“Manufacturing in Golden State Summit Highlights Threats to Prosperity”

October 28th, 2014

On October 16th, about 130 business leaders met at the conference facilities of AMN Healthcare in San Diego for the third “Manufacturing in the Golden State – Making California Thrive” economic summit. The summit was hosted by State Senator Mark Wyland in partnership with the Coalition for a Prosperous America and a long list of other regional businesses and associations. The purpose of the summit was to discuss how several national and California policies are threatening the growth and prosperity of California manufacturers and what policies should be changed to help them grow and thrive.

After State Senator Wyland welcomed attendees, Michael Stumo, CEO of the Coalition for a Prosperous America, provided an overview of the schedule for the day.

I provided an update to the overview of California manufacturing that I had presented at our summit in Brea on March19th covered in a previous article. California lost 33.3% of manufacturing jobs between 2000 and 2009 compared to 29.8% nationwide and 25% of its manufacturing companies. California lags in manufacturing job growth at a .36% rate compared to the national 6.09% rate.

I highlighted that the San Diego region offers a great deal of help for inventors and start-up technology based companies through the San Diego Inventors Forum, CONNECT’s Springboard program, the Small Business Development Centers in North County and South County, CleanTech San Diego, as well as groups like the San Diego Sports Innovators. San Diego also offers more career path and workforce training programs than most other states, including those offered by three of our event sponsors: California Manufacturing Technology Consulting, the Center for Applied Competitive Technologies, and the Lean Six Sigma Institute.

The good news is that California is benefitting from the reshoring trend that is sweeping the county. According to data collected by the Reshoring Initiative, California ranks first in the number of companies (28) that have reshored and third in the number of jobs created by reshoring (6,014).

I then moderated a panel of the following local manufacturers, who gave their viewpoints of the effects of some of our national policies and the challenges of doing business in California:

  • James Hedgecock, Founder and General Manager of Bounce Composites
  • Scott Martin, President, Lyon Technologies
  • Robert Reyes, Head of Strategic Sourcing, Stone Brewing Company

Hedgecock stated that Bounce Composites is less than two years old and makes thermoset composites, starting with paddle boards and branching into small wind turbine blades this year. He bemoaned the fact that in California you have to pay $800 to incorporate a company, which is double to quintuple the cost of incorporating in other states. Also, as a LLC, you have to pay taxes on gross profits rather than net profits, which is tough on a start-up company.

Martin said that Lyon Technologies has been in business since 1915 and has changed its products several times over the years. Current products include bird and reptile incubators, poultry products, and veterinary products, which they export to about 100 countries. He stated that the Value Added Taxes (VATs) that are added to the products they export and the currency manipulation practiced by several countries make it difficult for their products to be competitive in the world marketplace.

Reyes said they are expanding out of San Diego and are building a new $25M brewery and restaurant in the Marienpark Berlin, scheduled to open by end 2015/beginning 2016. Stone exports beer to Germany and other European countries and having a brewery in Germany will ave on shipping costs for exporting. They are also planning on opening a brewery on the East Coast in Virgina.

The national expert panel included Greg Autry, Adjunct Professor of Entrepreneurship, Marshall School of Business, University of Southern California; Pat Choate, economist and author, “Saving Capitalism: Keeping America Strong”; Mike Dolan, Legislative Rep., International Brotherhood of Teamsters; and Michael Stumo, CEO of CPA.  The focus of the talks was on national security, manufacturing growth strategies, tax strategies and fixing the trade deficit.

Autry, led off the national panel with the topic of “National Security Concerns with U. S. Trade Regime.” He began by stating, “An economy that builds only F-35s is unsustainable – productive capacity is what wins real wars. Sophisticated systems require complex supply chains of supporting industries. They require experienced production engineers and experienced machinists.” He added that we cannot rely on China to produce what we need for our military and defense systems. “We should not be relying on Russia’s Mr. Putin to launch our satellites and space vehicles and provide us a seat to get to the international space station.”

He pointed out that our technical superiority in military systems will not assure our national security any more than the technical superiority of Nazi Germany’s aircraft and tanks did for them. Economic superiority is what matters. The manufacturing industry of the U. S. out produced Germany during WWII and the Soviet Union in the Cold War.

Autry stated that Wall Street’s new hero, Jack Ma, founder of Chinese company Alibaba Group Holding Ltd, is a danger to American interests by the fact that Alibaba just overtook Amazon as the world’s largest online retailer by market capitalization. It was the wealth he created at Amazon that enabled founder Jeff Bezos to now lead a new company, Blue Origin, which was just selected by the United Launch Alliance to finish development of a new engine to replace the Russian made RD-180 rocket engine used by ULA’s Atlas 5 rocket. There is considerable skepticism by many of Mr. Ma’s independence from the Chinese government. Mr. Ma’s next target appears to be PayPal, which is responsible for the wealth of Elon Musk, now CEO and CTO of SpaceX, CEO and chief product architect of Tesla Motors, and chairman of SolarCity.

Next, Michael Stumo presented “A Competitiveness Strategy for America: Balance Trade and Rebuild Domestic Supply Chains.” He said, “Our ultimate goals should be: improved standard of living, full employment, and durable, sustainable growth. America has no strategy to win. Our trade deficit cuts our growth in half. Domestic supply chains were sacrificed to global supply chains; i.e. offshored and hollowed out….We need a strategy to win.”

He pointed out that “free trade is supposed to produce balance and address foreign mercantilism, but our trade policies enable mercantilism…We must replace the goal of ‘eliminating trade barriers’ and have Congress establish a new directive via statue to balance trade.”

He said that to achieve balanced trade, we must address, reciprocity, currency manipulation, forced technology transfer [by China], foreign VAT rebates, state-owned enterprises, and government subsidies.

In conclusion, he recommended that we should:

  • Create durable comparative advantage through technical superiority, infrastructure, low energy costs, etc.
  • Balance trade and fight foreign mercantilism
  • Create our own comparative advantage
  • Maximize domestic value added
  • Identify and minimize our advantages while minimizing our disadvantages

In conclusion, he urged, “Don’t be afraid of asserting and pursing our national economic interest.”

The next speaker was Mike Dolan, Legislative Representative for the Teamsters, who has long experience working for Fair Trade (fighting expansion of the job-killing NAFTA/WTO model). He said that big corporations want Congress to pass Trade Promotion Authority in the “lame duck” session to grant the president Fast track Authority for the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) Agreements. He called the TPP “NAFTA on steroids” and said that TTIP is just as bad. He said that Fast Track was invented by President Nixon and has been used 16 times. He said that we need a new form a Trade Promotion Authority where Congress has input with regard to the countries involved in the Agreement, certifies that negotiating goals were met, and votes to approve it before it is signed. He urged attendees to contact their Congressional Representative to oppose the TPP for the following reasons:

  • “Lack of transparency during negotiations warrants more thorough consideration than a up or down vote
  • Under previous trade deals, the U. S. has hemorrhaged jobs and cannot afford more of the same
  • The TPP is too large and complex to delegate constitutional authority away from Congress”

Pat Choate (Economist; Author, Saving Capitalism: Keeping America Strong) discussed how our trading partners have used Value Added Taxes (VATs), and currency manipulation to their advantage and to the disadvantage of the U. S. VATs or border adjustable consumption taxes are used by other countries to offset income, payroll, or other employer taxes to help their manufacturers be more competitive in the global marketplace or to offset other costs like national health care or pension programs. VATs range from a low of 10% to a high of 24%, for an average of 17%.

While tariffs have been dropped since 1968 as part of many trade agreements signed since then, the effective trade barriers have remained constant because of the VATs being imposed.

These consumption taxes have been a causative factor in increasing our trade deficits with our trading partners, which was $471.5 billion in 2013, $318 billion with China alone. He supports CPA’s advocacy of making changes in U. S. trade policy to address this unfairness which tremendously distorts trade flows.

During lunch, keynote speaker Dan DiMicco, Chairman Emeritus of Nucor Steel Corporation, spoke on “Seizing the Opportunity.” He led off by shocking the audience with facts about the real state of our economy and our unemployment rate. By September 2014, we still had not reached the level of employment that we had when the recession began in December 2007 although 81 months had passed. We lost 8.7 million jobs from December 2007 to the “trough” reached in February 2010, but because our recovery has been much slower than the previous recessions of 1974, 1981, 1990, and 2001, the gap in recovery of jobs compared to these recessions is actually 12,363 jobs.

In contrast to the misleading U-3 unemployment rate of 5.9% for September 2014 that is reported in the news media, the U-6 rate was 11.8%. The government’s U-6 rate is more accurate because it counts “marginally attached workers and those working part-time for economic reasons.”However, the actual unemployment is worse because the participation in the workforce has dropped from 66.0% to 62.7%. In other words, if the December 2013 Civilian Labor Force Participation Rate was back to the December 2007 level of 66.0%, it would add 8.2 million people to the ranks of those looking for jobs.The manufacturing industry lost 20% of its jobs, and the construction industry lost 19% of its jobs.

Unemployment Data Adjusted For Decline in Civilian Labor Force Participation Rate
(Adjusted For Decline from December 2007 Level Of 66.0% to 62.8% in September 2014)

Reported Unemployed U.S. Workers 9,262,000
Involuntary Part-time workers 7,103,000
Marginally Attached To Labor Force Workers 2,226,000
Additional Unemployed Workers With 66% CLF Participation Rate 8,199,000 
Unemployed U.S. Workers In Reality 26,770,000
Adjusted Civilian Labor force 166,287,000
Unemployment Rate In Reality 16.1%

 

DiMicco said, “We got in this position from 1970 until today because of failed trade policies allowing mercantilism to win out against true FREE Trade. We bought into wrongheaded economic opinions that America could become a service-based economy to replace a manufacturing-based economy. Manufacturing supply chains are the Wealth Creation Engine of our economy and the driver for a healthy and growing middle class! The result has been that manufacturing shrank from over 30% to 9.9% of GDP causing the destruction of the middle class. It created the service/financial based Bubble Economy (Dot.com/Enron/Housing/PONZI scheme type financial instruments.)”

He added, “We have had 30 years of massive increases in inefficient and unnecessary Government regulations. These regulations, for the most part, in the past have been put in place by Congress and the Executive Branch. However, today they are increasingly being put in place by unelected officials/bureaucrats as they intentionally by-pass Congress.

American’s prosperity in the 20th century arose from producing more than it consumed, saving more than it spent, and keeping deficits to manageable and sustainable levels. Today, America’s trade and budget deficits are on track to reach record levels threatening our prosperity and our future.”

He said, “Creating jobs must be our top priority, and we need to create 26-29 million jobs over the next 4-5 years. There are four steps we can take to bring about job creation:

  • Achieve energy independence.
  • Balance our trade deficit.
  • Rebuild our infrastructure for this century.
  • Rework American’s regulatory nightmare.

In conclusion, DiMicco said, “We need to recapture American independence through investment in our country’s people, infrastructure, and energy independence, and by reversing the deficit-driven trends that currently define our nation’s economic policy. Real and lasting wealth IS, and always has been, created by innovating, making and building things — ALL 3 ? and servicing the goods producing sector NOT by a predominance of servicing services!”

As the mid-term election approaches, we need to cast our votes for candidates who address the serious issues discussed at the summit, so that we can work together as Americans to restore California to the Golden State it once was and restore America to be “a shining city upon a hill whose beacon light guides freedom-loving people everywhere,” as declared by Ronald Reagan in 1974.

Posted in Economic Development, Jobs, Manufacturing, National security, Reshoring, Taxes/Regulations, Trade Policy, Training | No Comments »

San Diego Celebrates Manufacturing Week not just Manufacturing Day

October 14th, 2014

To highlight the importance of manufacturing to the economy of the San Diego region, the Mayor and City Council declared the week of September 30 – October 5, 2014 to be Manufacturing Week instead of only Manufacturing Day on October 3rd.

One of the highlights of the week was an all day Workforce Conference held on October 2nd put on by the San Diego Workforce Partnership and the San Diego and Imperial Counties Community Colleges Association Regional Consortium. The conference presented a summary of a detailed research report conducted by these two organizations of each of the sectors that are vital to the regional economy. San Diego’s five priority sectors are:

  • Life Sciences
  • Health Care
  • Clean Energy
  • Information & Communication Technologies
  • Advanced Manufacturing

More than 250 businesses were surveyed for the report, and industry associations and organizations with industry expertise also contributed to the study. The results of the study can be used to help these priority sectors, which are experiencing rapid growth and projected skills shortages, conduct workforce planning and management of resources. The Conference presentations included an overview of the research findings and panel discussions with industry experts and employers.

Since my interest in these sectors is limited to manufacturing, I only attended the session on Advanced Manufacturing, presented by Dr. Mary Walshok, dean of UC San Diego Extension. Describing San Diego’s manufacturing industry, she said, “It ain’t your old assembly line manufacturing. It’s about a network of suppliers. It’s about organizations that are prototyping and doing R & D on site…I think the moniker for San Diego should be drones, phones and genomes … Let’s add to that surfboards, skateboards, and golf equipment.”

Key data presented was the fact that “The Advanced Manufacturing sector accounts for 10% of all establishments, 15% of all paid employment and 22% of all annual payrolls” in San Diego County. The fact that the “sector is dominated by small-to-medium-sized businesses with 82% of firms employing less than 20 employees” confirmed my more than 30 years experience in San Diego’s manufacturing industry.

Utilizing a broader definition of what constitutes manufacturing, the report listed the manufacturing employment at 170,800 in contrast to the California Economic Development Department total of 96,900 manufacturing jobs in San Diego in August 2014, an increase of 2,200 manufacturing jobs since August 2013. The report projects a 6% increase in manufacturing jobs by 2018 for a total of 180,700 jobs.

The Advanced Manufacturing sector is no longer dominated by any one industry like it was 20 years when aerospace/defense was the dominant industry. Now, it is comprised of diverse industries in which no industry has more than 13% (electronic equipment and components). Aerospace/defense has dropped to 11%, and the fabricated metal products industry comes in a close third at 10%. Industrial/commercial machinery and computer equipment represents 8% of the industry, and signs and advertising specialties represents 6% of the sector. I was surprised that biotechnology only represents 5%, when San Diego is ranked third in the nation as a center of the Life Science industry sector after Greater Boston and the San Francisco Bay Area.

The report states, “Most Advanced Manufacturing occupations require high school education at a minimum. Moving up the career ladder requires on-the-job experience or more academic credentials, some are provided by 2-year or 4-year colleges. Many occupations require a specific set of skills for their workers, which can be acquired with an education credential. There are certain educational credentials that can be applied to multiple occupations.”

The study revealed the four occupational clusters that are most commonly employed in Advanced Manufacturing:

  • Engineers
  • Computer/Software
  • Drafters and Technicians
  • Production

The drafter category has morphed into people with expertise in Computer Aided Design and 3D modeling skills instead of traditional hand-drawn drafting skills.

The top five occupations that have a gap in the supply of workers produced by the regions educational institutions compared with the number of available job openings are:

  • Software developers, applications and systems software
  • Assemblers and fabricators
  • Aerospace engineers
  • Computer user support specialists
  • Machinists

The report goes into specific detail about the skill sets needed for each of the above occupations. To address this gap in the supply of workers with the requisite skills, the following recommendations are made:

•” Inform the public about the skills and levels of compensation in the Advanced Manufacturing sector.

• Develop an Advanced Manufacturing talent pipeline.

• Increase employer knowledge about business assistance programs for workforce training.

• Add an internship and/or work experience requirements to education and training programs.

• Encourage critical thinking and real world application in education and training programs.

• Standardize certifications and articulation agreements.”

Dr. Trudy Gerald, Deputy Sector Navigator for Advanced Manufacturing at San Diego City College moderated a panel of that included two manufacturing representatives: Nancy Boessow, HR Manager for Johnson Matthey Medical Components and Rick Urban, COO and CFO of Quality Controlled Manufacturing, Inc., a leading precision machining manufacturer of complex components and assemblies for the aerospace, defense, and energy industries.

Joining the panel was Jo Marie Diamond, President and CEO of the East County Economic Development Council and newly appointed as the region’s representative on the Executive Board for the Advanced Manufacturing Partnership – Southern California, one of only 12 federally designated Investing in Manufacturing Community Partnership (IMCP) consortia and the only one west of the Mississippi. Ms. Diamond said that the advanced manufacturing sector has an aging workforce, so “We’re going to have to fill that pipeline [with training and education].”

There has been a shortage of skilled machinists, especially lathe operators for the past 15 years, and since I have discussed this issue with Mr. Urban personally, I am aware of what his company is doing with regard to training. The company website states, “QCMI needed to establish an Education / Training Competitive Workforce Initiative. The QCMI WEA winning initiative includes: a mentoring program for entry-level employees; promotion and training from within; partnering with high schools and colleges; and the creation of a nonprofit Academy.” The Academy training and apprenticeship program began earlier this year with a curriculum that took a year to develop.

At the conference, he stated, “We’re going to do a lot of training…The people that come in at an entry level position are allowed to stay there for six months. They have to move up or it doesn’t make sense because we have to keep that pipeline going.”

The conference was well attended by people within the five industry sectors, as well as those seeking to make career transitions or improve their skills, career counselors, trainers, and educators. The presentations and panelists provided a complete picture of what employers are looking for in the current and future labor force and set the stage for the events that followed on Manufacturing Day.

Manufacturing Day began with a breakfast at the new central library in downtown San Diego organized by the San Diego Regional Economic Development Corporation. President and CEO Mark Cafferty and Congressional Representatives Susan Davis and Scott Peters gave introductory remarks welcoming attendees, and then Jack Stewart, president of the California Manufacturers and Technology Association, moderated the following a panel of local manufacturers that represent a cross section of San Diego’s diverse industries:

Bob Cassidy, Senior Director of Operations, ViaSat – producer of satellite and other digital communication products for the commercial and government sectors

Guillermo Romero, General Manager, 3D Robotics’ plant in Tijuana – producer of miniature commercial unmanned aerial vehicles (drones)

Kevin Graney, Vice President and General Manager, General Dynamics NASSCO – shipbuilding of Naval and commercial ships and tankers

Carlos Nunez, COO, Care Fusion – producer of infusion, interventional procedures, medication and medical supply management, respiratory care and surgical products.

Dave Klimkiewicz, co-founder of Sector 9 skateboards

Mr. Stewart remarked, “Manufacturing was the industry on the outs. Service industries aren’t creating the good paying jobs…”This isn’t your father’s factory floor anymore…Now manufacturing is new, high tech, and robotic…Just as manufacturers have retooled their operations to be more efficient, more clean, more innovative, the universities, community colleges, the high schools must retool their education systems.” He added, “Advanced manufacturers in California have to be the cleanest, the best, cut costs, and improve productivity.”

Each panelist gave a brief overview of their company’s products and services, and then took turns answering questions posed by the moderator. With regard to finding qualified workers, their comments corroborated the comments of the panelists the previous day at the Workforce Partnership conference.

Cassidy said, “We have a very stable workforce with very low turnover, but it’s an aging population, especially on the electro-mechanical team…We need more with solder training and wireless technician certificates.”

Graney said that they have the largest backlog in their history and are hiring anyone who can fit or weld. “We end up training everybody that basically comes in the gate,” he said. “We’ve got eight weeks to develop a fitter or welder, before they’re out on the production run. We have had really only frankly limited success doing it any other way.” He added that they are making data available electronically to their welders at their workstations, and their painting process has reduced 90% of emissions.

All of the panelists made comments about how high schools need to get back to basics, including computer skills and technical training in wood shop, auto shop, and metal shop for those not going to go to college. Mr. Nunez said that STEM education needs to be supplemented with hands-on projects, such as ones using a “Raspberry Pi [A breadboard device for prototyping circuits].”

In answer to the moderator’s question about what are the benefits of bi-national manufacturing, Mr. Nunez said that the majority of the manufacturing for their infusion pumps and tubing takes place in Tijuana and Mexicali. Mr. Romero said that most of their SKUs are made in Tijuana, and the close proximity allows their engineers to visit the plant in the morning. He said, “It’s important to buy the right equipment and hire the right people.

The panelists touted San Diego’s collaborative effort among businesses and organizations, as well as opportunities created by the region’s proximity to Mexico. They also commented on the higher costs of doing business in California compared with other regions.

After the breakfast ended, I went on three tours out of the more than 25 tours offered in the San Diego region’s manufacturers. First, I visited D & K Engineering in Rancho Bernardo. D&K Engineering was started in 1999 by Scott Dennis and Alex Kunczynski as an engineering design and product development firm that evolved into providing contract manufacturing services for such companies as ecoATM and Retail Inkjet. D & K offered tours every half hour from 11 AM – 3 PM and 10 people were allowed on each tour. Besides business people, there were one mother and her pre-teen, home-schooled son and daughter on my tour.

Next, I visited Alphatec Spine in Carlsbad that makes implants made from PEEK and Titanium used in spinal surgery and reconstruction. My last stop was a mixer sponsored by the California Manufacturing Technology Consulting and the City of Santee at one of our many microbreweries, BNS Brewing & Distilling Company in Santee. The guest of honor at the mixer was Sid Voorakkara, a Senior Business Development Specialist from the Office Governor Brown. He provided the attendees with a brief overview of the new California Competes Tax Credit and the Manufacturing and R & D equipment sales and use tax exemption (for details go to http://www.business.ca.gov/ )

The producers of Manufacturing Day 2014 have bragged that “This year’s Manufacturing Day set another record with almost twice as many events as last year. The final count was over 1,650 events in all 50 U.S. states, three Canadian provinces, and Puerto Rico.” However, until we get more educators, parents, and students to attend these tours, we will not achieve our goal of attracting more youth to manufacturing and other STEM careers.

Posted in Economic Development, Education, Jobs, Manufacturing, Training | No Comments »

North Carolina College Recognizes STEM is Critical to Workforce Development

September 16th, 2014

Developing the maximum potential of persons by means of expanding knowledge and aptitude is the objective of the foundational structure of becoming a “Lean company.” It is impossible for companies to achieve this objective without a comprehensive program of workforce development (referred to as Talent Development in the language of “Lean.”)

In a recent interview, Chris Paynter, Dean of STEM at Central Piedmont Community College (CPCC) told me that part of the plan for achieving the College’s vision “to be the national leader in workforce development” was the reorganization of the college divisions of Science, Information Technology, Engineering, and Mathematics under one Dean to support the growth of these four interrelated fields as a unit.

But CPCC is not alone in recognizing the combined need for these fields in the modern, high-tech workforce. “The Committee on STEM Education (CoSTEM), comprised of 13 partner agencies—including all of the mission science agencies and the Department of Education—will facilitate a cohesive national strategy, with new and repurposed funds, to reorganize STEM education programs and increase the impact of federal investments in five areas: P-12 STEM instruction; increasing and sustaining public and youth engagement with STEM; improving the STEM experience of undergraduate students; better serving groups historically underrepresented in STEM fields; and designing graduate education for tomorrow’s STEM workforce.

Dean Paynter said that CPCC just celebrated their 50th anniversary and now has six campuses located throughout Mecklenburg County. CPCC’s mission is to be “an innovative and comprehensive college that advances the life-long educational development of students consistent with their needs, interests, and abilities while strengthening the economic, social, and cultural life of its diverse community.”

He said, “We believe that there is shared responsibility between employers, schools, and families in developing an educational infrastructure that provides a skilled STEM workforce for the greater Charlotte region.”

He explained that the College has created career pathways that have multiple entry points, such as High School graduates, military veterans, incumbent workers, and displaced workers to provide access to structured training paths for the development of highly sought after STEM career skills.

He added, “More and more employers are seeking graduates from associate degree programs because of the practical, applied, and competency-based nature of those programs. These graduates are able to quickly apply the real world job skills they leaned at school and are very productive when hired.”

CPCC is a “Learning College,” which means it places learning first and provides educational experiences for learners any way, anywhere, anytime. In support of this initiative, four core competencies have been identified as critical to the success of every CPCC graduate. The competencies are:

  • Communication: the ability to read, write, speak, listen, and use nonverbal skills effectively with different audiences.
  • Critical Thinking: the ability to think using analysis, synthesis, evaluation, problem solving, judgment, and the creative process.
  • Personal Growth and Responsibility: the ability to understand and manage self, to function effectively in social and professional environments and to make reasoned judgments based on an understanding of the diversity of the world community.
  • Information Technology and Quantitative Literacy the ability to locate, understand, evaluate, and synthesize, information and data in a technological and data driven society.

Central Piedmont Community College (CPCC) recently joined 130 other community colleges from around the country as a member of the Achieving the Dream: Community Colleges Count! Initiative designed to identify new strategies to improve student success, close achievement gaps, and increase retention and completion rates.

Workforce Training

Dean Paynter said that CPCC provides up-to-date technical skills to the Charlotte region’s workforce and employers. The CPCC Engineering Technologies Certification Center was created to assist this effort by providing proctored credentialing exams for nationally recognized third-party industry credentials, such as the Manufacturing Skills Standards Council, National Institute of Metalworking Skills, North American Board of Certified Energy Practitioners, Packaging Machinery Manufacturers Institute, Siemens Mechatronic Systems Certification Program.

He added that advisors and instructors for CPCC’s Corporate Learning Center work with companies to assess their needs and recommend a customized solution, utilizing the comprehensive training approach offered by the IST Lab. Training can be scheduled at a time/date that is convenient for the client.

Companies that have benefited from this program include: Coca Cola Bottling Co. Consolidated, Sun Chemical, Timken, and Solectron.

Apprenticeship Programs

Dean Paynter said that CPCC provides apprenticeship programs in partnership with local companies:

Apprenticeship Charlotte – Programs vary, but usually consist of an employer and student agreement and approval by an appropriate entity. In North Carolina, formal or registered apprenticeships are created in agreement with the N.C. Department of Labor (NCDOL).

Apprenticeship 2000 – The Apprenticeship 2000 program is a 4-year technical training partnership in the Charlotte, NC region designed to develop people for such a workforce. Juniors and seniors from local high schools are recruited: Some of the advantages include:

  • AAS degree in Mechatronics Engineering Technology
  • Apprenticeship Certification
  • Earn a min. of $34,000/year at completion
  • Benefits (Medical/Dental, Paid Holidays)
  • Guaranteed Job after Graduation

CPCC works closely with the approximate 200 German companies with facilities in the Charlotte region, including BMW and Siemens. These companies employ about 15,000 people.

Dean Paynter said that earlier this month, CPCC and Festo Didactic SE, headquartered in Denkendorf, Germany, signed a letter of intent to establish a North American training center, to be located on CPCC’s Central Campus. The press release stated:

“The joint venture, to be called the “Festo-CPCC Learning Center of Excellence,” will be developed in stages, with the first stage operational by early 2015. The center will advocate the growth and development of advanced manufacturing in the United States, while giving CPCC students and incumbent workers a one-of-kind opportunity to become highly skilled operators of the latest high-tech manufacturing equipment.

Festo Didactic is a world-leading equipment and solution provider for industrial education. Festo Didactic designs and implements learning laboratories, educational equipment, and programs that train workers to perform in highly dynamic and complex industrial environments. The goal of Festo Didactic is to maximize learning success in educational institutions and industrial companies around the globe.

Festo AG, the parent company of Festo Didactic, is a global supplier of solutions in pneumatic and electrical automation technology to 300,000 customers of factory and process automation in more than 200 industries and 176 countries around the world.

‘We intend for our new joint venture to become the ‘gold standard’ for technical education and training in the United States and North America,” said Dr. Daniel Boese, managing director of Festo Didactic. “Through this large-scale initiative, we will advocate and promote advanced manufacturing as a viable, attractive and lifelong career option for students and new and incumbent workers in the U.S.’

‘One goal of this joint venture is to establish a showcase for advanced manufacturing and to create a broad-based sense of excitement and passion for the advanced manufacturing sector in the United States,’ said Dr. Tony Zeiss, CPCC president.

‘We have big ambitions for this center. We’ll endeavor to provide comprehensive workforce development and training programs and solutions to address, at regional and national levels, the ongoing mid-skills training gap that hinders U.S. advanced manufacturing,,,’ Zeiss said.”

This agreement follows an initiative the college undertook with German industry when it signed a cooperative education agreement with IHK Karlsruhe, a German regional chamber of industry and commerce in April 2012. CPCC became the first U.S. community college to offer IHK-certified job-training programs.

Engineering Summer Camps

In an effort to attract youth to manufacturing and other STEM careers, Dean Paynter said that the college also offers a one-week summer camp where students can learn hands on skills and apply their creativity. Math, science and engineering converge in camp activities and projects for a deeper understanding of how to apply these in real life. Using “contextual learning” high-school aged students build, analyze, and test either their own Bio-Mechanical Hand or own 3D Printer while learning fundamentals of electrical, mechanical, and computer engineering. At the end of the camp, the student is able to keep either the Bio-Mechanical Hand or 3D printer and have the knowledge and skills to fix it.

Workforce development is another way to address the skills gap in the manufacturing industry, as well as other science, math, and engineering career paths. In addition to focusing on training existing employees, companies need to be willing to hire and train older, unemployed workers that still have plenty of real-world know-how and technical expertise to off their employer. Many “Baby Boomers” would gladly delay their retirement if they had the opportunity to learn new skills to make their jobs more interesting and challenging.

Posted in Education, Manufacturing, Training | No Comments »

How to Combat the Manufacturing Skills Gap

September 1st, 2014

“Creating a robust pipeline of workers to address the needs of U.S. manufacturers has become a national priority” according to a recently released report by ToolingU, a division of SME (formerly the Society of Manufacturing Engineers) titled, “Using Competency Models to Drive Competitiveness and Combat the Manufacturing Skills Gap.” The report discusses the results of a survey on the skills gap and current training, defines competency vs. competency models, explains different models, and explores best practices.

American’s manufacturers are increasingly challenged to find the skilled workers they need to fill good jobs. As more and more “Baby Boomers” retire, we need to address this issue if we want to keep the manufacturing engine going and growing to keep our economy strong.

Currently, 9 out of 10 manufacturers are having difficulty finding skilled workers and they say this is directly hurting the bottom line, according to a 2013 SME and Brandon Hall survey. In fact, the survey revealed:

  • 64% of manufacturers say productivity losses are a result of a skills gap.
  • 41% cited quality losses
  • 56% report the gap in skilled labor has impacted their company’s ability to grow
  • 78% cited a lack of qualified candidates as one of the top two factors that impacted
  • their ability to hire a skilled workforce
  • 78% cited a lack of qualified candidates as one of the top two factors that impacted
  • their ability to hire a skilled workforce

There are four main reasons for the skills gap:

  • Limited pipeline – Fewer people are pursuing Science, Technology, Engineering and Math (STEM) education and fewer youth are choosing manufacturing as a career.
  • Retiring workforce – Baby Boomers are retiring and about 10,000 per day will turn 65 for the next 19 years.
  • Changing pace of technology – Technical innovation is moving so quickly that it can be a challenge for workers who are unable to keep pace and are left behind.
  • Reshoring – Returning manufacturing back to the U.S. creates a bigger demand for jobs.

In January 2014, President Barrack Obama signed a memorandum to initiate a review of all the federal training programs to “develop a specific action plan…to make the workforce and training system more job-driven, integrated, and effective.”

Additionally, recent government investments in the Manufacturing Innovation Centers, as well as a new $450 million round of the Trade Adjustment Assistance Community College and Career Training (TAACCCT) Grants Program demonstrates the commitment to solving these workplace issues.

The SME survey asked if the organization had a company-wide plan in place to address its skills gaps. The responses were:

  • 54% “No, we do not have a company-wide plan in place for filling our skills gaps among skilled workers in critical roles at this time.
  • 26% Yes, we have a company-wide plan for filling our skills gaps among skilled workers in critical roles through the next 12 months.
  • 14% Yes, we have a company-wide plan filling our skills gaps among skilled workers in critical roles through the next 5 years

The survey asked if the company’s skilled workforce training programs are built on specified competencies defined in job roles ? 71% said yes, 23% said No, and 6% said they don’t know.

In answer to the question about the best description of your company’s current approach to defining “skilled worker” roles, the responses were:

  • 40% We have written job roles, competencies, experiences, and education.
  • 21% We have general written job roles only.
  • 18% We have defined workforce roles in terms of written job roles, competencies (skills and behaviors), experiences, education, cognitive abilities, motivation factors and cultural fit.
  • 10% We have competency based written job roles only.
  • 9% We have not defined our “skilled worker” roles.
  • 1% Don’t know.

In the last 20 years, the training process has become much more sophisticated. Training is no longer one size fits all. Organizations are looking at employees individually and building customized training programs specifically to fit their strengths and weaknesses.

Professional and technical certifications provide objective confirmation and assurance of skill achievement in various areas of technical expertise. Certification validates a level of expertise and provides employees with advancement opportunities that motivate them to continue learning.

Certification organizations, such as the National Institute of Metalworking Skills (NIMS), Manufacturing Skills Standards Council (MSSC), SME, and American Welding Society (AWS), require manufacturers to show that employees have applied and retained the knowledge and skills they received through training.

The report contrasts “competency” with a “Competency Model.” Competency is defined as the capability to apply a set of related knowledge, skills, and abilities (KSA) to successfully perform functions or tasks in a defined work setting. They serve as the basis for skill standards that specify the KSAs needed for success and measurement criteria for assessing competency attainment. A competency framework is used to design a plan specific to a particular manufacturing environment or organization or when there are no manufacturing certifications tied to desired job roles.

A competency model is defined as a collection of competencies that together define successful performance in a particular work setting. Competency models are the foundation for functions such as recruitment and hiring, training and development, and performance management. Competency models can be developed for specific jobs, job groups, organizations, occupations, or industries.

There are two main industry competency models for manufacturing in the marketplace:

Department of Labor (DOL) Advanced Manufacturing Competency Model – Created by the Employment and Training Administration (ETA) and other industry organizations, the Advanced Manufacturing Competency Model is a broad platform outlining critical work functions and topical areas. It includes crosscutting competencies applicable to various industry sectors.

Tooling U-SME Competency Framework or Manufacturing Excellence – Created by a cross-section of manufacturing experts and introduced in 2014, the tool features a comprehensive series of competency models in nine manufacturing functional areas and is made up of more than 60 job role competency models, each outlining knowledge and skill objectives for job roles in production, technician, lead technician/technologist and engineer levels. Designed to complement other competency models in the marketplace, the Competency Framework can be used “as is” or customized to individual work practices at a facility. The framework is mapped directly to Tooling U-SME’s extensive training resources and a specially designed system allows for seamless validation and record keeping.

Implementing an ISO quality management system to obtain certification or becoming a Lean enterprise requires a talent development program, which means training. Companies are finding that competency models provide the rigor needed to meet the ISO and Lean quality objectives, guidelines, and reporting requirements.

Competency models allow companies to combat the increasing talent shortage and achieve stronger performance from their workforce while providing clear development pathways and career growth opportunities for their employees.

Advantages for companies:

  • Ensures enterprise-wide consistency making the workforce more flexible and dynamic.
  • Streamlines the training process and cuts costs by eliminating unnecessary/redundant training to focus on true needs.
  • Helps managers easily evaluate worker performance levels defined using specific behavioral indicators, which reduces subjective assessment and increases assessment accuracy.

Advantages for employees:

  • Enhances employee satisfaction based on the rationality of the system.
  • Defines and explains to each worker what they need to do to improve their skills.

The first step to get started is for human resources to work with production and operations managers to develop job descriptions that accurately define the qualifications needed by workers, including both knowledge and skills. This analysis provides the foundation for a program that meets a company’s objectives related to budget, consistency, measurability and results.

Good training requires both knowledge and skills that may not come from informal knowledge transfer or tribal learning. It requires understanding the concepts of what and why a job is done a certain way, and then requires on-the-job training to validate that the worker can fulfill the needs of that job.

The key is commitment from top management down to individual employees. It is important to communicate to all employees that the focus is on knowledge and skill requirements of the job and align training designed to help each person perform his or her job more efficiently, while providing new growth opportunities. An effective training program will include a validation process that not only tests a new skill but provides employees with the opportunity to gain new skills, apply them on the job, and then have their new skill sets validated through assessments, testing, and certifications.

A well-designed competency model can become the foundation for performance management, talent acquisition and leadership development for manufacturing companies. To combat the current and future talent gap and build a high performance team, it is critical for companies to have a system in place to codify knowledge and skills required for specific job roles aligned with the appropriate training.

 

Posted in Education, Jobs, Manufacturing, Training | 1 Comment »

Made in USA San Diego Brands Succeed in Apparel Market

August 26th, 2014

Would you be surprised to find out that San Diego has a fashion design industry? On July 30th, the Fashion Group International San Diego held a meeting, titled “Going from Designer to Manufacturer,” featuring Barrie Kauffman and Heather Haas from two San Diego based clothing lines: Fables by Barrie and Fiveloaves Twofish. Both of these brands are designed and manufactured right here in San Diego, not made across the border in Mexico and not made in China like other brands founded and still headquartered in San Diego.

Since the 1980s, the San Diego region has been known for its active sports line of clothing and shoes. In addition to the golf and sports apparel of San Diego-based Calloway and Taylor Made, other San Diego companies include: Reef, starting with casual sandals in the 1980s and branching into a complete line of men’s and women’s sportswear in 2002; Bad Boy starting with T-shirts and shorts for local surfers, skaters and motocross riders in the early eighties and expanding into action sport and combat sport lines in the 1990s; and Tribal Gear, launched in 1989 as a Southern California lifestyle inspired clothing brand, until its original San Diego based shop closed in 2012. None of these brands claim their products are “Made in USA.”

On the Fables by Barrie website, Barrie says that she started her company in 2007 to create stylish, whimsical, and head turning clothing for women. “Since 2007 I’ve been striving to meet these goals with a good mixture of kindness and elbow grease…I’m very pleased to tell you that Fables is designed, developed, and manufactured in San Diego, California USA. We take pride in being most definitely sweatshop-free…We are very aware that our creations cost a bit more than so many similar-style brands, much less knockoffs, so we want to thank you for your continued support through the years ….”

A feature article in the San Diego Union Tribune in July 2010 described her line as vintage style inspired fashions for ladies, specializing in swimwear, Western wear for women that kind of look like a chic version of the outfits on “Hee Haw,” and dresses. Kaufman makes clothes using lots of primary colors, bows, ribbons and ruffles. The popularity of her red, white and blue swimming suits, which are sold in places like South America, Puerto Rico, Israel and Australia, helped propel Kaufman from Internet saleswoman to boutique owner. She opened her first boutique, Fables by Barrie in the Hillcrest area of San Diego in April 2010.

Fiveloaves Twofish was founded by Kit Kuriakose and Heather Haas in 2009. Kit is the head fashion designer, and Heather functions as COO. Fiveloaves Twofish is a fashion design house for girls, tweens and teens. The design house was originally in the art district of Little Italy near downtown San Diego, but relocated to the Liberty Station area in and is open to the public.

The website states, “It is a fashion driven lifestyle brand for girls, tweens, and young contemporaries” and describes the collection as an “all encompassing look, attitude, and way of life,” saying they “design clothing for the up and coming generation’s needs, wants and desires.” They “design in order for girls to grow-up and enjoy each stage from 4 to 16, while allowing them to embrace the transitions from little girl, to girl, to tween. We like to call these stages the age of exploration, as girls are caught between ‘little’ girlhood and ‘juniors.’ During this age of exploration, Fiveloaves Twofish provides girls with a rich collection of varying attitudes that allows girls to play with who they will become each and every day.” The brand is sold in boutiques and department stores nationwide, with Nordstrom being one of their major department store outlets.

The website touts that “all our fashion is designed and patterned in our design house in San Diego. We take great pride that all our manufacturing from design to completion is done not only in America but also locally in San Diego, CA.We source our raw materials locally at first, using about 50% from local suppliers and 50% from overseas. All our packing material is recyclable, and waste is kept to a minimum.” The website encourages clients to wash their clothing in cold water and line dry it, saying “This is not only better for the longevity of your clothing, it is also easier on the planet.”

Fiveloaves Twofish’s website offers a challenge to clients: Know what you buy and read labels. Buy from companies that treat workers, animals and the environment with respect.

Barrie and Heather were asked by the moderator to describe how “went to market.” Barrie explained that “Going to market” means exhibiting in a major trade show in the fashion industry. The market calendar means that you sell your spring line in August and October, and your fall line in January and March. Barrie said that she started selling at craft shows in 2007 and “went to market” in 2009. She started with two swimsuits and one pair of shorts at the Magic show in Las Vegas.

Heather said they started in a tiny studio with 10 – 15 of each style, and it was a matter of either going to market or closing down. They went to market at a children’s show in New York in 2010 as that is where you have to go for children’s clothes. She said that all the big accounts (major chain stores) place their orders at the August and January shows, so they have spent all of their money by the October and March shows. The boutiques and small chains come to the shows in October and March to place their orders. She said that this can often work out better for a new brand as it is hard to meet the production needs of the big accounts when you start out.

An information handout for attendees said the major U. S. markets are: Los Angeles, New York, Dallas, Chicago, and Atlanta. There are trade shows conducted in these markets, with two of the biggest being the ENK show in New York and Magic in Las Vegas.

Heather and Barrie were asked what the costs to participate in trade shows are. Barrie said it started out as low as $2,500 for a booth at the Pool show, but that show costs $4,600 now. Then, you have to add in the cost of either renting or building “walls” for your booths. She explained that all booths have to have “walls” on three sides, so the booth is only open to the aisle. You can build the “walls” out of a variety of sturdy materials and cover them with contact paper.

Heather said that the children’s show in New York costs $3,000 for a 6′ X 10′ booth and besides the costs of building the “walls,” you have to add the cost of hotels, which in New York can run $5,000. Both ladies were leaving town at the end of the week to exhibit at one of the trade shows held the first week of August.

Heather said that you need to make a commitment to participate in trade shows for at least a year, so the buyers can gain confidence that you are going to stay in business. She added, “Our first New York show paid for itself. The accounts that make a show worthwhile don’t write orders at the show.” Barrie said that her biggest customer is Mod Cloth, and they were her first customer.

The next question was whether or not they used “reps” and had “showrooms.” Barrie said she doesn’t have any “reps” now, but is looking into it. Heather said they have “reps, and have show rooms in Los Angeles, Dallas, Atlanta, and London. She added, “Reps that go after them work out better. We pay a 12% commission and have show room fees in Los Angeles and Atlanta.”

The meeting handout explained that “reps are individuals you hire in different market locations to show your line for you. They usually carry 12-15 lines. They are paid by commission of the sales they make for you and also often charge a showroom fee.”

An audience member asked where they buy their material. Heather said you need to start with the streets of L. A. (the garment district) to buy smaller lots of material because to buy wholesale, you need to order 60 – 70 yards. She said they started out simple ? solid colors and no trims. She advised, “Always be honest.” [In other words, don’t inflate the size of what you may order in the future to get a cheaper price for your small order.]

Neither Barrie nor Heather felt people are willing to pay more just because their lines are “Made in USA.” They both said they have a problem with “knockoffs,” that is, copies of their styles mainly by foreign companies in Asia. I learned that the design of an article of clothing is not something you can patent, so there are no intellectual property rights to protect your designs. You can only trademark your brand of clothing. Thus, manufacturing of clothing is even riskier than the high-tech products with which I am familiar.

It is good to see the manufacturing side of San Diego’s clothing industry resurge after better-known apparel lines of companies headquartered in San Diego outsourced their manufacturing offshore. If boutique apparel companies can be successful making their clothing in San Diego using American workers, then think of the outrageous prices other apparel companies are charging by manufacturing their clothing in offshore countries like China, Vietnam, and India. By their success, Fables by Barrie and Fiveloaves Twofish have exploded the myth that one must manufacture their apparel offshore in order to be profitable. We consumers need to check labels and support companies that are manufacturing in the U.S. and creating jobs for other Americans.

Posted in Country of Origin, Manufacturing | 1 Comment »

San Diego Inventors Forum Contest Features Breakthrough Technology

August 19th, 2014

The San Diego region is truly a hotbed of ingenuity and inventiveness as evidenced by the 9th annual Invention Contest held by the San Diego Inventors Forum on Thursday, August 14, 2014, at the conference facilities of the Jack-in-the Box headquarters. There were more than 25 applicants for the contest, and five finalists were chosen for the New Technology category, and eight finalists were chosen for the Best Consumer Product category. Each contestant had five minutes to present their new technology or product and one minute to answer questions. At the end of the presentations, the audience of nearly a hundred voted for the best in each category. The winners were:

For Best New Technology:

First Place: David Horrigan, founder of Admiral Fluidics, for his SolidWater™ (or Caudal Prop™) Ship Propulsion System. SolidWater™ is a trademark of Horrigan Labs Corporation, CaudalProp™ is a trademark of Genero Labs Corp (Patent Number US Provisional 61/844,313 PCT Filed)

The benefits of this highly efficient ship propulsion system include: 70% lower fuel use and resultant atmospheric carbon emission, lower horsepower requirement, cheaper engine cost, antifouling, and no rudder needed. The system provides three breakthroughs in technology: Blade design eliminates cavitation; Linkage simplifies Caudal cycle and varies angle of propeller performing like a continuously variable automatic transmission; Assembly design eliminates deflection energy losses.

The next step will be to build a 20 hp, 600 lb. thrust system that is expected to have the thrust force and performance of a 90 hp diesel. There is a big market for this size for use by 30-50 ft. sailboats, most government research vehicles, and commercial fishing boats. The final production sizes of the propulsion system will also include a 2,000 lb. system and a 100-ton system. This propulsion system is truly a paradigm shift in propulsion technology.

The management team has been selected, and Mr. Horrigan envisions having 50 employees when they go into production, with the systems being “Made in the USA.”

Second Place: Carl Yee for his product, Paper Saver Ink (Patent number: 8,328,317)

Paper Saver Ink is a new type of inkjet ink for temporary printing that erases itself over time. This enables the same sheet of paper to be printed over and over again. A document is printed on paper, read or reviewed as normal, and then set aside. The ink gradually undergoes a chemical reaction with the atmosphere and loses its color, leaving behind a blank sheet of paper. When the printer or copier needs more paper, this blank paper is loaded back in, ready to be printed again.

Mr. Yee will be doing a few more months of product development work and then do a Kickstarter campaign for seed funding.

Third Place: Hal Slater for his Geothermal Water Heater

The Geothermal Water Heater is a new, highly efficient water heating design for residences in temperate and tropical climates. The GWHP extracts excess heat from the cold water used throughout the home with a water-to-water heat pump to heat the hot water used throughout the home. The key factors are that: 1) the typical residence uses three to four times as much cold water as hot water, 2) in some climates the cold water is about 15º-20ºF warmer than it needs to be and 3) water-to-water heat pumps are, on average, more than twice as efficient as air-to-water heat pumps. For more information, contact Hal Slater at hal@halslater.com

Other contestants in the Technology category were:

Gary Abramov – Ultra Miniature Defibrillator

The ultra-miniature external defibrillator (two-part set, each the size of a silver dollar) is based on reduced defibrillation energy via bypass of skin resistance. It enables 45 times improvement in weight and size of present external defibrillators. The target markets are military, government agencies and first-responders. Clinical trials are being held to obtain a FDA Class 3 approval.

Paul Moretto, Universal Wind Turbine LLC – Wind Turbine Generation System (WTGS) (Patent Number 7,888,810 B2)

It is vertically shafted and is inspired by jet engine design. It utilizes two turbines connected on a horizontal plan. The incoming wind is directed to the horizontally positioned blades of the turbines through four wind channels thereby increasing dramatically the WTGS power. To increase wind efficiency even more, two systems have been created to ensure rotatable advantages for the WTGS: (1) the top turbine rests on fixed and inverted casters, and (2) the lower turbine, rests and rotates on a bed of viscous liquid. Both systems eliminates friction, vibration, and noise, while increasing the viability of the WTGS’ capability of functioning in low wind speeds, as demonstrated on the Beaufort Scale. The WTGS is a 4-foot high freestanding turbine intended for individual home and commercial application. The company is in the process of working with Riverside County and University of California, Riverside for the modeling and prototype of the WTGS. The WTGS will utilize as many recyclable materials as possible.

For Best New Consumer Product:

First Place: Abel Monzon for his Cover & Vent Register, a collapsing vent register cover (Patent Pending)

This product is an insulated ceiling register cover designed to prevent heat loss and cold drafts when your AC is not in use. It facilitates opening and closing of your register and provides an airtight seal to save energy by preventing thermodynamics from occurring through partially open vents. It also makes opening and closing vents easier than conventional products currently on the market. It has a uniquely designed mounting bracket that will hold this universal cover to the majority of ceiling vents from size 6″ to 12″. It can also be used in place of your existing ceiling register. It has an aesthetically pleasing appearance and installs in just minutes.Further development and testing will be done before launching a website. For further information, you may contact Mr. Monzon at coverandvent@gmail.com

Second Place: Don Johnson for his Thera Point Focal Pressure Support (Patent pending), FDA Class 1 approved

Thera Point is a wearable provides advanced support with focal pressure therapy to help relieve symptoms of tennis or golfers elbow.Its exclusive 3-way adjustability provides custom fit and improved product performance. Latex free neoprene construction provides thermal benefit. It is washable and suitable for use at work or play. A storage bag included. In trials, participants showed an average VAS pain score reduction from 7.39 to 1.5 after wearing Thera Point for only 2 weeks. It is estimated there are up to 9,000,000 cases of tennis elbow annually… in the U.S.

Third Place: Chris Baker, EBG Design & Manufacture, for his Multi-Vise System (Patented March 2014)

The Multi-Vise System comes in a two-head, three-head, and four-head-vise configuration and can hold objects in any orientation, each vise independent to the other, with multi positions due to the rotating ball clamp.

The system works on the philosophy that it is better to clamp an object securely into a vise and then move and lock the vise into the desired position rather than trying to “fit” a clamp around the objects.

Ideal for holding and positioning objects securely for; gluing, painting, cutting and cleaning, etc. Once the object(s) are in position, the entire assembly can be tilted and swiveled due to a fifth ball clamp, giving much flexibility to the operator. The system is also available with attachments designed to support and hold printed circuit boards – making it the ideal platform for printed circuit board assembly, soldering and testing, etc.

Other contestants in the New Consumer Product category were:

Les Robbins – Snow Guard is the first windshield cover that protects your automobile’s windshield from snow and ice as well as the side view mirrors. It has a universal fit with flexible mirror gloves.

Patrick Trusio – Wall Hanging Wafer Device to simplify alignment, placement and fastening of items such as framed art, pictures or wall hangings. It is an injection molded thermoplastic device to simplify alignment, placement and fastening of items such as framed art, pictures or wall hangings. Self-adhesive backing bonds the device to back of an item. A slot allows a pushpin to be inserted and nest firmly in place. Exerting pressure forces pushpin into wall affixing item to wall. Slot allows item to be lifted off pushpin and removed from wall.

Harry Katcher – The Car Cubby – The Car Cubby is a portable, collapsible, washable car storage system. It holds your grocery bags in place while you drive.

Allen Young of Tallac LLC – VIER Compact and Secure Lock (Patent Pending) – Vier is a compact high security lock that use two locking bodies and two shackles. When disassembled, the four pieces fit into a bag the size of a burrito and weighs only 3 1/2 lbs. This hardened steel lock would replace a conventional U-lock. Vier just completed a successful Kickstarter campaign. For further information contact Allen at allencyoung@gmail.com.

Coral Bergman – Signwinder™ (Patent Pending) – a stretchable elastomeric fastener for attaching signs to posts, fences, light poles, etc. to increase visibility of such signs as real estate open house and garage sale signs by raising them to well above the line-of-sight.

The San Diego Inventors Forum will start its 10th year next month. I am honored to be on the steering committee for the Inventors Forum to meet San Diego’s inventors and assist them towards successful entrepreneurism. During the course of our monthly meetings, we essentially provide the inventors with a course in entrepreneurism. As part of our informal curriculum, I give a presentation on how to select the right manufacturing processes for their new product. We look forward to another great year!

Posted in Innovation, Manufacturing, Technology | No Comments »

How Multinational Agribusinesses are Attacking Country of Origin Labeling

August 5th, 2014

If you have bought any packaged meat recently, you may have noticed a new type labe:  a Country of Origin label that may list up to three countries under the categories of “born, raised, and slaughtered.” Consumer groups have long advocated for Country of Origin labeling, but not everyone in the food supply chain is pleased.

On July 22, 2014, Bill Bullard, CEO, R-CALF USA presented a webinar, titled “Country of Origin Labeling: How Multinational Agribusinesses Are Attacking This Law” to members of the Coalition for a Prosperous America (CPA) and sponsoring organizations.

He explained that County of Origin Labeling is not new. The Federal Meat Inspection Act of 1906 was passed by Congress to prevent adulterated or misbranded meat and meat products from being sold and to ensure that meat and meat products are slaughtered and processed under sanitary conditions. It required labels on imported meat, but the USDA considered imports of non-retail-ready meat products to be of domestic origin once they passed a U.S. safety inspection, so origin markings were not maintained. The USDA also considered imported livestock to be domestic after its Animal and Plant Health Inspection Service inspects and releases these animals. USDA inspection of poultry was added by the Poultry Products Inspection Act of 1957.

The Tariff Act of 1930 required that every imported item must be conspicuously and indelibly marked to indicate to the “ultimate purchaser” its country of origin. Products were exempt if they were too difficult or economically prohibitive to mark. The list of exemptions included livestock, “natural” or raw agriculture products such as vegetables, fruits, nuts, and berries.

Mr. Bullard stated that Country of Origin Labeling (COOL) was included in 2002 Farm Bill. It covered muscle cuts of beef, lamb, and pork; ground beef, ground lamb, and ground pork; farm-raised fish and wild fish; perishable agricultural commodities (fruits and vegetables); peanuts.

However, Mr. Bullard explained that this requirement applies to retailers (grocery stores), but not restaurants or if sold by retailer not required to be licensed under PACA (Perishable Agriculture Commodities Act), such as specialty markets, fish markets, butcher shops or roadside stands.

The USDA rules for COOL exempt “processed” versions of the foods, so that the following are exempt:

  • cooked, roasted, smoked or cured (even teriyaki flavored meat)
  • combined with one other ingredient

Most nuts sold in grocery stores are roasted, so they aren’t labeled. Ham, bacon, sausage and other products in the pork section of the meat case are exempt because they are smoked or cured.

However, he started that there was an 11-year delay in writing the rules for USA Label for USA-born, raised, and slaughtered beef. The multinational agribusinesses and their trade organizations like the American Meat Institute (AMI) and the National Cattlemen’s Beef Association (NCBA) fought hard to stop Implementation of this label. They convinced then Secretary of Agriculture Ann Veneman to support their efforts to keep consumers in the dark.

Congress’ FY 2004 appropriations bill delayed COOL for everything except wild and farm-raised fish and shellfish until Sept. 30, 2006. Congress’ FY 2006 appropriations bill further delayed COOL for everything except wild and farm-raised fish and shellfish until Sept. 30, 2008.

Just days before the 2009 presidential inauguration, on Jan. 15, 2009, USDA issued its final rule on COOL. It allowed packers to commingle a single foreign animal during a day’s production and then label the entire day’s production as “Product of U.S. and Canada and/or Mexico.”

Despite the quid pro quo, on May 7, 2009, both Canada and Mexico filed actions with the World Trade Organization (WTO) alleging COOL violated U.S. obligations under various WTO agreements.

In 2012, the WTO faulted COOL and ruled (in part):

  • Violates Article 2.1 of the WTO TBT Agreement because COOL’s recordkeeping and verification requirements impose a disproportionate burden on upstream producers and processors, because the level of information conveyed to consumers through the mandatory labeling requirements is far less detailed and accurate than the information required to be tracked and transmitted by these producers and processors.
  • These same recordkeeping and verification requirements “necessitate” segregation, meaning that the associated compliance costs are higher for entities that process livestock of different origins resulting in a detrimental impact on the competitive opportunities of imported livestock.
  • The COOL labels contain confusing and inaccurate information.
  • The regulatory distinctions imposed by the COOL measure amount to arbitrary and unjustifiable discrimination against imported livestock, such that they cannot be said to be applied in an even-handed manner. Accordingly, we find that the detrimental impact on imported livestock does not stem exclusively from a legitimate regulatory distinction but, instead, reflects discrimination in violation of Article 2.1 of the TBT Agreement.

On May 24, 2013, the U.S. informed the Dispute Settlement Board that on 23 May 2013, the USDA had issued a final rule that made certain changes to the COOL labeling requirements that had been found to be inconsistent with Article 2.1 of the TBT Agreement. The U.S. was of the view that the final rule had brought it into compliance with the DSB recommendations and rulings.

This rule reversed their concession of 2009 to consider comingled livestock as a U.S. product. The new implementing regulations require the label to show the Country of Origin for the production steps of born, raised, and slaughtered in the U.S.

This effectively ended the deceptive practice of commingling that previously allowed meat exclusively from U.S. animals to be mislabeled as if it were meat from multiple origins, such as the inaccurate label: “Product of the Canada, Mexico and the U.S.

Mr. Bullard said that the benefits of this regulation are:

  • Optimizes U.S. Value-Added Supply Chains
  • Prevents industry consolidation
  • Prevents consumer deception
  • Enhances competition
  • Provides synchronous information (between consumer and packer/retailer)
  • Facilitates more accurate price discovery
  • Provides consumers with more choices
  • Empowers consumers to make informed decisions
  • Provides food safety proxy for expression of nationalism/patriotism

However, Canada did not agree that the changes brought the U.S. into full compliance. In its view, the changes were more restrictive and caused further harm. On August 19, 2013, Canada requested the establishment of a compliance panel. Brazil, China, the European Union, India, Japan, Korea and New Zealand reserved their third-party rights, followed by Australia, Colombia, Guatemala and Mexico. On September 27, 2013, the compliance panel was composed. On 26 March 2014, the Chair of the compliance panel informed the DSB that the compliance panel expects to issue its final report to the parties towards the end of July 2014 (not issued as of this date.)

In the meantime, the WTO and multinational Agribusinesses continued to promote global supply chains. The World Trade Organization has been working on the “Made in the World” initiative for years. The WTO’s Made in the World initiative is part of a process of “re-engineering global governance.” On February 26, 2013, Former WTO Director General Pascal Lamy, said, “Fewer and fewer products are actually ‘Made in the UK’ or ‘Made in Switzerland’, and more and more are ‘Made in the World.’”

According to Mr. Bullard, the multinational agribusinesses and their allies have used every front to defeat COOL: U.S. Federal Courts, the U.S. Congress, industry propaganda, and the WTO.

COOL has been attacked in Federal Court by the American Meat Institute (AMI), National Cattlemen’s Beef Association (NCBA), National Pork Producers Council, American Association of Meat Processors, North American Meat Association, Southwest Meat Association, Canadian Cattlemen’s Association, Canadian Pork Council, and the Confederacion Nacional De Organizaciones Ganaderas.

The arguments they used were:

  • COOL violates their constitutionally protected rights to freedom of speech.
  • COOL improperly prohibits them from “commingling.”
  • The “Born, Raised, and Slaughtered” labels are not authorized by the 2002 COOL statute amended in 2008.
  • There is no substantial governmental interest in informing consumers where the meat they buy for their families was born, raised and slaughtered.

Thus far, the U. S. Courts have upheld COOL: the U.S. District Court for District of Columbia denied the Preliminary Injunction request, and the U.S. Court of Appeals for District of Columbia Circuit affirmed the District Court judgment. However, on April 4, 2014, the appeals court vacated its judgment and issued an order for the case to be heard en banc regarding the narrow issue related to the First Amendment, and a decision is pending.

The multinational agribusinesses have tried to eliminate or weaken COOL in each of the past three U.S. Farm Bills, but failed in their effort to include language to weaken COOL by allowing a “North American” label. They did succeed in adding anti-COOL language in House Agriculture Appropriations Committee report language.

In conclusion, Mr. Bullard explained that the main reason why COOL is under attack is the fact that the U.S. Department of Justice and USDA have failed to enforce U.S. antitrust laws and market competition laws against multinational meatpackers. In addition, unrestrained mergers and acquisitions, and the lack of enforcement of anticompetitive practices have accorded U.S. multinational meatpackers oligopolistic market power in U.S. meat markets (four firms control about 85% of beef market). As a result of this market power, meatpackers can and do discriminate against whomever they choose, including the countries of Canada and Mexico.

He said that COOL is the most pro-producer, pro-consumer, and pro-competition legislation to be passed by Congress in a long, long time, and it must be preserved.

 

Posted in Country of Origin, Economy | No Comments »

STEM Education Matters to our National Security, Innovation and World Leadership

July 22nd, 2014

Over the last 230 years, the United States became a global leader, in large part, through the genius and hard work of its scientists, engineers and innovators. Today, a little over 4% of the workforce is employed directly in science, engineering, and technology. Yet, this small group of workers is critical to economic innovation and productivity.

Science, technology, engineering, and mathematics (STEM) are widely regarded as critical to be competitive in the global economy. A growing shortage of science-based talent in our workplaces and universities represents a serious problem for our nation. Expanding and developing the STEM workforce is a critical issue for government, industry leaders, and educators. However, comparatively few American students are pursuing educational majors in STEM career paths.

If we want to attract today’s youth to careers in science, engineering, mathematics, and high-tech manufacturing, we need to show them the variety of career opportunities that exist in these industries. We need to change their perceptions about what the manufacturing industry is like and help them realize that manufacturing careers pay 25-50 percent higher than non-manufacturing jobs, so they will choose to be part of modern manufacturing.

As I have written in past articles, we need to reacquaint youth with the process of designing and building products from an early age and provide them with the opportunities to learn in both traditional and non-traditional ways. Experts agree that we need to restore shop classes to our high schools and establish apprenticeship programs to improve the image of manufacturing careers and portray manufacturing careers as fun and exciting.

The SME (formerly Society of Manufacturing Engineers) “Making Manufacturing Cool” program and the National Association of Manufacturers (NAM) “Dream It. Do ItTM” program are helping to expose our youth to the modern manufacturing environment and change the image of manufacturing to one that is “cool” and full of exciting career opportunities.

These new programs are building on the work of the non-profit organization, Project Lead The Way®, which has been working since 1997 to promote STEM curriculum for middle and high school students during the school year, along with the Gateway Academy, which is a one- or two-week day camp for 6th – 8th graders that includes team-building exercises, individual and team projects, and utilizes the latest technology to solve problems.

However, none of the above programs are geared specifically to girls, and it is an even bigger challenge to attract girls and young women to technical careers. Studies have shown that when role models and mentors are provided to girls, they are more likely to follow a similar career path.

Now, there is a new program in development by Invincible Enterprises, ME, Inc., an online and mobile app that provides Role Models, a Game Plan and Mentoring options to encourage teens to create a life of fulfilling rewards by enter thriving careers in STE@M industries. Helping with ME, Inc. are advisors with significant workforce, career development, empowerment, and business expertise. The program incorporates a PLAYBOOK for Teens, created by Cari Lyn Vinci & Carleen MacKay, which is available in print and digital format at Amazon.

In the PLAYBOOK, girls can meet fascinating women in STE@M (the “@” stands for “art”) and follow the “plays” of successful young women to help them create their own “Dream Career.” The PLAYBOOK is dedicated to the smart, talented teenage girls who will become the future business owners and leaders in STE@M industries. It will also provide a tool for organization and corporate partners to use to solve their future talent pool problems.

Permission was granted for me to share the following two role model stories:

Allison Goodman’s story – Allison is a young woman with a talent for stretching her limits. Allison, an electrical and computer engineer at Intel, is a pro at solving new problems by creating new, patentable ideas. She is particularly interested in increasing computer speed to help people connect and share data faster than ever before. To accelerate getting information around the world so it feels instantaneous, Allison creates products that are a combination of writing software programs and electrical components that together try to predict what we want to accomplish with our computer.

Her story began when she started to sort out and prioritize the different things that she found interesting. She tried, but couldn’t find that “one thing” that was most important to her. Allison’s father helped by telling her he would pay for ONE year of school – but only if she studied engineering. Since this was the only deal offered, she accepted it and left home for college.

Allison came to appreciate her father’s wisdom. It helped her become self-reliant. Knowing she had to pay for the balance of college, Allison applied for scholarships and soon discovered that scholarships in engineering were not as difficult to get as she had once thought. While Allison had initially struggled to find the “one thing” she wanted to do, she now realizes that the opportunity to study hands-on engineering opened her eyes to a number of options that she had never considered.

Today, Allison finds challenges and opportunities at Intel. She has been able to change roles every few years and her technical talents have led to positions in project management and customer service. Imagine. Allison has travelled to 22 countries on behalf of Intel, has met interesting and dynamic people, continues to learn about the world, and finds that new opportunities are always around the next corner. Fantastic!

Adrienne Huffman’s story – This story tells the tale of a curious young girl who found that computer engineering and electrical engineering both challenged her curiosity. What to do? She graduated from Florida A&M University with two degrees: a B.S. in Electrical Engineering and a B.S. in Computer Engineering. Then, she topped off her Bachelor’s degrees with an M.S. in Electrical Engineering from Iowa State.

In college, Adrienne was active with the National Society of Black Engineers. They provided encouragement and a venue to develop her leadership skills. Adrienne was inspired by members of Delta Sigma Theta Sorority, an organization she later joined. Adrienne identifies with the motto of Dr. Paulette Walker, the 25th National President of Delta Sigma Theta Sorority, “No one can make you feel inferior without your consent.” Powerful words of inspiration to young women who, in addition to their commitment to academic learning, must develop strong senses of self-worth in order to reach their goals.

Adrienne’s academic interests developed along the way. She, like so many people, began pursuit of a career in computer engineering but found that her interests shifted as she learned. Early influences included her parents who taught her the valuable lessons she lives by today. Notably, they taught her “in order to achieve success, you have to continue to push through hard moments.”

Today, Adrienne is a Hardware Engineer at a Fortune 100 company. Her career has rewarded her with a very comfortable lifestyle even as hard work continues to challenge her. She is very active in community focused, professional organizations, and travels frequently. She takes some time and money for herself and enjoys shopping as a self-directed reward strategy. Many wise people believe that it is this balance of learning, working hard, giving and taking that is the most powerful argument for achieving a life well lived.

At the end of each story, the Playbook Role Models share heart-felt advice for girls to apply to their career path. Then, questions are asked of the reader to help them take the first step to writing their own playbook.

In the “Afterword,” Ms. Vinci and Ms McKay wrote, “Although the young women you read about come from diverse backgrounds and were born with various talents, dreams and personalities, they share several important characteristics. First, they look at life as a year round school. They embrace the role of “student” beyond their formal education. Committed to growth, these ladies are aware and open to the possibilities the world offers. Second, they understand that success is not fast or easy. Failure at the beginning is common and they used early “unsuccessful outcomes” as part of the learning process. They said YES to opportunities and added life experiences to their playbook of skills. Third, these young women took responsibility. They understand, “IT’S UP TO ME TO CREATE THE LIFE I WANT TO LIVE.” Based on a future they dreamed of, they developed the skills necessary to take control and design the lives they want. And, existing resources didn’t determine their success. They succeeded because they believed in themselves. It was their courage, willingness and determination that led them to be exceptional rather than average.”

Utilization of the Playbook for Teens will help teenage girls see that STEM career paths offer enormous opportunities for them to create the life they want to live. Perhaps SME, NAM and Project Lead The Way® would benefit from incorporating the Playbook for Teens into their programs.

Posted in Education, Jobs, Manufacturing, Training | No Comments »

Trade Deficit Would Shrink with Stroke of a Pen

July 15th, 2014

Since NAFTA went into effect in 1994, the U. S. has generated the highest trade deficit in the world and the largest in the world’s recorded history. If you add the annual trade deficit in goods as shown on the Census Bureau website, the total is a staggering figure of -$10.347 trillion.

The United States now has a trade deficit with 88 countries according to data in the book, Buying Back America. Some deficits are small, but some are enormous. Our top six trading partners of Canada, China, Mexico, Japan, Germany, and South Korea represent 64% of our total trade deficit. In 2013, our total trade deficit in goods was $688.4 billion, of which China represented 46% at $318.4 billion. However, our 20-year total trade deficit with China since 1994 is a staggering -$3.287 trillion.

Now, the current Administration wants to cover up the evidence of the damage to our economy by changing the rules of how a manufacturer is defined instead of responding to the American public’s demand to know where products are manufactured so they can have the freedom to choose whether or not to buy “Made in USA” products.

On June 24, 2014, Robert E. Scott, Director of Trade and Manufacturing Policy Research for the Economic Policy Institute, conducted a webinar for the Coalition for a Prosperous America: “The Factoryless Goods Production Controversy (Foreign Goods Production) – How proposed government rule changes would classify foreign goods as U.S.-made.”

He explained that an Economic Policy Classification Committee (ECPC) formed by the Office of Management and Budget is proposing a Factoryless Goods Production (FGP) and Global Value Chain (GVC) rule to artificially inflate manufacturing production and reduce the trade deficit. This change would result in shrinking our trade deficit and growing our manufacturing output with the stroke of a pen, without adding any more real jobs or production.

The ECPC was formed to make recommendations for revising the North American Industrial Classification System (NAICS), created in 1997 as a unified Industrial classification system for the U.S., Mexico and Canada.

Traditionally, all production chain tasks were performed in one factory, in multiple factories of one firm, or by subcontract suppliers to that firm, as is the case for companies like Northrop Grumman that makes Unmanned Aircraft Systems in San Diego.

In the last 20 years, improvements in communications, technology and transportation, as well as global trade agreements and foreign investment in plants haveallowed product design, development, and manufacturing to be performed in different locations, including offshore in China and other Asian countries.

This has enabled a company to control production without directly performing any manufacturing process or transformation task in one of their facilities; e.g. Apple, Nike, AMD, and fabless semiconductor manufacturing. In fact, the top five semiconductor firms in 2013 were fabless companies: Qualcomm, Broadcom, AMD, Mediatek, and Nvidia. These companies focus on innovation, product development, marketing, and sales rather than manufacturing tasks.

There are currently three types of establishment classifications:

Type of Establishment Characteristics  
Integrated Manufacturer (IM)  Performs all the tasks of the production chain
Manufacturing Service Provider (MSP) Performs transformation tasks but does not perform production management tasks (may purchase inputs) 
Factoryless Goods Producer (FGP) Does not perform transformation tasks but performs all production management tasks (may or may not own parts)

These current classifications require the statisticians to choose where to put the FGPs and how to count production. They now have the choice of classifying them as wholesalers, manufacturers, or split based on the location of the transforming company.

Currently, Apple and Nike are classified as wholesalers since they do not perform any manufacturing transformation tasks in the U.S. This accurately reflects the fact that both Apple and Nike have offshored their manufacturing to China.

Under current policy, when a company like Apple ships component parts to China to be assembled in a Chinese factory (e.g. Foxconn) and then sends the product back to the U.S. to be sold here, the value of the imported iPhone minus the value of the exported parts counts as a net U.S. import of manufactured goods.

Under the ECPC proposal, Foxconn, now called a “manufacturing services provider,” would not be described as having manufactured the iPhones but as having provided services to Apple.

An additional concern is that the ECPC proposes to treat some goods exported by foreign factories as U.S. manufactured exports. For example, currently, when Apple ships iPhone parts to China to be assembled by Foxconn and then ships the finished product to another county, Apple’s export of these parts to China counts as the only U.S. export.

But, the ECPC proposed rule would classify the engineering, marketing and profit to Apple as U.S. production. A fully assembled iPhone sale to another country, such as Japan or a European Union country, would count as a “U.S. manufactured goods export,” less the cost of any imported parts.

The justification for this is that while China manufactured and exported the iPhones, they count as U.S. manufactured exports because they were under the control of a U.S. brand. This would create an artificial increase in U.S. manufactured exports and cover up the real U.S. manufacturing trade deficit.

Thus, if a U.S. based company offshores manufacturing work, much of it would be classified as U.S. production. Further, imported products from foreign contract manufacturers hired by a U.S. company will no longer be a “goods import” but rather a “manufacturing services import.” This means that products from Flextronics in Mexico, which makes components in Mexico for U.S. firms that are shipped to the U.S., would no longer be considered a “goods import” but a “services import.”

In addition, the ECPC proposal would result in a miraculous overnight increase in the number of U.S. “manufacturing” jobs. White-collar employees in firms like Apple would be re-branded as “factoryless goods producers” and counted as “manufacturing” workers. The change would also create a false increase in manufacturing wages, as many of the new-to-be-counted “manufacturing” jobs would be designers, programmers and brand managers at “factoryless goods producers” like Apple. As a result, reported manufacturing output would jump, as revenues from firms like Apple would be lumped in with the output of actual U.S. manufacturers.

This proposal would deceptively shrink the size of the reported U.S. manufacturing trade deficit while artificially inflating the number of U.S. manufacturing jobs. It would obscure the erosion of U.S. manufacturing, undermining efforts to improve the trade and economic policies for our country.

This proposal is fraudulent and would distort U.S. trade, labor, and gross domestic product statistics that show the need for a developing a manufacturing strategy in the U.S. The offshoring of U.S. manufacturing under years of bad trade policies should not be undone with a data trick.

The proposal from the Economic Classification Policy Committee (ECPC) to redefine U.S. manufacturing and trade statistics must be stopped. Only manufacturing performed within the U.S. should be considered U.S. goods production. If manufacturing occurs in another country, it simply is not U.S. production.

On May 22, 2014 the Office of Management & Budget solicited comments on these proposed revisions. You also can view the notice for this proposal in the Federal Register. The comment period ends July 21, 2014. You may email your comments today to John.Burns.Murphy@census.gov to keep the “factoryless goods” proposal from becoming a reality. Or, to make taking action even easier, you can click here to customize and submit a pre-drafted comment provided by the Coalition for a Prosperous America.

Posted in Economy, Manufacturing, Outsourcing, Trade | 1 Comment »

Manufacturing Thrives in San Diego’s North County Region

July 8th, 2014

On the morning of July 1st, the San Diego North Economic Development Council (SDNEDC) hosted a North County Manufacturing Executive Roundtable at the City of Vista Civic Center. Over 100 professionals were welcomed by County Supervisor Dave Roberts and Lee Morrison of Bank of America. Bank of America and The Eastridge Group of Staffing Companies sponsored the Roundtable.

In an interview prior to the event, KPBS Morning Edition anchor Deb Welsh spoke to Carl Morgan, CEO of the San Diego North Economic Development Council. Morgan said. “Manufacturing is alive and well in San Diego’s North County.” He said the manufacturing executive roundtable would discuss why companies chose to locate and stay in the region. Ms. Morgan asked him what North County’s six key industry clusters are, and he responded that “the sports and active lifestyle, clean technology, biotechnology and medical and informational technology “are doing very, very well” besides the craft and brew industry.

Reo Carr, executive editor of the San Diego Business Journal, moderated the panel, which also discussed such topics as reshoring of manufacturing, environmental concerns, filling the gap between education and manufacturers’ need for skilled labor, sufficient, accessible transportation, and the economic incentives that are and should be available.

The six panelists were: Clark Crawford, VP Sales and Business Development, Soitec Solar, which manufacturersconcentrated photovoltaic (“CPV”) solar modules; Christine Jensen, special programs coordinator at Mira Costa College, which offers classes in biotechnology, engineering, and machining; Jeffrey McCain, CEO, McCain, Inc, a pioneer of advanced traffic control equipmentas well as a contract manufacturer; Michele Nash-Hoff, President, ElectroFab Sales and Chair, California Chapter of the Coalition for a Prosperous America; Chris Roth, vice president, Lee & Associates, the Nation’s largest broker owned commercial real estate services firm.; and Martin Wood, CEO, Delkin Devices, the largest US memory card manufacturer.

Crawford said that when his company (Soitec Solar Industries headquarted in Grenoble, France) decided to set up another manufacturing plant in the U.S., they were wooed to come to many states, including Texas, but they chose to move to California because California’s GO-Biz worked with them to identify possible site locations around the state and to define all statewide incentives that could be available to their company. GO-Biz participated in several rounds of site selection tours that helped to qualify the final locations, out of which they chose San Diego. They were able to get the former Sony building in Rancho Bernardo before it went on the open market. When fully operational, Soitec will directly employ 450 and indirectly support 1,000 jobs.

The other reason they chose California is that it is the largest market for solar energy, and California offers good financial incentives for residents and business to convert to solar energy.

Crawford mentioned that GO-Biz also worked with the California Employment Training Panel (ETP) staff to help qualify Soitec for training funds to help their company train and prepare employees for the high-skilled jobs at their newly established factory in San Diego. During my subsequent phone interview, Mr. Crawford told me they were awarded $300,000 in training funds by the California ETP, and they provided over 15,000 training hours to their San Diego employees. They completed the training in early April 2014.

When asked why his company stays in California instead of moving to another state, McCain said, “California is currently the 8th largest economy in the world. A tremendous amount of our business, current and future, will come from this economy. Even though it is still difficult to find qualified employees, it is my experience that California is rich in qualified workforce, compared to other states.”

He added, “Our success depends greatly on the advantages of our workforce in Mexico. However, over the last 20 years, I have come to realize the culture in Mexico makes it difficult to do manufacturing that requires ingenuity and innovation. We will typically do our first articles and fixturing and any automation type manufacturing in the U.S. When it comes to labor intense, higher volume products, we can turn it over to the plant in Mexico where they can be very successful producing quality products. That allows the company to compete successfully, not only in the U.S. but also against offshore companies. The operation in Mexico, just over the last two years, has allowed us to grow our U.S. side, which has nearly 200 employees.”

In contrast, Martin Wood, stated, “We are solicited often by other States to move our manufacturing facility and jobs to NV, TX, FL, AZ and others. While it would be disruptive, in all cases, it would be like handing employees and the company a raise. Lower or zero State taxes is a big incentive to move. “

“While previous offers were less appealing, they are becoming more and more sophisticated involving real estate and grants, development and hiring help, and of course, no taxes for an extended period or permanently. Any business that is truly run for profit above all would be foolish to not at least consider these offers. We try not to let it consume us, and only entertain them on an annual basis. Right now, California edges out other states in our analysis, based on a number of support, service availability, and quality of life issues, but the gap is narrowing.”

“People in City, County and State Government should be aware this poaching is going on, and try to find a way to bring advantages to manufacturers in California and incentivize them to stay. We know we bring high paying employment wherever we go, and our customers are based worldwide. I see no reason these offers will not continue and expect them to get more and more appealing. Don’t get me wrong, I love California and my family is firmly entrenched here, but to truly own and manage a manufacturing business, you must make hard decisions and be right most of the time.”

Roth stated “the quality of life here in Southern California is a great incentive for companies to continue operating here even though [manufacturing companies] are not receiving the same type of incentives from the local and state governments.” This was one of the major points made in explaining why manufacturers tend to stay in California, despite the sometimes harsh business environment. Roth also stated that a key decision factor in contemplating company relocation is the difficulty entailed in moving employees and their families.

I commented that a company is more than a product; it is also the people who formed and comprise the existing company, and many times, employees aren’t willing to relocate to another state, and the company loses people key to its success. This is often what happens when an out-of-state company buys a San Diego regional company. Key employees don’t move with the company, and the acquisition becomes “buying a product” rather than “buying a company.” In addition, I pointed out that over 90% of California’s manufacturers are less than 100 people, and their customers are most local obtained through word of mouth and referrals. If they decide to move the company, it would be as if they started a new company from scratch.

When Reo Carr asked the question about reshoring, I explained that it started because of quality issues and expanded because of increases in wages in China over the last few years. I mentioned that China and other Asian nations don’t honor U.S. patent laws, which leads to intellectual property theft, hurting U.S. companies in the long run. The other panelists added their opinions as to why outsourcing manufacturing to China is becoming of a thing of the past (increasing wages, quality control, and logistics problems and problem-resolution) and why America is benefiting from the shift to returning manufacturing to America.

McCain confirmed that the contract manufacturing division of his business is benefitting from regional companies returning manufacturing to America.

In answer to the question about the impact of environmental and other regulations, I pointed out that we have been outsourcing our pollution to China and other Asian countries to escape the costs of regulation here. The consequences of industrialization with environmental regulations has been horrific for China and India, which I described one of the chapters in my book (Can American Manufacturing be Saved? Why we should and how we can) When asked about the environmental regulations that apply to his plant in Mexico, Mr. McCain said that Mexico is quickly catching up with the U. S.

A question from the audience about the shortage of local, trained machinists led into a discussion about two connected issues: workforce training and mass transit. Ms. Jensen shared that colleges are shifting in the programs they are now offering in an effort to meet the needs of employers. Mira Costa has both certificate and Associate degree courses in biotechnology, engineering, and manufacturing skills such as machining. She encouraged the companies to check with their local community colleges to inquire about the various programs available. I shared that there are now four high schools that provide up to two years of training to be a machinist and that for years and years, the San Diego Community College District has provided machining and welding training, as well as other manufacturing skills.

Wood said, “it is hard to find people to fill the positions they need, because most of [the blue collar laborers] live further south, in South County.” Crawford seconded that comment, saying that workers are coming from points south, as well…even from Mexico. McCain added mass transportation needs to improve to deal with the issue of where employees are traveling from to accommodate the job availability.

I pointed out that San Diego doesn’t have a “hub” center of manufacturing where everyone is going to work. The industrial business parks are scattered around the county (mainly in 13 of the 18 cities in San Diego County). Mass transit doesn’t work well for this type of region, and I don’t know how feasible it would ever be for mass transit to get workers coming from across the border to these scattered business parks.

In conclusion, the panelists shared that for the time being, the advantages of doing business in California outweighed the disadvantages. The biggest draw is still the quality of life the region offers, as well as the great weather. I shared that the successful company that stays in San Diego has a high dollar, high value, low to mid volume product, which has proprietary technology and lower labor content. When this type company does a Total Cost Analysis of doing business in San Diego/California, it pencils out positively. Crawford agreed that doing this kind of analysis is what enabled them to make the decision to locate Soitec in San Diego.

While it is hard to compete against the incentives and low or no taxes of some other states, we may have fewer companies making the decision to move out of California if more companies did this type of analysis. Of course, it would be even better if the governor and legislature actually proposed and passed legislation that would benefit manufacturers instead of adding to their costs of doing business in California.

 

Posted in Economic Development, Jobs, Manufacturing, Nearsourcing, Reshoring, Taxes/Regulations, Training | No Comments »

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