Articles in Category: Manufacturing

This is Part One of a two-part series. Read Part Two here.

How to explain the gap between federal job retraining initiatives and low enrollment at a growing number of industrial training programs? Is there a correlation? What are the factors at work?

We’re hearing reports of factory jobs in the manufacturing sector being added as the economy continues its slow rebound. But at the same time, companies are unable to match up open positions with workers’ existing skill sets. What happens when nursing programs are started and funded in an area where predominantly blue-collar factory workers live? And how much money will those workers have to put in or borrow to switch careers to where the jobs are, or will be?

The Obama administration has recently announced a new job retraining initiative, which looks to specifically pair training schools (and their students’ curricula) with industrial companies in all 50 states, ultimately hoping to make job placement a firmer guarantee.

The initiative may be a response in part to the tide of bad press that “for-profit colleges have been receiving. Schools, such as those owned by Apollo Group and Kaplan, and their executives have been under fire for boosting their bottom lines while increasing numbers of graduates have been defaulting on their federal loans. (Roughly 90 percent of for-profit schools are federally funded, according to reports.)

But “Skills for America’s Future, as the initiative is called, may not work as well in practice as intended in theory. MetalMiner spoke with Steve Kay, principal of the William D. Ford Career-Technical Center outside Detroit. He said that due to abysmal enrollment numbers in their computer-aided machining (CAM) program, the school had to shut down the program entirely and auction off its training equipment. To replace it, they began an Emergency Medical Technician program.

Cultural perception, rather than federal funding or rule-making, may be playing a greater role. “Not only are the jobs that used to pay $28 an hour now paying only $12-$14, put parents are actively encouraging their students to do something else, Kay said.

He went on to explain that parents who grew up working in such historically manufacturing-heavy areas as Detroit are now seeing those industrial models crumbling before their eyes. This influences them to coach their kids to pursue computer programming or design, he said.

William D. Ford Career-Technical Center isn’t the only school to auction its machining equipment. Dennis Hoff, president of Hoff-Hilk Auctions in Minneapolis, has presided over five school auctions over the past three years, including St. Paul College.

Federal policy and the technical training programs may be at odds in another way. In one example, officials, while pushing for alternative energy investment, are decrying the fact that certain training programs (think the DeVrys and University of Phoenixs’ of the world) are not offering sufficient job placement for students to repay their debt. Meanwhile, advocates for alternative vocational tracks may contend that for some of these industries, such as wind energy or biofuel production, many jobs simply haven’t been invented yet. Essentially, students are enrolling in programs to prepare them not for existing fields, but for ones they will eventually pioneer. Determining exactly which skills to teach under this approach has been just as difficult, said Fred Dedrick, executive director of the National Fund for Workforce Solutions, in a National Journal article. Ultimately, what good is a student’s vocational certificate if there’s no job to match on the other side of the rainbow? Who’s to blame?

This argument has yet to fully play out. As we follow the industrial jobs initiative, we’ll continue talking to those teaching and learning the trades in this current economic climate. Paradoxically, as unemployment levels remain high, industrial companies struggle to fill open positions.

In the next post, we’ll explore the welding sector and why there appears to be a nationwide welder shortage even with $50,000 starting salaries.

–Taras Berezowsky

Source: Forward Online

“Imagine a nation that has lost its ability and desire to make things¦

With that tagline, we enter the world of TINKERERS, a graphic novel and “original tale of the near future written by David Brin and illustrated by Jan Feindt. The comic book envisions a dystopian future, painting America’s flailing manufacturing sector as both victim of and primary accomplice to its own demise. As much an economic tale as a moral one, TINKERERS’ authors clearly have the US industry’s failings in their crosshairs.

Or do they?

(The novel may be read in its entirety here.)

Characters speak in clearly biased and sometimes vitriolic tones, whether bashing the results of global free trade, extolling the virtues of mercantilism, or decrying Americans’ consumerist attitudes. While many sides are alternately and somewhat equally represented, the story never adds up to a cohesive or satisfying conclusion.

Overall, the viewpoints/stereotypes coming from the talking heads are all over the place. Perhaps this is the point; to have a discordant slew of “controversial issues brought up and have the reader, much like the main character, sort out the individual truth for herself.   We all know the truth is messy (if there is such a thing as a single truth), and I don’t expect things to be tied up in a neat little bow¦

But it still doesn’t absolve the author of making his characters speak in overwrought abstractions. As soon as Danny Nakamura, the “hero,” is close to getting a straightforward answer from someone, they change gears for no other reason than to move the plot along. (“We didn’t decline because our time was up, says Bill Nolan, an uncanny comic-ink-copy of Kris Kristofferson. “No, we’re the world’s teenagers, Daniel. Always will be. It was our glory¦and our downfall¦and maybe key to our future. But go ask around, I’ll bet you’ll get a different answer.) A slight Marxist undertone muddles the message of the story, and seems antithetical to the authors’ and publisher’s main goals.

(On a stylistic note, while the scenes feature generally serviceable drawings, the choices of race and gender representations are rather awful. Aside from stealing visages of Bernie Mac, Morgan Freeman and the aforementioned Kris Kristofferson outright, the artist paints the main character’s distant Japanese cousin Akio Nakamura’s skin in a sickly green. Female characters, on the other hand, are depicted in stereotypically bullish ways.)

The slew of viewpoints simply confused me, rather than allowed me to make any sort of logical conclusions based on the economic principles and landscapes. The fact that after his quest Danny straps on his boots and gloves to take part in an “illegal construction process belies the point the writers (and by extension, the funders) are trying to make. I’d like to think that the “third way of negotiating with all parties to end up with a novel engineering solution for the future is a good, or at least legal, thing; when I get to the end, however, I feel even less sure about that.

Is it a cynical approach? An idealistic one? Or is the comic simply a shill for the US Department of Defense?

TINKERERS appears to be underwritten to some extent by DARPA, which, as stated on the last page of the novel, invested one billion dollars in alternate manufacturing in August 2010. Essentially, the US military-industrial complex is subliminally recruiting people to work for or within their cause by smartly presenting this story’s message as “you can decide for yourself to speak highly of industrial virtues while simultaneously speaking ill of the “expressive fields like entertainment or law does not do its overall message justice.

My suggestion for improvement: hone and simplify the message. It’s too cluttered, and if the organization responsible for the comic intends to promote US metal production, then the end does not really make that clear. The creators clearly love the science fiction genre and try to make it work here, but it sadly falls flat. Understandably, this is a product of a metals trade association, but there has to be a better way of preaching to the choir and more importantly, preaching outside the chapel.

Ultimately, TINKERERS must decide what it wants to be. It tries to bring severe, “hammer-over-the-head didacticism together with vivid entertainment, but the marriage rings false to this reader. Pick one or the other, folks; it doesn’t succeed being both.

–Taras Berezowsky

MetalMiner is pleased to welcome Dan DiMicco, CEO of Nucor Corporation in the first contribution of what we hope will be many op-ed pieces over the coming months. Mr. DiMicco has served as Nucor’s President and Chief Executive Officer since September of 2000. In addition, Mr. DiMicco has been re-appointed to serve on the United States Manufacturing Council which works with the Federal Government and the US manufacturing sector.

America is known as the Land of Opportunity. However, for the 26 million Americans currently unemployed or underemployed, the Land of Opportunity seems like an illusion. This is the worst economy since the Great Depression. However, the response from our political leaders has fallen far short of what is needed to overcome this crisis.

Many economists have noted the parallels between our current economic and political environment and that of the late 1930s persistently high unemployment, inadequate economic stimulus by the government and a lack of public and political support to do more. World War II provided the impetus necessary to make the serious investments this country needed. Those investments not only ended the Great Depression; they laid the foundation that built the American middle class and the greatest period of prosperity any country has ever experienced.

We need a similar public-private partnership now in order to restart our economy and lay a new foundation for the next generation of American prosperity. Our political leaders do not seem to grasp the seriousness of the situation. Policies enacted to date have been the equivalent of bringing a garden hose to a five-alarm fire. We are at a crossroads.   Investments we make now (or fail to make) will determine America’s economic future for the next fifty years.

We are falling dangerously behind our economic competitors. The United Nations just released a report showing the top countries for foreign investment. For a long time, the U.S. held the top spot for foreign direct investment by multinational companies.   Now, we are fourth behind China, India and Brazil.

We need to create 25 million jobs over the next five years to put Americans back to work and ensure a strong economic future. This will take bold measures and a comprehensive economic plan by the public and private sectors. There are several steps policymakers can take to reignite our economy and create future prosperity.

Enforce global trade agreements. Our trading partners need to be held accountable for the rules of global trade they have agreed to abide by in order to access our markets.   Illegal subsidies and currency manipulation by countries like China must end.

Develop our domestic energy resources. By expanding domestic energy production, both traditional and renewable resources, we will diversify our energy supply. This will increase our nation’s competitiveness and energy security, as well as generate tax revenue for additional investments.

Implement a national manufacturing strategy. America must be a nation that builds things again. True, sustainable wealth can only be created by producing goods. We need to grow our manufacturing base so that it accounts for 20 percent of our gross domestic product. Our economic competitors have manufacturing strategies. America needs one.

Invest in our infrastructure to ensure future economic competitiveness. Infrastructure built 50 years ago that fueled America’s economic growth in the second half of the last century is crumbling. The American Society of Engineers has stated we need to spend $2.2 trillion over the next five years to replace our aging infrastructure. Only 12 percent of our stimulus bill was spent on infrastructure. By comparison, China spent 80 percent of its stimulus on infrastructure.

America did not become the Land of Opportunity through inaction. Bold vision and strong leadership resulted in policy decisions and investments that benefited generations of Americans.   Today, America needs that kind of leadership.   Our political leaders need to rise to the occasion, and we need to demand that they do.

Dan DiMicco

Disclaimer: Nucor Corporation is a paid sponsor of MetalMiner.

Last week, Nucor CEO Dan DiMicco sat down with Maria Bartiromo in an 8:30 minute segment on the state of the US economy, where and how the government and private sector can come together to help US companies better compete both domestically and globally as well as share some interesting statistics about the historical contribution of US manufacturing to GDP. Dan believes a tighter partnership between the government and the private sector looking at a range of issues from the trade deficit to energy independence to holding overseas trading partners accountable to WTO rules are all part of the solution to help grow the US economy. As he points out, the Chinese “got it right with their $700b stimulus on infrastructure whereas our programs went to Ëœsugar highs’ taking us from one bubble of overspending to the next.

And even though Dan admits he wears red because he is a Yankees fan (we won’t hold that against him), he also explains why Nucor employees wear red on Fridays:

We’d welcome your comments and reaction to the segment in the comments section below.

–Lisa Reisman

Disclosure: Nucor is a paid sponsor of MetalMiner.

We were recently lucky enough to go on a tour of Elkay Manufacturing where we saw American manufacturing at its finest. From state of the art robotic equipment to an amazing laser cutter, we saw a degree of quality and care go into the production of product that may be tough to beat in other parts of the world. But the world of industrial manufacturing continues to evolve. New policy-makers in Washington have in part, altered the landscape as have a series of trends in terms of exchange rates, trade deficits, global labor rates etc. Here is a mix of articles on the state of US manufacturing as well as global manufacturing trends:

Health Care Costs and the Manufacturing Fallout

Should the US Government Allow a Chinese Steel Mill to Invest in Steel Technology They Don’t Have?

Andy Grove on US Manufacturing and Jobs Growth Not Without Controversy

Manufacturing Enhancement Act of 2010 It’s But One Small Piece of the Pie

–Sheena Moore

Disclaimer: MetalMiner has no commercial relationship with Elkay Manufacturing

Last week, the collective MetalMiner team had the pleasure of visiting a local manufacturer, Elkay Manufacturing, headquartered in Oak Brook IL. You might not know Elkay by name but you’ve definitely sipped from their water coolers.

Last week, we wrote about our visit as it got us thinking about how US manufacturers differentiate themselves from their Chinese peers. As you may recall, Jason (my husband and author of Spend Matters are currently re-doing our kitchen and learned that Elkay has developed a new technology to make stainless counter tops in a “custom matte finish that has the benefit of reducing the appearance of scratches and fingerprints. Since a friend of ours works at Elkay, he treated us to a plant tour and opportunity to see first hand whether or not this new product innovation would meet our requirements.

Here is a link to a video that showcases a similar product application (new innovation) from Elkay, etched sinks:

Besides product innovation, Elkay, like many manufacturers, has invested in new technology. In this short video clip, my 7-year old son holds a stainless steel bicycle charm made on a laser-cutting machine. The machine can cut to a 30,000th mm tolerance!


Now to finish that kitchen¦.

If you have a little snippet or video clip of an interesting product innovation in the metals space, send it to us, we’d like to feature these on a regular basis.

–Lisa Reisman

Last Friday, several of us from the combined MetalMiner/SpendMatters team spent the afternoon with a local manufacturer (we’ll share details of our visit later this week). My other half and I decided to mix work with pleasure and take this specific tour as we are in the final stages of a home renovation and hope to complete our new kitchen for the fall. The impetus for the tour involved looking at a production innovation we had not previously heard of specifically a new scratch resistant stainless steel countertop (you didn’t think we’d opt for a non-metallic surface did you?) The tour proved interesting on a number of fronts and the collective MetalMiner team had several interesting post-tour conversations. The first one came from a colleague/friend who joined us on the tour and posed this question: don’t you think the marketing of Ëœpoor China quality’ has been overdone? In other words, isn’t the quality message simply over-played and tired?   After all, our friend argued, Chinese imports are up and clearly there is an enormous appetite on the part of the American consumer for Chinese produced goods. It’s hard to disagree with that statement.   In fact, our trade deficit with China continued to increase according to the latest economic numbers. So, what’s the real beef with Chinese produced products? We’ll return to that in a minute.

My friend’s questioning got me thinking because we saw several things on our plant tour that suggested to me where/how US manufacturers have created successful “niches (we say niches because many of the mass produced products are no longer made here). We will summarize three areas here now: the first product innovation generated only through the connection or close collaboration if you will between the engineering/manufacturing side of a company and the marketing side. The second, the strategic advantages of high mix low volume operations and finally the third, the ability to produce in a “mass customized manner.

Let’s start with the first clearly American manufacturers (or any country’s manufacturers) can gain competitive advantage (and insight) by rapidly solving a customer’s problem. In this case, the manufacturer we visited produces stainless steel sinks, counters etc. When a sales person from the manufacturer went to visit a client (a showroom featuring the counter tops) the sales rep saw a bunch of towels covering the stainless counter, in effect hiding the counter top. When queried by the sales person as to why the towels were there, someone from the showroom said the surface scratches so easily that they needed cover the counters to maintain the look. But according to the manufacturer, that is the exact opposite way to show stainless. Instead, the manufacturer quickly devised a way to create a scratch free surface (which we can attest to, works) that solved the problem and allowed the showroom to remove the towels. Can the process be copied? Sure, but in the meantime, the manufacturer had created a product innovation distinguishing its products from all competitors (domestic and foreign). Read more

My TweetDeck was abuzz with tweets yesterday morning about a new bill that President Obama will have signed into law yesterday afternoon. Cleverly named the Manufacturing Enhancement Act of 2010, the bill while certainly helpful to US manufacturing can hardly be considered either comprehensive or complete. The bill’s actual name, the “Miscellaneous Tariff Bill commonly known as HR4380 specifically only covers the reduction of a range of import tariffs for materials and chemicals. You can view the complete text of the bill via this link. Some of the materials include flat screen plasma displays, golf club heads but also a range of chemicals and compounds such as Caprolactone-neopentylglycol copolymer, nickel carbonate and ortho nitro phinol, as examples.

But as this post from NAM (National Association of Manufacturers) points out, the legislation does not address several key aspects in order to truly “enhance manufacturing. For example, it doesn’t address any strategies for lowering trade barriers on imports of US products in foreign markets.  NAM calls for the adoption of free trade acts specifically for Panama and South Korea as examples of policies required to help double US exports, a policy plank of President Obama’s. NAM names over a dozen policy initiatives in a report entitled: Blueprint to Double Exports in Five Years that Congress would need to enact to ensure the success of the export initiative. Some of these changes involve export control changes, intellectual property protection, logistics, infrastructure investment, foreign trade compliance with WTO rules along with many others.

We have a little button that sits in our office that says “easy. When you hit it, the speaker says, “That was easy. We’d be clicking that button about this bill, though we understand that Republicans had held it up. It’s a non-controversial bill that has stood the test of time as it has been repeatedly introduced and signed into law by several previous administrations. With few controversial elements this law represents a “no-brainer. But to get US manufacturing moving again, the real work lies ahead.

–Lisa Reisman

For those of you who missed an interesting essay by Andy Grove, co-founder and former CEO of Intel, you can read “How to Make an American Job Before It’s Too Late: Andy Grove, right here. For those of you looking for the Reader’s Digest version, we can summarize his main points in the following ways. First, he takes a punch to something that NY Times columnist Thomas Friedman said in a recent article entitled: Start-Ups, Not Bailouts, according to Thomas, “Let tired old companies that do commodity manufacturing die if they have to. If Washington really wants to create jobs, he write, it should back start-ups. Grove says simply that Friedman is wrong. He points to the necessity of the “scaling process which involves the capital investment to grow a business beyond a start-up to one which requires factories and American jobs. Though this theme permeates Grove’s essay, he argues several other points worth noting. He argues that job creation must become the “number one priority of state economic policy. He goes on to say that government really has the largest most strategic role in seeing this happen. Finally, he suggests some financial incentives, not too dissimilar to those proposed by Warren Buffet in levying an import tax on goods that come into the US that don’t have a corresponding equal export value. In this case, Grove suggests a tax be placed on any products that come into the US with offshore labor.

The article discusses the US high tech industry starting with Intel but then moves to alternative energy and the advanced battery market. His comments however, are not without controversy. In a well-argued piece by Forbes entitled: How to Kill the American Job, author Reihan Salam argues that Grove suggests using trade barriers and government subsidies to solve the problem of American jobs whereas Salam dismisses the notion that job and income growth will come from the US manufacturing sector (it will come from the caring professions as an example). Instead, Salam argues for tax reforms to improve work incentives, entitlement reform and less “bashing China. He then examines marginal tax rates and says, “large cumulative increases in the tax burden lead to institutional and cultural shifts that are difficult to reverse: Firms become less likely to hire, workers take longer vacations and trade taxable income for leisure, overall spending levels grow slowly or flatten. Finally, Salam concludes that what Grove is arguing for “larger and more intrusive government will, “¦destroy more American jobs than off-shoring ever has or ever will.

But let’s take a step back for a second. Grove discusses a key metric: the employment cost-effectiveness of a company. To get at the number, one takes the initial investment and any fund-raising investments (this could include an IPO) then one divides this number by the number of employees at the company ten years later. Grove says for Intel this number equated to $3600 per job (adjusting for inflation) and for National Semiconductor, this number was $2000. Now, the cost is $100,000 per job. And those costs get levied on a company through regulatory burdens, increased health care costs, wage etc. US manufacturers lose their edge when other countries peg their currencies at less than the free-floating rate (e.g. China, South Korea, etc)

One might conclude Grove argues for big government, subsidies and high taxes (that’s what Salam accuses Grove of arguing for anyways). But hold on a second. What do we call these massive stimulus programs? How about the enormous regulatory burdens placed on US employers for health care, as well as tax increases poised to kick in by January of 2011? Folks, we already have massive government intervention. Why wouldn’t we argue for gulp “incentives, tax breaks and reduced regulatory burdens and even taxes on products with off-shored labor content (as Grove suggests) to stimulate the scale that Groves is talking about? Or, do we really think we’ll survive as the “knowledge economy or the “caring professions helping hand economy? I don’t know but financial advisors always seem to suggest the best investment strategy is a diversified one. Are we prepared to walk from US manufacturing?

–Lisa Reisman

How to disentangle the upbeat from the downbeat reports on the US economy? We have had plenty of both in recent weeks and trying to make sense of the real state of the economy is a tough call. The analysis isn’t helped by the fact we are in a transitory stage with many stimulus measures such as support for the housing market having just finished which has had profound short term effects. Given more time, these may not look so bad but on a month by month change they look pretty dire.

On the plus side, manufacturing appears to be doing well. The private sector has been investing in plant and equipment again, partly out of a renewed confidence in the future and partly because they invested so little last year that investment plans are slipping well behind schedule and some plant and equipment needs replacing. A Wall Street Journal article details some major and minor investment plans for US corporations. Engine-maker Cummins Inc. plans to increase capital spending to $400 million this year, up nearly 30% from 2009. The company needs to meet increased demand fueled by rising sales of trucks and off-road engines in India and China, and an expected increase in demand for fuel-injection and emission-control systems that can meet new air-quality and fuel-efficiency standards. Meanwhile, Fedex is upping investment this year to $3.2bn from $2.8bn last year of which two thirds is earmarked for growth in their business and only one third to sustain current services. The shipping giant is buying new aircraft, bringing mothballed ones out of service and building new sorting facilities. Aircraft orders have distorted US figures in recent months, making some months look high and others low but non defense capital equipment orders excluding aircraft have risen steadily, up 2.1% from April to May and 18.4% above last year’s low base. And that is part of the problem. Year over year comparisons are against the biggest fall on record, unless the world had come to an end in 2009 this year was bound to be higher than last year. It makes more sense to look at month over month figures to see if growth is sustained and the general trend is upward.

What seems to have created the uncertainty is a combination of recent poor housing data coupled with concerns about the wider global economy. In the US growth has been downgraded slightly to 2.7% from earlier estimates of 3% for the first quarter 2010, but it was still the third consecutive quarter of growth and will almost certainly be followed by another quarter of growth for April to June. Although the IMF is forecasting in its latest World Economic Outlook that global economic growth will be at 4.2% for this year and 4.3% for next there is still a prevailing sense of fear over debt problems in Europe and a slowing of growth in China which is sapping confidence and giving rise to expectations for a double dip. Our expectation is China, India and other emerging markets will continue to grow strongly albeit at lower rates in the second half than the breakneck pace in late 2009 and early 2010. I believe the US market will also continue to expand. Employment is currently a worry with figures being distorted by the census but firms at least in the manufacturing sector are beginning to hire again. Not until employment levels improve and people feel confident about their jobs however will the housing market show consistent signs of recovery. Concerns about China are overblown. The country will have good months and bad but on the whole growth is being well managed. Provided that debt worries in Europe do not escalate over the summer the fear factor will retreat and confidence will return. So a lot is riding on the mandarins in Brussels and the markets reading of their handling of developments when put in those terms may be it’s not all clear sailing.

–Stuart Burns

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