Welcome, please login:
[Login]   |  [Join]  |  [Renew]   |   [Contact Us]


0415ctt CLS

Published on April 15th, 2014 | By: Eileen De Guire

0

Manufacturing is alive & kicking! Despite challenges, industry is finding creative ways to succeed, say execs at CLS

Published on April 15th, 2014 | By: Eileen De Guire

 0415ctt CLS talk

Frank O’Brien-Bernini (right) fields a question from David Johnson (left) at the 4th Ceramic Leadership Summit in Baltimore last week. O’Brien-Bernini talked about Owens Corning’s success adopting sustainable manufacturing practices. (Credit: ACerS)

Top leaders from ceramic and glass companies at last week’s 4th Ceramic Leadership Summit offered a variety of strategies they are adopting to keep their companies strong, responsible, global leaders and manufacturers of ceramic and glass products. They are investing in innovation and workforce development—and coming up with creative ways to strategically execute these investments.

 

CLS, held April 7–9 in Baltimore, Md., welcomed 125 executives, senior managers, university faculty, and young professionals. Charlie Spahr, ACerS executive director says, “The quality of the CLS rests on two main pillars: The thought-provoking presentations of our excellent speakers, and the high level of engagement and interaction of the audience. These combined to create an event worthy of everyone’s time.”

 

At a pre-CLS breakfast, 50 or so executives discussed whether or not manufacturing was undergoing a renaissance. A show of hands indicated about two-thirds ‘yay,’ about one-third ‘nay’.  Further discussion revealed several underlying threads—job growth vs. technology growth, dearth of skilled technician and skilled trades labor, innovation partnerships with universities and other companies, and intellectual property protection.

 

(Note: The following speakers’ names are linked to PDF downloads of their presentation slides. Images from the event can be viewed on ACerS’ Google+ page.)

 

These themes wove throughout the entire CLS program. Opening speaker James Meil, vice president and chief economist of Eaton Corp., evaluated manufacturing competitive advantage in the United States. Leading the audience through a careful, data-driven analysis, he showed that US manufacturing faces some stiff hurdles from abroad, such as lower labor costs, access to low cost natural resources, and lower regulatory, safety, tax, environmental, and similar hurdles.

 

However, the US economy brings several strong characteristics to the manufacturing arena. Meil talked about “high intellectual value,” referring to solid management practices, and leadership in research and development, technology, and university prestige. Although expensive, US labor is skilled and productive compared to the global workforce. Also, any natural resources, such as natural gas, water, coal, some minerals, etc., are accessible and inexpensive. Finally, the US infrastructure, legal system, and even its markets lead the world.

 

Overall, Meil says, the US share of global manufacturing is steady, but he warns that the US edge will narrow over time. China leads the world in manufacturing output, followed by the US. However, the productivity of the US labor force is highest in the world, which is a competitive advantage (but not necessarily a job-creator).

 

Where does the future look bright for US manufacturing? Industries that are high value added, innovative, and “clean and green.” Industries without these aspects, such as textiles, furniture, and commodity manufacturing, are likely to continue to be more competitive abroad.

 

Later in the afternoon session, Al Lubrano, speaking as chair of the National Association of Manufacturer’s Small to Medium Manufacturers, echoed some of these themes. He says the US leads the manufacturing world in worker productivity, but is hampered by corporate tax policy, healthcare costs, regulations, and US trade policy (more on that later).

 

Following Meil, IBM vice president and CTO Katharine Frase talked about global technology trends and the exponential growth of large amounts of data. She highlighted some data-related “mega-trends,” including the global milestone reached in 2013 of the number of mobile devices exceeding the world’s population. Mobile phones are everywhere, including undeveloped regions. In a later talk, Michael Silver, president and CEO of American Elements, tied the mobile device megatrend to materials science, noting that anyone using a cell phone is using advanced engineered materials.

 

The avalanche of data is as much curse as blessing—one-third of executives say they make decisions based on data they do not trust, half say they lack the information they need, but 60% say paradoxically that they have too much data. However, good use of data, Frase says, provides insight to drive key business imperatives such as creating new business models, attracting and retaining customers, and managing risk. Companies that use big data well strive to “be more right, more often,” and she spotlighted a few examples of companies that realized tangible improvements in efficiency, cost, productivity, and savings. (Meil, moderator David Johnson, and Frase are pictured in the featured image above.)

 

Don’t kill ideas, find killer ideas

Innovation is the activity that establishes competitive advantage in the marketplace. And, innovation necessarily consumes data, reacts to data, and generates data—otherwise it’s just “gut instinct.” “Innovation” is hardly a “new” or even “innovative” idea. What is new is how companies are thinking about it and strategically leveraging their assets to maximize competitive advantage. A unifying theme of the “flavors” of innovation is that they are all pragmatic approaches.

 

For example, Andy Zynga’s company, NineSigma, is an “open innovation” broker that matches companies needing to solve problems with researchers and companies that have solutions. Zynga says that “thinking outside the box” means getting out of the box or collaborating with someone in a different box. He cited two “boxes” that can be traps. “Cognitive bias” is the paradoxical blindness that accompanies growing knowledge—the better you get at something, the harder it is to see new solutions. The other is “functional fixation,” where thinking gets trapped into limiting uses of things only to their original functions, rather than seeing larger possibilities.

 

Open innovation can be an effective way to get outside ideas at any step along the innovation pathway. Intellectual property is protected through careful structuring of the project scope and by focusing on the fundamental scientific problem involved. Also, Zynga noted that open innovation makes a lot of sense when the stumbling block is necessary for the product, but not essential to the core product. An example would be specialized packaging for a beverage manufacturer.

 

Corning Inc.’s Martin Curran talked about “agile” innovation, which is a fast-tracked version of the traditional five-step stage–gate innovation approach. Here the idea is to set your top talent loose with enough resources to find a breakthrough. However, Curran says management (the folks holding the wallet), needs to be shrewd and ask upfront whether a real opportunity exists—can the company win this race, and is the cost worth it?

 

Curran distilled agile innovation down to four steps:

  • Crystallizing the customer—know who the customer is and get their skin in the game; know who holds the power and influence.
  • Deep technical insight—focus on one or two technical problems that matter most to customers, and then get customers and decision makers involved in refining the product.
  • The right team and ruthless execution—not everyone belongs on the team, even if they think they do. Be ruthless about choosing experienced, dedicated talent for the specific skills they bring to the project.
  • Good business model—flexibility allows for outsourcing functions like manufacturing, marketing, etc.

The approach has a merciless aspect to it, too, and agile teams that cannot communicate their project’s value proposition to management, and ultimately customers, will find their programs axed. Curran says, “going fast does not excuse you from doing the right work well.”

 

Ceramatec’s Anthony Nickens talked about the familiar concept of disruptive technology and how his company thinks of innovation as an ecosystem by invoking six “P” principles: people, pesos (i.e., money), passion, persistence, patience, and partnerships. Nickens asserts that the culture of the organization necessarily provides a foundation for underlying the six Ps, and he places responsibility for setting it squarely on the CEO’s shoulders. He says these ingredients held together with the right culture help avoid poison darts from idea killers like “we tried this before,” “this will never work,” and “let’s do a full economic analysis first.”

 

Perhaps the most succinct insight into the unsettling prospect of disruptive technology came from John Balistreri, a professor of ceramic art at Bowling Green State University, who was the dinner speaker. Besides being a clay artist, he has experimented with additive manufacturing, a bit anathema in the pottery world. He dismissed fear of disruptive technology, saying, “if it’s not right for you, it won’t be right for your competitors, either.”

 

Innovation works—Success stories

Two success stories showed how innovation drives the competitive edge Meil talked about.

 

Frank O’Brien-Bernini, chief sustainability officer at Owens Corning, described the company’s work to develop and adopt sustainable practices into its operations.  Looking at some macro-trends in consumption, emissions, and demographics, the company decided to proactively go after sustainability as a strategic opportunity. He compared our era to the ancient Mayan culture that failed to adjust and disappeared. “We wonder, didn’t they see what was coming? Well, why don’t we see what’s coming?” he asks.

 

OC set some goals for itself for the 2002–2012 span relating to energy use, emissions, particulate matter, waste to landfill, and water use. When the math was done, they had exceeded every metric they had set for themselves. Even more, when the government issued new regulations that would affect its businesses, OC found it had already met or exceeded the new requirements. No angst over meeting government regulations!

 

Sustainability strategy requires subtle thinking about a number of issues, such as energy and resource consumption, transportation and shipping, recyclability, and life cycle assessment. O’Brien-Bernini says, “An important yet imprecise metric is way better than a precise, meaningless one. That is, focus on what matters most.”

 

The second day of CLS opened with a plenary talk by Steve Rengers, R&D manager of additive manufacturing at GE Aviation. He recounted how engineers first started using AM for rapid prototyping of parts to test designs. It was not long before they realized that they could design a completely different type of part if they used AM to build the part. “It’s really neat to start thinking differently, and that is what additive enables,” he says.

 

GE will install AM-fabricated fuel nozzles in the new LEAP engine beginning in 2016. The nozzle will be five times more durable because brazing is eliminated and 25% lighter than traditional fuel nozzles. Meanwhile, challenges that remain with AM include monitoring production process, managing the massive amounts of data entailed, fighting against counterfeiters, and advancing new design concepts.

 

Protecting the competitive edge—IP, policy, and reality check

Gaining a competitive edge through innovation is a high-risk, high-payoff hedge. So once it is gained, it behooves companies to protect it. Patent attorney Steve Ritchey explained changes in patent law brought by the 2011 America Invents Act and that inventors need to “act fast or get left behind.” Companies need to be aware of how things like disclosure of an idea in a speech or conversation could negatively impact a patent application later. Ritchey also says that the courts are just starting to interpret the new law, so the patent landscape will be shifting for some time.

 

One inescapable reality of manufacturing is the issue of raw materials. Michael Silver, CEO of American Elements, says, “Raw materials are not subject to new technology.” They are located in the areas of the globe where they coalesced as the Earth was cooling—an incontrovertible reality—and the laws of physics did not distribute mineral deposits uniformly around the globe. For example, 92% of all niobium ore is in Brazil. Not only that, just one family owns the entire Brazilian niobium interest!

 

Silver called for US foreign policy to evolve toward a policy of economic aid to developing countries that supports their need to develop a sustainable infrastructure, while also promoting US access to critical raw materials. He credits the Chinese government with being very smart in the management of their resources, technology development, and economic partnerships, especially in developing countries.

 

Al Lubrano (the chair of the National Association of Manufacturer’s Small to Medium Manufacturers) also called for policy changes to support manufacturers, especially the small-to-medium Subchapter S corporations. He says the cost of doing business is 20% higher in the US than in the countries of our nine largest trading partners and called for the government to initiate tax reform, fair trade agreements, and sensible regulations. “We are not looking for handouts, but we aren’t looking for encumbrances, either,” he says.

 

Converting ‘blueprints’ to products

Innovation is a meaningful strategy only if it leads to production, and two of the afternoon tracks addressed the “nuts and bolts” business issues manufacturers need to consider, such as whether to locate plants in the US or overseas, government resources, and public-private partnerships.

 

Daniel Tipsord, director of engineering at Trans Tech Inc., and Bud Cass, managing member at Bud Cass Consulting LLC, explored the plusses and minuses of locating operations outside the US for a small or mid-sized US-based company based on their firsthand experiences. Tipsord discussed practical questions to answer in making the decision to locate a plant in any country: Where are my customers; where are my suppliers; and where are my competitors? For a smaller company, if there is not a customer-driven reason for locating in a certain country, it may not be a very smart move. Moving operations abroad to be closer to a large company you supply, for example, could leave you stranded if the larger company decides to move.

 

Tipsord recommends caution when it comes to protecting intellectual property and to recognize that countries and cultures have varying viewpoints on this issue. He advocates keeping “high IP” activities in the US, EU, Japan, and similar countries. “Low IP” activities can be located in any country where it makes sense based on the location of customers, that is, what can be done by anyone should be done at the lowest cost and for the greatest benefit to your customers.

 

Cass reiterated that proximity and access to customers, rather than cheaper labor, is the compelling reason to locate a plant in another country, warning “if your target customers aren’t nearby don’t do it.” Other less important reasons to locate abroad include access to raw materials, lower labor costs, and escaping domestic regulatory environments. 

 

Cass also warned about IP protection and said that many costs, besides labor, are actually higher, saying, “You’re not in Kansas anymore, so be careful.”  Cass concluded that locating a factory outside the US is a high-risk activity and, like any high-risk activity, it can produce high returns if done correctly.  It is a decision that requires a comprehensive business plan and your eyes wide open. 

 

Petra Mitchell, president and CEO of Catalyst Connection, described how Manufacturing Extension Partnerships (MEP) can help small manufacturers grow.  Established by the Department of Commerce’s National Institute of Standards and Technology, MEPs exist in each state to help American manufacturers compete in a global economy, for example, by assisting with commercializing innovative research. 

 

Mitchell explored the interrelationship of four trends affecting manufacturing in the US:  low-cost energy and shale gas, innovation management, additive manufacturing, and social media. She reported that in Pennsylvania, where she is located, the emergence of shale gas has not only lowered energy costs, but spurred a boom in the local economy.  Companies are using additive manufacturing to get to market quicker with new product designs. Finally, she says companies are adapting social media tools, such as Twitter and LinkedIn, for improved marketing, customer service, collaboration with suppliers, and workforce development.

 

Also on the domestic side of the equation, Richard Norment informed the audience about the value of public–private partnerships. Norment is executive director (retired) of the National Council for Public–Private Partnerships. PPPs, he says, are contractural agreements between public agencies and the private sector that allow both parties to share the risks as well as the rewards. The concept is not new—the model was used in 1653 to build bridge and water systems—and can be a valuable option for getting projects done. However, a successful PPP requires careful planning, communication, leadership, and often, education to overcome “institutional inertia” on the public sector side.

 

Workforce development

Awareness of the importance of human resources to innovation and manufacturing was never far from any of the discussions. It popped up as a theme very quickly at the Executive Forum breakfast with concerns about replacing a skilled workforce that has an eye on the door marked “retirement.”

 

Interestingly, the need for trained talent spanned the entire gamut of job functions in manufacturing companies, with the need to train skilled trades and technicians and plant engineers getting more attention than the oft-heard cry for more PhDs.

 

Eric Urruti showed how Schott North America is adapting its German parent company’s apprenticeship program to develop the highly specialized skill set needed to run glass melting operations. Earlier, Meil (the economist), cautioned the group to be careful about the causes for the shortage of skilled labor now that the economy is recovering, saying, “Do we do enough to protect job security during a downturn?” Urruti noted that production at Schott’s German factories ramped up quickly, in part, because they were able to keep the skilled labor on staff during the lean years by reducing the workweek by 20% with financial support from the German government.

 

Speaking from their perspective of a small Subchapter S corporation, Lora Cooper Rothen, CEO of Du-Co Ceramics, emphasized the importance of a well-defined business plan to guide acquisition and development of the right workforce through accurate job descriptions, company handbooks, documentation, metrics, etc. She says fit with the company culture and communication are key to finding, developing, and retaining talent.

 

Demonstrating that innovation applies everywhere, Wayne Butscher introduced a model for training technicians, the so-called “middle skills.” A parasitologist, he now directs BioSTART, a nonprofit that trains unemployed or underemployed people who are not college educated for highly skilled bioscience industry lab jobs.

 

At the college level, Pennsylvania State University professor Allen Kimel says students are choosing majors according to the kinds of problems they want to solve. Materials science departments, therefore, are adapting their curricula to show students how MSE applies to energy, sustainability, and other global grand challenges.

 

Richard Brow, also a professor (Missouri University of Science and Technology), looked at trends in higher education that affect the ceramics and glass industry. Where there once were about 20 accredited ceramic engineering programs in the US, there now are only two—Alfred University and Missouri S&T. A similar pattern is affecting metallurgical engineering programs as these “traditional” departments transform into materials science and engineering departments, of which there are now about 60 in the US. Brow asks, “How will these programs serve the needs of the ceramics community?”

 

Brow provides some interesting context. The number of BS MSE degrees awarded has been trending steadily upward over the last decade, although the field remains small compared to other engineering disciplines. Interestingly, though, it attracts larger numbers of women than most other engineering disciplines, especially the “big” fields like mechanical, chemical, and electrical engineering. Another “hidden” trend in the MSE field is that a higher number of students pursue advanced degrees compared to other engineering fields. As a result, MSE curricula tend to emphasize graduate school knowledge over industrial skills. 

 

Brow challenged the audience, “What type of engineer will you need? Does interest in or experience with ceramic materials matter?” In discussions after many of the CLS presentations, business leaders said internships and coop experiences were valuable for recruiting undergraduates to careers in manufacturing. Brow outlined some other ways industry can build relationships with universities and their workforce pipeline, such as supporting senior thesis projects, offering plant tours, serving on industrial–academia advisory boards, and getting involved.

 

The American Ceramic Society has a role, too, through established programs such as the President’s Council of Student Advisors. Brow provided some background for the Society’s new initiative, the Ceramic and Glass Industry Foundation, and its mission “to ensure that industry is able to attract and train the highest quality talent available to work with engineered systems and products that utilize ceramic and glass materials.” Internships and on-campus experiences will be key aspects of the CGIF, along with lifelong learning and K–12 outreach programs.

 

Joel Moskowitz introduced the Ceramic and Glass Industry Foundation to attendees at the conference dinner. Moskowitz, himself a manufacturer who founded Ceradyne, is the founding chair of the CGIF and an enthusiastic advocate for getting undergraduates into industry as early as possible.

 

One encouraging sign was the number of young professionals at CLS. Besides having the opportunity to hear from executives how they leverage strategic investments of talent and money, there was special programming for them through the Society’s Future Leaders Program. In these “before hours” forums and networking events, professionals who are still in the first decade of their careers met with industry executives and learned about career pathways and what it takes to succeed in manufacturing businesses.

           

Looking ahead

Manufacturing is alive and kicking! Sure, it faces some challenges, but industry is finding creative ways to meet them head-on, work with them, redirect them, or embrace them. Lubrano put it nicely, “We’re manufacturers—we’re fighters!”

 

Investing in innovation is a key strategy and can take a variety of forms, but must be carefully managed. With an eye on near-term as well as long-term horizons, executives are keen to develop labor pipelines at all levels of the education and job function spectrum.

 

The next Ceramic Leadership Summit will be in April 2016 and will continue the momentum of this meeting. Meanwhile, the manufacturing community will have the opportunity to promote their businesses at the Ceramics Expo, a comprehensive manufacturing trade show for the ceramic and glass industry, of which ACerS is a founding partner. The inaugural Ceramics Expo will be April 28–30, 2015, in Cleveland, Ohio.

 

Most of the slides from the CLS presentations are available on The American Ceramic Society website.

 

 

 

 

 


Back to Previous Page
« « Previous Post     |    Next Post » »





Leave a Reply

Back to Top ↑