California Targets Manufacturing Industry to Reduce Pollution

October 4th, 2022

On September 14, 2022, I had the pleasure of attending the California Metal Coalition quarterly meeting in San Diego held at the offices of C & H Machine in Escondido. The CMC website states: “California is home to 4,000 metalworking facilities, employing over 350,000 Californians with high-paying manufacturing jobs and health benefits.   Jobs provided by our industry are the path to the middle class for many Californians.”

After introductions, Executive Director James Simonelli provided an overview of legislation and rules changes that could adversely affect the metals industry in California. 

First, he discussed AB 423 – San Diego County Air Pollution Control District: members and duties. This bill was sponsored by Assembly Member Todd Gloria (elected as San Diego Mayor in 2020) on May 28, 2019 and was signed by Governor Newsome on Oct 11, 2019

He pointed out that while “existing law provides for the establishment of air pollution control districts and air quality management districts,” San Diego’s air pollution control district was handled by the County Board of Supervisors. AB 423 required the San Diego County Air Pollution Control District to become a separate agency with a specified membership as of March 1, 2021. It required local governments to appoint members to the San Diego County Air Pollution Control District governing board in a specified manner and appoint a specified liaison to consult with the United States Navy, the United States Marine Corps, and the United States Coast Guard. AB 423 greatly expanded the authority of the SDAPCD for permitting, compliance/enforcement, local air monitoring, and new rule making.

Next, Mr. Simonelli reported further developments with regard to AB 617 that was passed and signed by the Governor on July 16, 2017.  “It requires the California Air Resources Board (CARB) and air districts to develop and implement additional emissions reporting, monitoring, reduction plans and measures in an effort to reduce air pollution exposure in disadvantaged communities. It mandates a statewide strategy to reduce emissions, with a review at least once every five years. Through grants to community-based organizations, locals can more easily analyze data and participate in new air pollution reduction programs.”

The bill is supposed to provide the following benefits to disadvantaged communities:

“Quicker review of pollution control technology – In districts exceeding air pollution limits, the new law supports an expedited process to implement the best available retrofit control technology at industrial sites.

More significant penalties for polluters – Penalties increase five-fold to $5,000 for violating air pollution laws from non-vehicular sources”.

However, Mr. Simonelli said that the task force was set up to find out what concerns disadvantaged communities had with regard to pollution, and the task force is currently looking at facilities where welding of metal is being done as welding operations can create emissions of lead, hexavalent chromium, copper, nickel, and cadmium.

The next item for discussion the agenda went along with California’s recent ban of the sale of new gasoline-powered cars and light trucks by 2035.  They would also like to have Zero-Emission Forklifts.   

Mr. Simonelli said they are targeting internal combustion forklifts, such as propane powered, with a lift capacity of 12000 lbs. or less.  “New equipment cannot be purchased after 2026, and current equipment must be phased out between 2026 – 2038.  The primary option will be electric forklifts.  CMC submitted formal written comments to CARB on August 19 2022.  This measure is scheduled for consideration by the Board in 2023.”

The CRB website states, “Accelerating the transition to zero-emission technologies, where feasible, is an important component of CARB’s strategy to meet the state’s air quality and greenhouse gas reduction goals. As such, CARB staff is currently developing a measure that would drive greater deployment of zero-emission forklifts within fleets throughout the state. This measure, which has been identified in CARB’s Mobile Source Strategy, State Implementation Plan, and Sustainable Freight Action Plan, is one of several near-term actions intended to facilitate further zero-emission equipment penetration in the off-road sector.

CARB staff is currently developing a measure that would drive greater deployment of zero-emission forklifts within fleets throughout the state. This measure, which has been identified in CARB’s Mobile Source Strategy, State Implementation Plan, and Sustainable Freight Action Plan, is one of several near-term actions intended to facilitate further zero-emission equipment penetration in the off-road sector.

Forklifts operate in many different industry sectors but are most prevalent in manufacturing and at freight facilities, such as warehouse, distribution centers, and ports. There are approximately 100,000 forklifts operating in California.”

If you are thinking you are safe because you don’t live in California, think again. In reporting on the ban of gas-powered cars, CNBC reported: “The decision is expected to have sweeping impacts beyond California and will likely pave the way for other states to follow. At least 15 states including New Jersey, New York, and Pennsylvania have adopted California’s vehicle standards on previous clean car rules.”

Mr. Simonelli then discussed two proposed rules by the South Coast Air Quality Management District:

 Proposed Rule 1460 – Control of Particulate Emissions from Metal Recycling and Shredding Operations.  

This rule addresses controlling emissions (fugitive dust) from scrap recycling of which there are about 200 in the district along with several shredding facilities.  It would affect registration, housekeeping, water use, and potential enclosures at these facilities. The first Working Group meeting was held on March 16, 2022, and two additional Working Group meeting were held in May and July.  There was a Public Workshop on September 6, 2022 and a special public hearing on September 21, 2022.  A notice for the final Public Hearing was sent out on October 4th announcing the final Public Hearing to be held November 4, 2022, when the board votes on the proposed rule. 

Proposed Rule 1435 – Control of Toxic Emissions from Metal Heat Treating Processes.

This rule address controlling emissions from heat treating, forging, brazing, plating, anodizing, and other processes in which metal is heated, which may produce hexavalent chromium. The first Working Group meeting was held August 6, 2019, and the University of California Riverside is conducting research on heating metal and creating hexavalent chromium. The SCAQD website states: “Hexavalent chromium is a toxic air contaminant that is a potent carcinogen mainly produced by industrial processes. Long-term inhalation of hexavalent chromium over a lifetime can:

  • Increase the risk of developing lung and nasal
    cancers
  • Cause or worsen certain health conditions such as
    respiratory tract irritation, wheezing, shortness of
    breath etc.

It is important for manufacturers to participate in industry organizations like the California Metals Coalition to be able to keep informed about issues that will affect their industry and have an organization that will lobby for or against issues that will affect their industry. Company owners do not have the time to do research on their own with regard to what their state legislatures and regulating agencies are doing that could adversely affect their company.  I strongly recommend that company owners and executives look into joining the organization that best fits your industry in your state as well as national organizations that keep track of legislation being considered by Congress, such as the Coalition for a Prosperous America, a non-profit, non-partisan organization working to “save American manufacturing, of which I have been a member for 11 years.

It will only be through unprecedented collaboration between organizations such as CMC, CPA, and many others that we will be able to achieve the vision of Industry Reimagined 2030 to transform the narrative of American manufacturing from one of inevitable decline to one of vibrant opportunity that is necessary to revitalize American manufacturing to create more jobs and prosperity for our country. 

Posted in Environment, Manufacturing | No Comments »

Workshops for Warrior Expands Training Programs

September 20th, 2022

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Posted in General | No Comments »

Reinventing Education – Students Learning “how to think – not what to think” for New Collar Workforce

August 16th, 2022

Our non-profit Industry Reimagined 2030 has identified some prevailing misperceptions about manufacturing that must be dispelled if we want to be successful in growing the supply of available recruits for manufacturing jobs.  These are that “manufacturing is in inevitable decline” and “manufacturing jobs are dumb, dirty and not well paying.”

Fortunately, the importance of manufacturing during the pandemic and advanced manufacturing technologies are changing some of the longstanding misperceptions. The Deloitte and The Manufacturing Institute 2022 Manufacturing Perception Study reports “Sixty-four percent of consumers surveyed view manufacturing as innovative, up from 39% of respondents five years ago” and 77% now view manufacturing as more important than they did pre-pandemic.

I recently interviewed Glenn Marshall who is one of our advisors for Industry Reimagined 2030. Glenn Marshall is also serving on the Association for Manufacturing Excellence Management team to help lead a Manufacturing Renaissance. He told me that this “initiative is designed to reduce the critical shortage of skilled workers for advanced technology and manufacturing. He reaches out to business leaders, academia, students, veterans, and policymakers to promote innovative ideas to create ladders of opportunity to make ‘Made in America’ a reality by leading initiatives to design and build things at home, again.”

Prior to retiring, he said that he was the benchmarking/process excellence advocate for Northrop Grumman and Newport News Shipbuilding (NNS). He engaged with all levels of the corporation, supply chain, and the Navy and led the proposal team from NNS to support the Navy’s Task Force Lean initiative. He continues to work with NNS in its outreach to the public schools and colleges Career Pathways program.

He said, “We struggled along with other employers in Virginia and across the nation to find the kind of skilled workers they needed so realized that they had to get involved with the local schools. I met with the superintendent of the Williamsburg James City County (WJCC) School District and arranged to have students tour local manufacturing facilities   part of national Manufacturing Day. These employers showed the students, teachers, and parents the kind of good paying jobs are available and what they could earn doing these jobs which got the students interested. 

Then we worked with the New Horizons Regional Education Center (NHREC) in Virginia and other employers to create an expanded   pubic private partnership to provide career and technical educational options for students within the school districts. NHREC is the largest of nine regional centers in the Commonwealth of Virginia.  NHREC has become a benchmark for community partnerships

The New Horizons Regional Education Center (NHREC) in Virginia has engaged in a public private partnership with Newport News Shipbuilding Apprentice School, employers, public school leaders, legislators and families. They are working to provide career and technical educational options for students within the school districts. NHREC has become a benchmark for community partnerships. Educators and families are discovering that career technical initiatives valued by employers can provide an equitable gateway for each student to learn how to be capable of achieving their career goals and dreams.

Glenn commented, “Upcoming graduates will step into a rapidly changing workforce, with a growing number of “new-collar jobs” requiring specialized, technical skill sets. The future of learning is changing — Beyond creating a world online, advances in artificial intelligence, cognitive technologies, and robotics are upending traditional assumptions about jobs and technology’s role in the workplace. For kids wanting to seize these opportunities, having transferable skills will be more important than a degree. For many, a strong foundation in science, technology, engineering, and math skills will be invaluable. And for some, apprenticeship and certification programs will be essential.”

Glenn also sent me information about Virginia’s lab schools. He said, “These schools are partnerships between public and private universities and colleges, as well as private companies and local K-12 schools. Lab schools that have a specific focus, such as STEM or literacy, or a particular skill or industry, will create learning environments that engage students in hands-on learning.”  My research discovered:  “Legislation approved by the 2010 General Assembly (HB 1389 and SB 736) and the 2012 General Assembly (HB 577) allows any public or private institution of higher education in the commonwealth with an approved teacher-preparation program to establish a college partnership laboratory school…College partnership laboratory schools are public schools established by contract between the governing board of a college partnership laboratory school and the Board of Education.”

I told him that California had passed legislation to re-establish career technical education for grades 7-12 in 2002 (Senate Bill 1934 (McPherson), a companion bill to the earlier Assembly Bill 1412 (Wright), passed in the same year) but it didn’t get fully implemented until 2005. Now, I know of three high schools that teach manufacturing skills such as machining and welding in the San Diego region. The training is a two-year program for juniors and seniors and students receive certifications upon graduation.

Glenn said, “Companies want graduates with an eye for detail, creative critical thinking skills, a collaborative mindset and an ability to deal with ambiguity and complexity. New graduates will need foundational skills in reading, writing math and science, but also know how to think – not just want to think.”

He concluded by saying, “To achieve this goal, educators and business leaders must form public-private partnerships and join with organizations like the Association for Manufacturing Excellence (AME), the Reshoring Initiative and others to engage in reinventing the educational experience. The goal is to graduate all students with the critical thinking skills to adapt to the evolving challenges of new-collar careers and the ever-changing demands for the future of work.

The Association for Manufacturing Excellence will host an international conference in Dallas Texas October 17 – 20, 2022.  Register at  https://www.ame.org/ame-dallas-2022  One of the featured sessions will be an international panel discussing how companies are addressing the need to replenish the talent pipeline with skilled career ready new collar workers: 

In order to achieve the goal of creating five million more manufacturing jobs by 2030, we encourage manufacturers to use the increased public awareness to promote manufacturing’s benefits, opportunities, and technological advances to increase the number of youths interested in manufacturing careers. Manufacturers should emphasize that advanced manufacturing technologies now provide, safe, clean working environments that pay well and offer highly transferable skills that enable career advancement.  As incentives, companies can offer internships, work programs, certification or degree programs, and apprenticeships to increase the talent pool and develop the skilled workforce they need to grow their businesses. 

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

ToolingU-SME Works to Close the Skills Gap

August 2nd, 2022

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tags: ,
Posted in General | No Comments »

ITIF Report Assesses Competitiveness of North American States

July 5th, 2022

On June 21, 2022, the Information Technology & Innovation Foundation conducted a webinar entitled, “Assessing the Competitiveness of North America: The North American Subnational Innovation Competitiveness Index,” based on a report by Luke Dascoli and Stephen Ezel of ITIF, and prepared in collaboration with the Macdonald-Laurier Institute, Fundación IDEA, and the Bay Area Economic Council Institute.

I was unable to attend the webinar, but later read the 49-page report with the goal of identifying examples of the vision of Industry Reimagined 2030 to convert the narrative of American manufacturing from one of “inevitable decline” to “vibrant opportunities.”

The purpose of the report was “to identify economic differences among states and provinces and highlight regions needing more federal attention, identify cross-national innovation performance, and track the continent’s overall competitiveness in the innovation-driven global economy.”

A vibrant opportunity was identified in the first paragraph of the Overview: “North America—Canada, Mexico, and the United States—represents one of the world’s most economically vibrant regions, accounting for 28 percent of global economic output. The region also forms one of the world’s largest free trade zones, with deeply integrated supply chains…the three nations form a high-wage/low-wage partnership, bringing complementary labor forces, infrastructure, innovation capacities, and industry strengths together to create a highly competitive economic region. This relationship is poised to make North American manufacturing value chains globally cost competitive with Asian ones and thus make North America a leading global innovation and manufacturing powerhouse.”

“This report assesses how prepared North American states are to compete in today’s increasingly innovation-driven economy. The North American Subnational Innovation Competitiveness Index (NASICI) uses 13 measures across 3 categories to quantify the extent to which each state’s economy is knowledge based, globalized, and innovation ready and form composite scores (between 0 to 100) that identify each state’s level of performance in the innovation economy.”

Knowledge Economy

•Immigration of knowledge workers – number of highly educated foreign-born residents as a share of total state population
•Workforce Education – total workforce finishing postsecondary education (including universities, trade schools, and colleges)
•Professional, scientific, tech – total employment enrolled in professional, scientific,
and technical activities

•Manufacturing Gross Value Added per worker – measures the average GVA per manufacturing worker

Globalization

•Inward foreign direct investment – flow of funds into a state from foreign-based enterprises to purchase that state’s existing facilities or to develop new ones
•High tech exports – (NAICS 333, 334, & 335) as a Share of GDP

Innovation Capacity

•R & D Intensity – Total R&D Investment Relative to GDP
•R & D Personnel – as a Share of Total State Employment
•Patents (per capita) – PCT Patents Issued per Million Persons
•Venture Capital Investment – shows a state’s total VC investment (based on VC-receiving firms located therein) relative to the size of its GDP.
•Broadband telecommunications – Share of all Households Subscribing to Broadband Internet

•Decarbonization (CO2 emissions) – Tons of CO 2 Emissions per Capita

The Composite NASICI scores for the top ten states/provinces are:

RankingState/ProvinceCountryNASICI SCORE
1MassachusettsUnited States91.5
2CaliforniaUnited States83.9
3OntarioCanada75.2
4MarylandUnited States75.0
5WashingtonUnited States74.2
6British ColumbiaCanada70.4
7New JerseyUnited States70.2
8New MexicoUnited States68.3
9QuebecCanada68.1
10OregonUnited States66.0


Notice that Canada has three provinces in the top ten, but Alberta was the only other Canadian province to rank in the top 30. Arkansas, Mississippi, and South Dakota came in last for U. S. states, with South Dakota at number 60.  The ranking of Mexico’s states was “concentrated at the low-scoring end of the subnational index (61–92).”

The report commented that “Massachusetts ranks first due to the state’s massive network of software, hardware, and biotech firms in the Greater Boston area. Boston also holds one of the country’s most densely populated clusters of top-performing research universities, many of which focus on science, technology, engineering, and mathematics (STEM) education. California places second due to its bustling tech economy of Silicon Valley and other southern Californian innovation hubs with access to leading research universities such as Stanford, Caltech, and the University of California, San Diego. Maryland earns its spot due to the state’s abundance of D.C.-commuting knowledge workers employed in scientific, technical, and professional activities, alongside its R&D and innovation activities attributable to a plethora of federal contracts. Washington state ranks fifth because of its high-tech exports, cutting-edge tech businesses bringing in foreign investment, patent generation in areas such as artificial intelligence (AI) and cloud computing, and digitalization of the service sector.”

The report goes into some detail regarding the rankings in the 13 subcategories which are too complex for this article to cover. With regard to high tech exports, it discusses the successful cross-border region of the Pacific Northwest states of Oregon and Washington with the Canadian province of British Columbia, as well as the cross-border regions of California, Arizona, and Texas with the Mexican states of Chihuahua, Baja California, and Tamaulipas…These Mexican “states include the major manufacturing cities of Ciudad Juarez, Tijuana, and Matamoros, which together comprise most of Mexico’s
“maquiladora” manufacturing plants.”

The report makes the following policy recommendations for the United States:

Expand the R&D Tax Credit to Be Competitive with Canada – Canada’s “overall federal subsidy rate of 19.1 percent on business R&D investment” is “above the 16.6 percent median among 34 developed countries observed” and considerably higher than the U.S. “sub-median federal-state subsidy rate of 9.5 percent.”

Build Globally Competitive North American Supply Chains – This recommendation advocates the partnering of companies in the U.S. and Canada with the low-wage states of Mexico to “nearshore their production of innovative goods and the low-tech complementary manufacturing of products in high-tech industries into Mexico….This collaboration of complementary labor forces would help North American supply chains perform as a region that’s globally competitive with the supply chains of Asian low-cost competitors.”

Promote Industry-University Partnerships – “Firms on the cutting edge of new research can benefit from tapping the skills of the next generation of scientists and engineers early on by collaborating with neighboring universities via internships, fellowships, and other resource sharing with academic institutions. As federal funding for intramural research in states/provinces lags behind, industry investment in university research is increasingly important.”

Expand Collaborative Research Between U.S. and Canadian Leaders – “Firms engaging in international research collaboration tend to generate more valuable research than firms not collaborating in research or only collaborating among domestic firms do… Firms of U.S. and Canadian states/provinces should thus pursue greater research collaboration and co-patenting, given the proven benefits in international research collaboration and diversifying with new research partners. Doing so would help expand the network of shared research knowledge to drive more frequent and impactful innovations for both U.S. and Canadian states.”

Fully Embrace USMCA’s Commitments to Create a Free-Flowing North American   Digital Economy – The USMCA provided stronger rules for digital services across industries such as finance, e-
commerce, and software, for cross-border data transfers. The United States, Canada, and Mexico must “utilize the full economic value of data and remain competitive in the global digital economy.”

Expand National Place-Based Development Projects – The report recommends thatnational and regional policymakers should use the NASICI rankings to identify regions or states that are lagging behind in economic development.  The authors note that the efforts of the U. S. Economic Development Agency and regional commissions have “fallen off” and that the EDA’s budget had been reduced over time.  “Federal investment to build up economic attractiveness for underperforming states can improve their competitive edge and reduce economic hardships for the populations of those states.”

Improve Economic Indicator Data Availability Among North American States – “…the NASICI, ITIF and its Canadian and Mexican partners were only able to identify 13 indicators for which data was uniformly and readily available across North America’s 92 subnational regions. Statisticians from Canada, Mexico, and the United States should collaborate to make more such indicators available.”

In conclusion, the report states: “Today’s 21st-century economy has different success markers than the post-war economy experienced in the latter half of the 20th century. There are many more global competitors in the space of advanced technology production, R&D, and digital services.”  For the United States, “NASICI scores are helpful to bring to light regions needing more federal attention to support innovation competitiveness.”

Th9is report confirms that the narrative of the “inevitable decline” of American manufacturing of American manufacturing is no longer true and “vibrant opportunities” already exist.  These “vibrant opportunities” need to be expanded to be achieve the goal of fostering 50,000 more world-class companies and creating five million more manufacturing jobs by 2030.

Tags: ,
Posted in Economic Development, Manufacturing | No Comments »

The Manufacturing Institute Grows FAME’s Technical Training Program

June 21st, 2022

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tags: , ,
Posted in General | No Comments »

Becoming a Lean Enterprise is Critical to Rebuilding American Manufacturing

May 24th, 2022

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tags: ,
Posted in General | No Comments »

How to Have a Secure Supply Chain

May 10th, 2022

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

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

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

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

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

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

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

Globalization of U.S. Supply Chains Failed

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

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

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

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

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

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

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

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

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

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

Some of the advantages of sourcing in the USA are:

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

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

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

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

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

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

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

Tags: ,
Posted in General | No Comments »

Imperial Capital Conference Highlights Vibrant Opportunity for Advanced Manufacturing Sector

April 26th, 2022

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

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

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

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

The trending Industry Segments

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

Trending Manufacturing Processes

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

Sector Valuation and Vibrancy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tags: , ,
Posted in General | No Comments »

Manufacturing Renaissance: Recommendations to Bolster National Security & Economic Prosperity 

April 5th, 2022

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

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

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

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

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

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

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

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

The Executive Summary emphasized the following key points:

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

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

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

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

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

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

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

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

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

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

Tags: ,
Posted in General, National security | No Comments »

« Older Entries
Newer Entries »