will facilitate the building being redeveloped into space for seven to eight different companies as there are several entrances/exits and roll-up doors for deliveries around the perimeter of the building.  They already have five companies interested in the space already.

This set the stage for our drive into the heart of Winston-Salem where we drove by several much older buildings that were previously owned by R.J. Reynolds when tobacco production was in the heart of the city. The largest building was sold to the Wake Forest Baptist Medical Center in 1986, and the rest of the downtown plants’ land and buildings were donated at the same time to the City of Winston-Salem because R.J. Reynolds was moving to a modern manufacturing center 15 miles north of the city.

We had a brief tour and lunch at one of these former tobacco plant buildings that has been re-purposed as the Wake Forest Innovation Quarter by “a partnership between the city and state, Wake Forest Baptist Medical Center, Wake Forest University and Wexford Science and Technology, a Baltimore-based primary developer.

At lunch, we met Allen Joines, Mayor of Winston-Salem and Eric Tomlinson, PhD, who wears three “hats”— President of Wake Forest Innovation Center, Chief Innovation Officer of the Wake Forest Baptist Medical Center, and Professor of Physiology and Pharmacology at the Wake Forest School of Medicine.

Mayor Jones said, “Winston-Salem began the course to become a knowledge-based economy in 1995. We started to focus on innovation, and there was strong collaboration in the city. The Wake Forest Innovation Quarter is becoming an economic engine for the state. A lot of the companies in the center were the relocation of companies already in Winston-Salem, but we are starting to see businesses forming around the research center. The Innovation Quarter has become a great place to Work, Live, Learn and Play because of the repurposing of some buildings as residential apartments.”

Dr. Tomlinson said, “We are the fastest growing innovation center in the U.S. by size and number of people employed. We are the new hub for innovation in biomedical science, information technology, digital media, clinical services and advanced materials. We have 1.9 Million sq. ft. of space covering 337 total acres, and currently, we have 3,453 people working here, 152 companies, five academic institutions with 1,395 students enrolled this fall. We have 619 research units, and the 78 service companies generate $4.8 million in revenue. Every high-tech job creates several support jobs. People like working at the center, and they have access to about 270 different events monthly. We celebrate Juneteenth, a yoga event, and a bicycle race.”

According to the website, the five academic institutions are:  Wake Forest University, Winston-Salem State University, Salem College, the University of North Carolina School of the Arts and Forsyth Technical Community College. It also features the following highlights of the center:

  • ” Patented university technologies available for licensing
  • Cost-effective scientific services
  • An advanced telecommunications structure, with a fiber optic ring running throughout
  • Venture capital opportunities, with many top venture capital firms in North Carolina within a 75-mile radius
  • Business incubation, capacity planning, entrepreneurial counseling and training”

Dr. Tomlinson said, “We have weekly meeting of entrepreneurs in our center every Tuesday evening. We have program topics that benefit entrepreneurs.  Flywheel co-working innovation space located at the Center for Design Innovation was our first incubator, where people can come together to work on the fly, learn and share knowledge.  In January, we will add a Maker Space and “Tinker” shop with manufacturing equipment.”

Our last stop of day before going to the airport to return home was Thomas Built Buses, Inc. in High Point, where we met with Caley Edgerly, President/CEO.  Mr. Edgerly said, “Thomas Built buses is the largest bus manufacturer in North America.  “We built our Saf-T-Liner C2 plant in 2004, which was a state of the art $100MM investment by our parent company, Daimler. We produce thousands of vehicles each year across our two main manufacturing facilities in High Point, and we have approximately 1,900 employees at these locations.”

He explained, “The company was founded in 1916 by Perley A. Thomas to build streetcars. In just a few years after the company’s founding, Thomas streetcars were carrying passengers in many of North America’s largest cities —notably in New Orleans on the line that was the inspiration for “A Streetcar Named Desire,” the famous play written by American playwright Tennessee Williams. The company switched to building school buses in 1936. In 1998, Thomas Built Buses became a wholly-owned subsidiary of Freightliner LLC, and Daimler purchased Freightliner in 2000. Freightliner is now known as Daimler Trucks North America LLC, the largest heavy-duty truck manufacturer in North America. The chasses they use come from the Daimler Trucks plant in South Carolina.”

Then, Mr. Edgerly gave me a tour of the plant where I first watched six robots weld the front end of the bus and one robot stack the assembly.  The paint booth is large enough to fit their 30-ft. bus, and three robots do all of the painting. I got to watch a bus being matched and attached to a chassis.

I asked when they had transformed into a lean company, and he said that the plant was set up in a lean way, so this plant gave birth to the Lean Way for the company.   Now they operate under the Daimler TOS (Truck Operating System).

I asked what are the advantages of being in High Point, and he said, “Continuation of the heritage of the company, ability to have long-term employees, and good supply of new workers in the region.  When we had to hire 50 new workers, we had 1,000 applicants. We are also close to the center of our manufacturing suppliers, and we are located in the middle of the population centers on the East Coast. The traditions of manufacturing are passed down from generation to generation.”

As I ended my trip to North Carolina, I felt good about the potential for future growth of the more diverse manufacturing sectors that are now in the region.  With low tax rates, a favorable business climate, programs for apprenticeships and employee training, Maker Spaces, incubators, and innovation hubs such as the Wake Forest Innovation Quarter, North Carolina is poised for a manufacturing boom in the future.

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North Carolina Prepares for the Future through Training and Redevelopment

November 14th, 2017

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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North Carolina Rebounds from Effects of Offshoring and Recession

November 11th, 2017

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

November 2nd, 2017

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

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

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

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

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

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

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

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

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

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

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

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

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

Nexans – high voltage underground and submarine cables

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Charleston Manufacturers Focus on Training Current and Future Workers

October 31st, 2017

After visiting the Charleston Port terminal and the Mercedes-Benz Vans Training Center, I had the pleasure of visiting several manufacturers during my two-day trip to the Charleston metro area. We first visited Ingevity in North Charleston, where I met Michael Wilson, President and CEO, Dan Gallagher, V.P., Investor Relations, Eric Walmet, Charleston Plant Manager, Jack Maurer, Director, Communications and Brand Management, and Laura Woodcock, Manager, P.R.

Ingevity is a leading global manufacturer of specialty chemicals and high-performance carbon materials that are used in a variety of demanding applications, including asphalt paving, oil exploration and production, agrochemicals, adhesives, lubricants, publication inks, and automotive components that reduce gasoline vapor emissions. The company creates high value-added products from renewable raw materials. The name is “coined” from the meaning of four words:  genuine, ingenuity, innovation, and longevity.

Ingevity was spun off in May 2016 from WestRock, which has a long history and many name changes going all the way back to 1846 when it was founded as Ellis, Chaffin & Company. Ingevity is headquartered in North Charleston, and has manufacturing plants in South Carolina, Georgia, Kentucky, Louisiana, and Virginia, as well as two in China. Ingevity has four sites in the Charleston region: its headquarters with 205 employees, the manufacturing plant with 214 employees, the Ashley Center with 109 employees, and the Innovation Center with six employees for a total of 534 employees.

Michael Wilson said, “We recently announced an agreement to acquire Georgia-Pacific’s pine chemicals business for $315 million. This will give us a stronger more competitive pine chemicals business. We also signed a supply agreement with Georgia-Pacific which in combination with our agreement with WestRock, will put 70 percent of our crude tall oil requirements under long-term contract. There is little customer overlap between the two companies. And, because we do business in 65 countries, we believe we can accelerate global growth for the Georgia-Pacific products.”

When I asked him his impression of the manufacturing sector in the region, he responded, “The manufacturing base is very diversified. The business climate of South Carolina is world class. The mindset of the government has been beneficial. It is a right to work state and has low taxes.”

Eric Walmet gave us a tour of the Charleston plant and Innovation Center, where we saw some of the activated carbon end-products made by Ingevity. The products include carbon honeycombs, granular carbons, and shaped carbons used to reduce automotive gasoline emissions. The activated carbon is made by combining sawdust and acid through a proprietary process.

I could see that the plant was laid out on the basis of a Lean value stream mapping event, and there were the obvious signs of the application of Lean tools and principles on the shop floor.

Our next stop was IFA North America in nearby Ladson.  We met with Mauro Amarante, President and CEO, and Ryan Loveless, Training Coordinator.  IFA North America LLC, formerly known as MTU Drive Shafts LLC., was founded in 2002 and operates as a subsidiary of the German company IFA – Holding GmbH.

IFA is one of the world’s leading and largest suppliers of drive shafts and side shafts for the automotive industry. In North America, IFA produces more than two million drive shafts a year and employs more than 600 people.

Mr. Amarante said he has been in the U.S. 11 years, having previously lived in Germany, Brazil, and Verona, Italy where he was born and raised. IFA is currently building a new plant in Berkeley County (still in the Charleston metro area) that will be 234,000 sq. ft., where they will be manufacturing constant velocity joints. They plan to consolidate all their operations and expand to about 400,000 sq. ft. by 2023.

Mr. Amarante said, “South Carolina is very business oriented, and former Governor Nikki Haley was very business focused.  We have all the business conditions we need here to secure our workforce.  We were one of the partners with VTL and three other companies to start an apprenticeship program three years ago to teach basic manufacturing skills like math, statistics, gauging, and machine operations.”

Mr. Loveless gave us the plant tour where we watched their production team turn purchased metal tubes into several designs of drive shafts.  Mr. Loveless said, “In addition to our full-time employees, we utilize about 120 temporary workers from a private agency.  These people work for us for about three-six months, and then we select the best workers to add to our full-time employees base. We would like to reduce the number of temporary employees. This is why we are investing time and money into the apprenticeship program to grow our future employment pool.”

Again, I saw the application of Lean tools and principles throughout the shop floor.  We even had to watch a safety video before we got to take the plant tour, and I was glad I was wearing my own Sears Die Hard steel-toed shoes instead of having to wear their guest shoes. Of course, as an automotive Tier 1 and Tier 2 supplier, they are ISO 9001:2008 and TS 16949 Certified.

Next, we visited the VTL Group, also in Ladson, where we met with Jeff Teague, General Manager, and Brian Glasshof, Account Manager.  Mr. Teague said, “The company was started in 1919 and changed its name to Valeo Transmission Ltd. in 1997. The management team, Bruno Joan, Chris Elliott, and a third man who has since been bought out and retired, did a leveraged buyout in 2001.  Chris started at the company as an apprentice when he was a young man.

He said, “I started in November 2011 when the company was in a turn-around mode after the recession. I came from the Greenville/Spartanburg area.  We are now running in a very tight workforce market because of the low unemployment.

We specialize in the design, development, prototyping, and manufacture of high precision components and sub-assemblies for automotive powertrain applications. We have expanded by winning several new contracts.  This plant makes variable geometry turbo parts for Cummins and make engine components for Borg Warner.  Everything we do is built around CAFÉ standards for emissions. VTL Group employs 275 globally, and has 48 employees in this Charleston plant.”

He went on to tell me about the genesis of the region’s youth apprenticeship program. “We were one of the six companies that showed up at a meeting in 2013 to discuss starting an apprenticeship program, which launched in 2014. We had a signing day event for 11 students. Now, this fall we’ll have 100 in the program.  Apprentices can start when they are 16 years old in high school. There are now nine industry sectors and 122 companies in the apprenticeship program. Industrial mechanics is the most requested training.”

Two of their new apprentices were brought in to meet me:  John Cody Geiger and Ty’Celia Young.  Both are high school students.  Ty’Celia said, “My high school engineering teacher encouraged me to apply when I was a junior.” Cody said, “I got an email from my high school principal and applied as a senior, so I graduated before starting at VTL.”

They go to high school in the morning, and then take industry-specific college courses a couple afternoons, and go to work the other afternoons during the school year. In the summer, they work full-time. When they complete the apprenticeship program, they will be Certified as Journeymen by the Department of Labor. They will also have two years of paid work experience on their resume. VTL has hired two past apprentices as full-time employees.

There are 26 schools in the apprenticeship program, public high schools, as well as charter schools and private schools. The Charleston Metro Chamber of Commerce pays for the tuition, tools and supplies for all of the students, so the students are getting their training free of charge. The Charleston Metro Chamber focuses on in-demand occupations. Besides advanced manufacturing, Charleston is also becoming an IT hub.

When I asked about the curriculum, I was told that the community colleges already had curriculum, which the companies helped modify to meet their needs. The program has two main goals:

  • Fill the critical workforce needs.
  • Monitor the next generation of students to keep them in the region.

Apprenticeship training is not all the training provided at VTL. Every employee is allowed one hour a week for training, but it is up to them to take advantage of the opportunity. VTL uses ToolingU training modules for their in-house training program.

Mr. Teague gave us the plant tour, and I was amazed at how many robots they had doing various manufacturing processes and moving parts from one operation to another. No wonder that only 48 employees at this plant are able to maintain the work flow required of a Tier 1 and Tier 2 automotive supplier. The parts I saw in process were Variable Cam Timing engine components and turbo-charger components. Mr. Teague showed me their Lean scoreboard section where there are visual displays of all the metrics required for a Lean company.  Naturally, VTL is also ISO 9001:2008 and TS 16949 Certified.

From these tours, I could see why world class companies are choosing to locate or expand in the Charleston, South Carolina region. A very favorable business climate, excellent transportation options by truck, rail, and ship for both national and international destinations, a highly skilled, trained workforce, and apprenticeship programs make the region a desirable location for many manufacturing sectors, especially those that export their products.

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High-Performing Port and Workforce Training Drive Global Manufacturing in South Carolina

October 17th, 2017

Last week I had the opportunity to spend two days visiting the Charleston, South Carolina metro area as the guest of the Charleston Regional Development Alliance (CRDA).  Claire Gibbons, Director of Global Marketing & Communications, was my hostess, and told me that if you drew a line along the 32nd parallel across the U. S. from San Diego, you would wind up at Charleston.  Like San Diego, Charleston is a major port, being the deepest port along the south Atlantic coast, able to handle ships with up to 48 ft. draft, depending on tides. Charleston is about 50% lower in population than San Diego (761,000 vs. 1.407 million (2016), but is growing 3X faster than the U.S. average (14.5% vs. 4.7%).

Charleston is a military town like San Diego and is home to Joint Base Charleston, one of twelve joint facilities operated by the Department of Defense; the U.S. Space & Naval Warfare Systems Center Atlantic (SPAWAR), one of the Navy’s only two cyber mission engineering centers; and nearly all U.S. Dept. of Defense and Dept. of Homeland Security agencies. These facilities represent more than 23,000 active duty, civilian and contract civilian personnel.

Our first stop on my visit was the South Carolina Ports Authority (SCSPA), where we met with James Newsome, III, President and CEO.  He said “Charleston meets the needs of today’s global shipping industry, particularly as large vessels are deployed to East Coast trade routes. Our South Atlantic location is a significant driver of the Port of Charleston’s above-market average cargo volume growth, offering proximity to the fastest growing population in the U.S., as well as a booming manufacturing economy.”

He said, “We just received approval to dredge to 52 ft. depth to be able to handle the new, larger container ships that are coming online.  Two new taller cranes just came online (155 ft. vs. 115 ft.), and we have two more on order to install in 2018. We are also raising four existing cranes, for a total of eight cranes offering 155 ft. of lift height. We have three active cargo terminals now, and a new terminal is in development on the former Navy Base.

One of our terminals is a drive off terminal for automobiles, and the other two handle container ships. The new terminal will also handle container ships. The larger container ships are 13,000 TEUs in capacity. We also built a new rail connection from Charleston to the Inland Port in Greer to able to reduce truck congestion at the port and expedite rail shipments out of the region. “

As we drove around the terminal that has the new cranes, I was dismayed to see thousands of containers from Chinese and German shipping lines, but was encouraged when Mr. Newsome said that according to the latest report, Charleston is the port that is the most balanced in terms of imports and exports on the Atlantic coast. The port is also seeing good growth in exports of manufactured goods. The three terminals turn over the entire number of containers every 7-10 days.

Mr. Newsome said, “Charleston ships more tires than any other port in the United States.  Michelin came in the 1970s and has invested $6-7 billion in their manufacturing facilities. BMW came in 1994 and has invested about $10 billion in their facilities. About 70% of BMWs are shipped out of the Charleston port from the entire line made in the U. S. Boeing built a plant in 2009. Mercedes-Benz Vans is building their new Sprinter vans here. Volvo will open a new $500 million facility near Ridgeville in 2018. Five companies represent about 70% of our shipping volume.”

After I returned home, I found this important data on the Port’s website: “A 2015 study by the University of South Carolina’s Darla Moore School of Business concluded that the Port’s statewide impacts include:

  • $53 billion in annual economic activity
  • 187,600 jobs
  • $10.2 billion in labor income
  • 10 percent of total annual gross state product
  • $912 million in tax revenue”

Besides cars, tires, and other manufactured goods, Mr. Newsome said that the major products shipped out of Charleston are: agricultural (soybeans, grains), forest products (including diaper pulp, poultry, and pork.

According to the SCSPA website, the five fast-growing business sectors for the Port are:

  • Automotive manufacturing
    •Consumer goods distribution
    •Refrigerated/frozen exports
    •Transloading resin & grain
    •Tire manufacturing & distribution

Charleston shares some of the same industry clusters that San Diego has:  Aerospace, Information Technology, and Life Sciences. Their other two largest industry clusters are automotive and logistics. The following chart derived from data on the CRDA website shows the top ten manufacturers ranked by number of employees:

Company Products Employees Nationality
The Boeing Company
Aircraft manufacturing 7,400 American
Robert Bosch LLC Antilock brake systems, fuel injectors 1,800 German
SAIC Electronic security and communications systems 1,500 American
BlackBaud Inc Specialty computer software 1,300 American
Kapstone Charleston Kraft LLC Specialty paper & packaging 1,000 American
Nucor Steel Carbon & alloy steel 1,000 American
IFA North America LLC Automobile drive shafts 600 German
Mahle Behr Engine cooling systems 375 German
BAE Systems Electronic security and communications systems 350 British
V. T. Milcon Fabrication & assembly of communications systems 275 British

On our drive to our next appointment, I asked Claire to fill me in on the South Carolina business climate, so I could understand why so many foreign companies have established plants in the state. She said, “South Carolina offers a strategic location, particularly for companies based in Europe, and a business-friendly climate. We are a “right to work” state with one of the lowest corporate income tax rates in the south.” There are other benefits shown on the CRDA website: “no state property tax, no local income tax, no inventory tax, no sales tax on manufacturing machinery, industrial power or materials for finished products, no wholesale tax, and no unitary tax on worldwide profits.”

Claire added that another big advantage is that when a company relocates or expands to South Carolina, they can get training at little to no cost for their employees through readySC™, a division of the South Carolina Technical College System.  ReadySC’s mission is to “To promote the economic and workforce development of the state of SC. We provide customized training for new and expanding business and industry in the state of SC…”

Later in the day, I had the opportunity to visit the Mercedes-Benz Vans Training Center, where I met with Terrance Rivers, Area Director of readySC™, Susan Pretulak, V. P. Economic Development of the SC Technical College System., and Alyssa Bean, responsible for communications at Mercedes-Benz Vans manufacturing plant.

Ms. Pretulak said, “The Division of Economic Development works to not only attract new and expanding companies to the state but also provide the workforce development tools necessary to make certain they grow and prosper in South Carolina over the long term. The division is touted as providing a comprehensive solution for companies looking to grow their workforce in South Carolina. Housed within the division are the System’s nationally renowned statewide programs — readySC™ and Apprenticeship Carolina™.”

She explained, “Training is state-funded and is open to companies who will hire 10+ new, permanent, full-time employees with benefits.  There is a simple two-page agreement to participate in the program.  We have 16 technical colleges in our system, and each college has a readySC™ group. We are working with 89 companies at present.  We have two programs: (1) Pre-hiring Training, which is an unpaid training experience to provide potential employees for a company client and (2) Post-hiring Training, which is job specific training, such as welding, machining, assembly, etc.”

I asked if they have developed their own curriculum or do they use the SME ToolingU curriculum, and she said, “Some of both.” Mr. Rivers said. “We have a three-phase program:  Design, Discovery, and Delivery to customize the training to meet a company’s needs. Daimler was one of our first clients before they switched their name to Mercedes-Benz Vans. They make the Sprinter van at their plant.”

The readySC website expands on the requirements to participate in the program, specifying: To qualify, we require that:

  • Jobs projected must be permanent.
  • Pay represents a competitive wage for the area.
  • Benefit package must include health insurance.
  • Number of jobs created must be sufficient enough to allow readySC™ to provide training in a cost-effective manner.

Ms. Pretulak informed me that the SC Technical College System is also responsible for the Apprenticeship Carolina™ program, which “works to ensure all employers in South Carolina have access to the information and technical assistance they need to create demand-driven registered apprenticeship programs. At no cost to the employer, apprenticeship consultants are available to guide companies through the registered apprenticeship development process from initial information to full recognition in the national Registered Apprenticeship System.

The program started with 90 apprenticeship programs in 2007, and now has 918 programs today, representing 14,475 apprentices. One in three participating employers offer programs in more than one occupation.  The target industries are:  advanced manufacturing, construction technologies, energy, health care, information technology, and tourism and service industries. The total number of apprentices trained to date is 26,864, and the program is averaging more than 120 new apprentices per month.

At dinner that evening, I met Robin Willis, Associate Vice President, Talent Pipeline Strategies for the Charleston Metro Chamber of Commerce.  She said, “We are very proud of the growing number of Youth Apprenticeship students and their hosts in our region. We feel strongly that this program provides life changing experience for students and helps companies fill their critical Talent needs, so much so we have funded the program in its entirety. There are 105 Youth Apprentices currently in the workforce – 66 new ones that started in August 2017 and 39 who started their 2nd year in August 2017 and will complete the program in June 2018.

I told everyone that I haven’t visited any other state that has such comprehensive training and apprenticeship programs, and I am very impressed by what South Carolina has to offer to existing and relocating companies. It is no surprise that so many foreign companies are choosing South Carolina to establish or expand their U.S. presence. Other states (particularly California) would be smart to emulate the business incentives and training programs offered by South Carolina.

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Threat to the American Patent System and Inventors’ Rights

October 10th, 2017

On August 11, 2017, a group of inventors went to the United States Patent Office to make a statement and give testimony against new patent laws that promote the theft of our intellectual property instead of protecting it. Afterward, the inventors demonstrated in front of the Patent Office, and several burned their patents.  Michael Caputo, Managing Director of Zeppelin Communications, stated, “Patents have become worthless.”  The C-Span video of the protest can be viewed here.

Why is the American patent system and inventors’ rights being threatened?  In September 2011, Congress passed and the president signed the Leahy-Smith America Invents Act (AIA) that changed the U.S. patent system to the party “first to file” instead of the “first to invent to bring the U.S. in line with other countries who adopted first to file patent systems years ago, supposedly to simplify the patent process for companies that file applications in multiple countries. Its central provisions went into effect on September 16, 2012 and on March 16, 2013.

At the time, supporters said it would improve patent quality by creating a new process for reviewing patents after they have been issued and allow third parties to provide information on other parties’ applications.

Opponents argued that there was no reason to change the U.S. system, and inventors and small businesses complained that switching to a “first to file” system would give large companies an advantage and hurt individual inventors.

To find out what has happened to the American Patent System and Inventors’ Rights since 2011, I requested information from Randy Landreneau, Founder Independent Inventors of America, Paul Morinville, Founder US Inventor, and Adrian Pelkus, President of San Diego Inventors Forum.

Randy Landreneau: “America has been the most innovative country on earth from the start. A key reason for this is the revolutionary patent system created by our Founders that provided intellectual property rights to any man or woman, rich or poor. The rest of the world had systems that were for the aristocracy and those favored by the powerful…America maintained a superior system in protecting the intellectual property rights of inventors until …the passage of The America Invents Act in 2011…While it is hard to quantify the effect of changing to First-to-File, this change does place a disadvantage on the independent inventor relative to the large corporation. But another change has had very measurable negative effects.

The America Invents Act created new and easier ways to invalidate an existing patent. Prior to this, to invalidate a patent required going to a judicial court with its various protections offered to the holder of a property right. The America Invents Act created procedures for an administrative court, the PTAB (Patent Trial and Appeals Board), that does not have the same protections. Approximately 70% of the patents that companies try to invalidate using the PTAB get invalidated.

There are efforts underway to get the PTAB procedures ruled unconstitutional or at least reigned in and similar to the procedures of a Judicial court. Certainly, the PTAB procedures are doing great harm to American innovation.”

A more recent bill was even worse – The Innovation Act (H.R. 9), which passed the House in December of 2013. But, the Senate version (PATENT Act, S.1137) was fought effectively and did not pass the Senate.  However, these bills were reintroduced in subsequent sessions of Congress until the summer of 2016, when it became clear these bills were not moving forward.

Hundreds of millions of dollars have been spent pushing a false narrative that nefarious entities called “patent trolls” are using frivolous litigation to make companies pay them unfairly. More often, in actuality, an inventor has a patent that is being infringed by large corporation that he cannot afford to fight in court. So, he sells his patent to a company that does have the wherewithal to fight in court (a non-practicing entity or NPE), and the infringer loses because he is guilty.

One element of the Innovation Act was ‘Loser Pays.’ If an inventor sues a corporation for patent infringement and does not win, he could be liable for the infringer’s legal costs. This could be more than $5,000,000. This liability would also be a personal liability to an investor with an interest in the patent (piercing the corporate veil and placing personal assets at risk).

There are still efforts underway by multinational corporations to get a similar bill passed in the future. Currently, there is the threat that something similar to the Innovation Act will come back.

But, the more current threat is how the courts have been moving toward not considering a patent as the property right that it has been for 200 years. A three-judge panel actually ruled that a patent is a public right. If the courts start to widely regard patents as not being property rights, as some feel they are already doing, this will greatly harm American innovation. If a court does not respect the rights of an inventor, court procedures end up being applied in ways that work against him. Recently, there have been numerous cases where judges ruled that a patent was too abstract, and the inventor was not given the normal due process of providing witnesses, testimony, or otherwise fighting to retain his intellectual property.

There is an effort underway to get the U. S. Supreme Court to take up this issue and rule in the favor of patents being property rights. If this effort succeeds, we will have, at least temporarily, stopped the erosion of inventor rights that are so important to this great nation. I and others are involved in fighting to maintain the rights of inventors, and to expand them where they have been reduced in recent years.”

Paul Morinville wrote his opinion in a paper titled, “We’ve Been Googled,” when H.R. 9 looked like it would pass in which he stated that “H.R.9 creates a Patent System without Inventors. Over the last decade, Google and others have spent hundreds of millions of dollars to lobby Congress and produce an ingenious ‘patent troll’ narrative, which distorts the reality of invention in America. In this decade long war on inventors, H.R.9 is the Google lobby’s latest accomplishment. Not surprisingly, H.R.9 is not directed to fixing the fictional problem of ‘patent trolls.’ Instead, H.R.9 mounts its considerable damage on the patent system in general, specifically harming inventors and small patent-based businesses.”

Morinville explained, “If this bill becomes law, inventors will not be able to enforce their patent rights against moneyed corporations like Google. However, moneyed corporations like Google will still be able to enforce their patents against small businesses with even more devastating consequences to those small businesses. Patent litigation is about risk and cost versus reward. If risk or cost is too high in relation to reward, a patent cannot be enforced.”

Adrian Pelkus: “I’m an inventor named on 14 issued patents and have made my life as a serial entrepreneur doing new product development for over 30 years. Along the way I have created many startups and raised millions of dollars on the back of IP. I have coached inventors and startups every Thursday since 1985 and have run one of the larger inventor clubs in the U. S. since 2005, the San Diego Inventors Forum (www.sdinventors.org.)

He said, “What is most absurd about the America Invents Act to American inventors is the fact that with PTABs we can lose our ISSUED PATENTS… A company challenging a patent wins 90% of the time. The cost to defend is so expensive that inventors give up and are unable to afford achieving their dreams.”

Now, issued patents guaranteed as a Property Right in the constitution are being challenged. A business that infringes would just pay a royalty to the inventor if found guilty hence ‘efficient infringement.’ The biggest incentives to create new ideas and businesses are weakened because the guarantee that an issued patent will protect your IP interests and investments is gone. Patents can now become liabilities. The proposed bills to penalize an inventor with loser pays and threatens to make their investors pay was beyond absurd; it would be economic and intellectual suicide. The end of our rights and hopes as inventors is in plain sight.”

Adrian became connected to Randy Landreneau and Paul Morinville when they reached out to other inventor groups, and he was invited to join the fly-in to Washington, D.C. to fight H.R.9 in April 2015. After that fly-in to Washington, D.C. he became focused on fighting against bills that would destroy our patent system and joined the board of US Inventor in August 2016. He was already on the board of the United Inventors Association and had been working to unite the inventor clubs and groups nationwide.

In January, 2017, the Policy Panel of US Inventors authored a USI Policy Section 101 paper and in February, it was determined that they had to “get as many inventors as possible calling Congress and writing about the threat of a new bill.” 

Adrian said, “I sent out my first call to action to all the clubs and sent a second one the next week and every week since. I discussed the plan to unite the groups and clubs with Stephen Key of Invent Right and Louis Foreman of Edison Nation, who asked how they could help. With their help, we have united 24 inventor groups nationwide to fight the threat to our American patent system and protect inventors’ rights.

I established a bimonthly phone conference with the heads of the biggest organizations in the inventor community, inventor clubs, and individual inventors in an effort to create a coalition that would support a petition that reflects our concerns about and suggestions to change the America Invents Act. This coalition is a historic cooperation that will unite the inventor community and bring a voice to Washington, D.C. they need to hear!

We now have a petition that we believe will help make America great again by making it a great place for American Inventors again. This petition represents concerned citizens, inventors, entrepreneurs, and businesses from coast to coast. I’m proud to contribute my efforts to help America by restoring its patent system.” 

I agree with Landreneau, Morinville, and Pelkus that the America Invents Act is gradually destroying the American Patent System. If a bill similar to H. R. 9 passes Congress, it would the final nail in its coffin.

Why is this important? Because most new technologies, especially break-through or disruptive technologies, come from individual inventors who either start a company or license their technology to companies that are more able to take them to the market.

As a mentor for San Diego’s CONNECT Springboard accelerator program and fellow director on the board of the San Diego Inventors Forum with Adrian Pelkus, I work with inventors designing new products or break-through technologies. Local inventors have the opportunity to compete in the San Diego Inventors Forum annual invention contest for best new consumer product or best new technology. All contestants must have applied for at least a Provisional patent before they can participate. The future success of their product or technology is contingent upon their having a patent they can protect from infringement. Their ability to raise the financial investment they need to bring their product to the marketplace depends upon their being able to protect their patent. No investor will take the risk of investing in a product or technology that cannot be protected.

Please join the American inventors coalition formed by Adrian Pelkus, Randy Landreneau, Paul Morinville, and others to save American inventors by signing the petition at http://www.usinventor.org/petition.

 

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