States In Recovery: Manufacturing

Pamela M. Prah from Stateline, a nonpartisan, nonprofit news service of the Pew Charitable Trusts that provides daily reporting and analysis on trends in state policy, wrote an article on how manufacturing is making a comeback in terms of manufacturing jobs lost, especially those hit hardest by the recession. Manufacturing and construction were reduced the most after the recession, but there have been a million manufacturing jobs created in the U.S. since 2009.

To build on that momentum, President Barack Obama wants to initiate a network of “manufacturing innovation institutes” to help manufacturers capitalize on cutting-edge technologies.  The administration would eventually like to create 15 manufacturing institutes. Both Ohio and Pennsylvania are already realizing the gains of these endeavors.  Pennsylvania Governor Tom Corbett said, “we are seeing nothing less than the beginnings of a new Industrial Revolution.” The new Youngstown center boasts a 3-D printing lab that can create a three-dimensional model of an object using metal, plastic or ceramic powder. The head of Ohio’s Department of Development called it “the next generation of manufacturing methods.”

Other states are pursuing similar opportunities. Illinois teamed up with the University of Illinois and the National Center for Supercomputing Applications to create an advanced manufacturing hub. Large and small companies can come there to learn about “the world’s most sophisticated tools and software,” said Democratic Governor Pat Quinn.

Some critics, however, say the federal government is ill-equipped in choosing which technologies to invest in. Harry Moser, founder of the Reshoring Initiative, said “the risk is, especially if the government picks them, that they are picked for political reasons, rather than economic reasons.”

South Carolina claimed they don’t need assistance from D.C., touting themselves as the “new superstar of American manufacturing,” having manufacturers of cars, planes, tires, ATVs, and more.  Though what may attract these companies is South Carolina’s union-free policy, many of these companies are foreign.

“Nationwide, some 2 million Americans are employed in manufacturing by the U.S. subsidiaries of global companies, accounting for more than 17 percent of the U.S. manufacturing workforce, according to the Organization for International Investment, a trade group. The manufacturing sector is the top sector for global companies investing in the United States.”

For more information please read the full article at pewstates.org.

Innovation Urgency: A Framework For Success?

Paul Tate, the Research Director and Executive Editor at Frost & Sullivan’s Gil Community, a leadership community for manufacturing, recently posted the article “Innovation Urgency: A Framework For Success?” It details what an organization needs to do to stay competitive and be considered one of the top innovators in today’s fast paced markets.  The competition is fierce with pressure from customers and stakeholders driving the high expectations.

At the Growth, Innovation and Leadership conference, Angel Mendez, Cisco’s Senior Vice President of Transformation and a member of the Manufacturing Leadership Council’s Board of Governors, shared his insights on how to effectively drive innovation:

“‘Right now there isn’t sufficient growth in most industries to put wind in a company’s sails by just focusing on internal business productivity initiatives,’ argued Mendez. ‘The fast moving turbulence of global markets, the short lead-times between new ideas and industrial commoditization, and the continuing explosion of customer demands for innovation excellence make innovation a huge issue today. This is not an intellectual exercise or a thought experiment any more. This is really urgent.'”

In the article, Tate outlines what Mendez considers to be the best way companies can allocate their innovative efforts: a systematic approach. By utilizing strategic alignment, successful idea generation, proactive management of innovation portfolios, and building a collaborative culture, manufacturers can overcome obstacles in their innovation pipelines.

A systematic framework as such has the potential to make a real market difference with new ideas more attainable.

To access the full article, click here.

Reshoring Depends on the Right Business Ecosystem

Precision Manufacturing, a trade publication operated by the Minnesota Precision Manufacturing Association, released an article titled “The Global View: Reshoring Depends on the Right Business Ecosystem”. The article suggests that businesses cannot thrive let alone survive without a stimulating environment including a workforce of specific skills, local suppliers, and access to customers.  Not only that, but a supportive community also plays a key role in successful reshoring expeditions.

The article highlights how the government’s misconception has been undermining the success of reshoring initiatives.  Many people in government refer to non-manufacturing jobs created from a reshore as “free jobs.” They fail to see that these jobs are necessary to sustain a healthy business ecosystem and are not just created out of thin air.

Governments and businesses must work together to enable reshoring.

“Governments and business leaders need to ask themselves what type of reshored manufacturing they want in their communities. Do you want to attract manufacturers that are competing to develop and build the next generation of battery technology? If so, you need to shift educational resources toward chemistry and math, and you need to improve your regulatory knowledge of chemicals and processes used in battery production. In short, you need to be smart and interact with the reshored business in a thoughtful way.”

For reshoring to flourish, governments also need to consider international supply chains, tariffs and logistic costs, visa policies, education, skilled workforce, regulatory environment, and transportation infrastructure. All of these combined provide the ideal structure for a business ecosystem that supports manufacturing.

To read the full article, click here.

Does America Really Need Manufacturing?

The Harvard Business Review published an article last year that focuses on how production is closely related to innovation.  However, companies fail to see the connection and largely view manufacturing as a cost center.  The article highlights the benefits of keeping manufacturing and R&D near each other, as well as provides a framework that helps managers assess the consequences of geographically separating the two.

“Part of the problem is that it’s devilishly difficult to determine when manufacturing is critical to innovation and when it can be safely outsourced to lower costs and reduce capital outlays.  In this article we’ll provide a framework that will help business leaders and government policy makers navigate this issue. Our hope is that it will lead to better sourcing decisions that will reinvigorate America’s innovation-driven economy.”

To access the entire article, please visit hbr.org.

 

Enriching the Ecosystem

The Harvard Business Review published an article, “Enriching the Ecosystem,” by Rosabeth Moss Kanter, the Ernest L. Arbuckle Professor of Business Administration at Harvard Business School.  The article addresses how industries can improve innovation, enterprises, and jobs. In the article, Kanter outlines a four-point plan to link these institutions together for an enhanced business environment.  These include:

  • “Generating ideas and deploying them in the market-ready enterprises;
  • Connecting small and new enterprises to large companies;
  • Aligning education with industry needs; and
  • Uniting leaders across sectors to develop ecosystem strategies.”

Historically, innovation centers in the U.S. have looked inward to optimize their performance.

“However, when business, academic, and policy leaders collaborate to bridge the gaps, they create a fertile environment for job growth and more-inclusive prosperity.  Creating and maintaining links among these institutions requires a commitment to: Invest in the foundation institutions… Seek integrated, collaborative solutions… [And] identify and reward excellence.”

The U.S. lacks strong training programs for middle-skills between a high school diploma and a bachelor’s degree. Companies must not only invest in educational programs to close the gap between companies and universities, but also fill the void of apprenticeship programs that teach a skilled trade.  Survival rates of start-ups also increase when incubators connect resources to strategic partners.  The collaboration among these institutions can produce a rich ecosystem of enhanced innovation, provide direct resources, and reward excellence.

To listen to the interview with Rosabeth Moss Kanter or read the full article, please visit hbr.org.

Restoring American Competitiveness

The Harvard Business Review released an article, “Restoring American Competiveness,” which highlights opportunities to rebuild the industrial commons.  Industrial commons are the foundation of innovation by providing competitiveness, R&D know-how, advanced processing developments, and manufacturing and engineering skills related to that particular industry.  They are vital to the economic growth and competitive advantage U.S. companies need in today’s global market.

The decline in these commons existence is largely due to companies outsourcing development and manufacturing work abroad.  Without these resources, the U.S. is losing the knowledge base, skilled people, and suppliers needed to manufacture many of the cutting-edge products it invented.  Not only that, but the capability to produce new high-tech products is rapidly diminishing.

“For example, nearly every U.S. brand of notebook computer, except Apple, is now designed in Asia, and the same is true for most cell phone and many other hand-held electronic devices.”

The article suggests government intervention, not in the sense of bailouts, but to grow its funding support of basic and applied scientific research that allows the commons to prosper.  These commons provide companies the capabilities to share and fuel ideas off of one another and bring enormous competitive advantages to those who reside in the commons.

“…It is in the interests of Washington and all companies that operate in the U.S. to work together to reinvigorate the country’s industrial commons.  Washington’s interest is obvious: to revitalize the all-import high-tech sector.  Why should companies care?  America is an important market.  If a company, regardless of its nationality, is a player there, building or sustaining local capabilities is in its interest.  Beyond that, a commons, regardless of where in the world it’s located, can be a source of long-term competitive advantage for all its members.”

For the full article, please visit hbr.org.

Moser: “You can bring anything back to Kansas”

In an article (paywall) in Crain’s Cleveland Business, Harry Moser from the Reshoring Initiative discusses what what one company’s surprising reshoring success experience indicates for others in the manufacturing industry.  Rising labor costs in China and higher energy costs are causing many to reconsider their sourcing decisions.  With the advantages of shorter supply chains, minimizing disruption, and the benefits design and engineering being proximate to the manufacturing process, many companies are choosing to manufacture their products in the U.S.

Moser states “There’s nothing much simpler to make than a Frisbee and there’s no place in the U.S. more expensive than California or Michigan, so if you can bring Frisbees back from China to California and Michigan, you can bring anything back to Kansas.”

Also, discussed in the article is the multiplier effect that reshored jobs can have.  Because manufacturing firms are ubiquitous in the supply chain, a company that makes the decision to reshore can set off a chain reaction to add jobs at shops both up- and down-stream in the production process.