SP EC IAL ISS UE Helping Manufacturing Enterprises Grow Profitably
Forecasting Through Fog
Enterprise Minnesota 310 4th Avenue S. Suite #7050 Minneapolis, MN 55415
NONPROFIT ORG U S POSTAGE PAID Slayton, MN PERMIT NO. 22
Manufacturers say economic uncertainty and Washington gamesmanship hinder their ability to plan for growth.
contents APRIL 2013
Features 12 Forecasting Through Fog
The challenges of health care and the shortage of skilled workers still loom large for manufacturers. But economic uncertainty and Washington gamesmanship are hindering their ability to plan for growth.
16 Finding Their Voice
We scoured transcripts for each of this year’s 19 State of Manufacturing focus groups for a representative response to each of the top concerns.
20 The Urban Workforce
How Saint Paul College capitalizes on explosive student growth to replenish manufacturing careers.
24 3-Dimensional, Unconventional
Manufacturers use RedEye On Demand’s 3D printing service to design and manufacture prototypes and finished products in less time.
photograph by patrick kelly
Stern Companies’ ‘culture of problem solvers’ p. 6 Shawn Hunstad, president
Subscribe to our e-Trends newsletter today! Get updates on the people, companies, and trends that drive Minnesota’s manufacturing community. To subscribe, please visit http://www.enterpriseminnesota.org/Resources/ Magazine-eNewsletter/Subscribe.aspx.
Visit the Enterprise Minnesota Web site for more details on what’s covered in the magazine at www.enterpriseminnesota.org.
in every issue:
The State of Manufacturing® demonstrates just how far manufacturing has come in five years. Page 2
PlastiComp rewrites the book on customer relationships. Page 4
Truth Hardware incorporates in-shift stretching breaks as part of an overall wellness program. Page 10
Lindsay Strand explains how manufacturing leaders can deliver more engaging, efficient and effective presentations. Page 32
ENTERPRISE MINNESOTA APRIL 2013 1
The Industrial Bob Kill Evolution The State of Manufacturing® demonstrates just how far manufacturing has come in five years
More than a few years ago,
the 1980’s to be exact, I attended the National Computer Conference, a national trade show in Anaheim, California. At this particular event, two long-haired kids had been barred by show organizers from introducing a personal computer they had developed for business use. PCs, the organizers decreed, would never be used in business. Undeterred, those two guys -- Steve Jobs and Steve Wozniak – rented the basement of a nearby Disneyland hotel and unveiled their computer anyway -the Apple PC for business. I showed Bob Kill is president and CEO up, too. of Enterprise Minnesota. As I look back, being at that meeting felt like being part of business history. (By the way, I got Jobs’ autograph at the meeting. I’d love to put it up for auction – as soon as I find it.) For me, it became a benchmark in time that now enables me to recognize the full industry-wide significance of the moment. Nobody in that hotel really realized it at the time, but that product introduction symbolized a hinge moment in business history. The PC really would transform the way we do business. From the very beginning, we felt the State of Manufacturing® would achieve a similar benchmarking context. And, as you read the analysis of this year’s project by Rob Autry, our pollster, you’ll get a real sense of the value of comparing the opinions of manufacturers from one year to the next. But now, as we mark the fifth anniversary of the State of Manufacturing®, I find value in looking back to what’s happened since our first effort, especially in the subjective content of our focus groups. When we convened our first focus groups in late 2008, we knew the results would be interesting – but maybe not in a good way. At the time, manufacturers were already coping with the multi-layered effects of competition from aggressive cheap-labor economies in India, China and Latin America. Their aging workforces also forced them to recognize a growing scarcity of young workers with the skills and attitudes necessary to shoulder the responsibilities of increasingly sophisticated manufacturing operations. They were working hard to persuade schools, educators and parents to shed their outdated notions about manufacturing and recognize that modern manufacturing offered substantial life-long career opportunities that were interesting and relatively lucrative. And finally – this one can never be taken lightly – they were responding with great frustration to the costly and unmanageable annual increases in the cost of employee-related health insurance. (As a side note, the cost of health care has been the #1 concern of manufacturers every year we’ve taken the poll, including during the downturn.)
Helping Manufacturing Enterprises Grow Profitably Publisher Lynn K. Shelton
Editors Tom Mason email@example.com Andrea Lahouze firstname.lastname@example.org
Contributing Writers Rob Autry Lindsay Strand Photographer Patrick Kelly Art Director Amy Bjellos
Contacts To subscribe email@example.com To change an address or renew firstname.lastname@example.org For back issues email@example.com For permission to copy firstname.lastname@example.org 612-455-4215 To make event reservations email@example.com 612-455-4239 For additional magazines and reprints contact Lynet DaPra at firstname.lastname@example.org 612-455-4202 To advertise or sponsor an event email@example.com, 612-455-4225 To pitch a story firstname.lastname@example.org
Enterprise Minnesota, Inc. 310 Fourth Ave. S., #7050 Minneapolis, MN 55415 612-373-2900 ©2013 Enterprise Minnesota ISSN#1060-8281. All rights reserved. Reproduction encouraged after obtaining permission from Enterprise Minnesota magazine. Additional magazines and reprints available for purchase. Contact Lynet DaPra at 612-455-4202 or email@example.com. Enterprise Minnesota magazine is published by Enterprise Minnesota 310 Fourth Ave. S., #7050, Minneapolis, MN 55415 POSTMASTER: Send address changes to Enterprise Minnesota 310 Fourth Ave. S., #7050 Minneapolis, MN 55415
continued on page 28.
2 ENTERPRISE MINNESOTA APRIL 2013
Member, Minnesota Magazine & Publications Association
Printed with soy ink on recycled paper, at least 10 percent post-consumer waste fiber.
Lean Office: Beyond the Manufacturing Floor
Quality Management - ISO Processes Power Your Business Management System
GreenLean® - Eliminating Time & Energy Wastes to Cut Costs & Grow Business
The Value of Your Business - What Expert Buyers Are Looking For
Developing Leaders at All Levels of Your Company (TWI)
Creating a Business Strategy to Implement Your Company Vision
Solving Business Problems - A Practical “Failsafe” Approach
Stephen T. Bowen, President & CEO, PlastiComp
A Road Less Travelled
photographS by PATRICK KELLY
PlastiComp rewrites the book on customer relationships. Airbus, the French aircraft manufacturer, last year approached
PlastiComp with a challenge to reduce the overall weight of its popular A380 aircraft by converting its seat structures from metal to composite plastic. If the significantly lighter-weight plastic could prove to be as sturdy as metal, they knew it would translate into higher payloads and better fuel efficiency. PlastiComp President and Founder Steve Bowen and his Winona-based team of engineers tackled the problem in May. They proposed to configure a seat structure using new carbon fiber reinforced materials that would pass rigorous FAA impact testing. By December, they delivered a product that reduced the individual structural weight of each passenger seat by 30 percent, about 10 pounds. With 550 seats in each aircraft, the overall weight reduction approached three tons. The relevance of the Airbus project is not so much to showcase that PlastiComp has become a go-to partner for some of the world’s largest and most prestigious manufacturers, or to fea4 ENTERPRISE MINNESOTA APRIL 2013
ture the creativity or turn-on-a-dime agility of its engineering team -- but to illustrate the unique path Bowen has used to grow his company. PlastiComp is not a consulting company, but it has used consulting partnerships as a unique sales tool. Fully 90 percent of PlastiComp’s revenue derives from selling composite pellets from the company’s “pushtrusion” technology, a patented process for long-fiber reinforced thermoplastic materials. Long-fiber polymer composites provide a stronger, stiffer, lighter alternative to metal in manufacturing. PlastiComp markets its products through an inventive, almost counterintuitive overall corporate philosophy regarding its target markets, its salesforce free approach to sales, and its cooperative, not competitive, approach to market rivals. And it has worked: the $50 million company grew all through the recession and last year posted a 70 percent growth in revenues. PlastiComp’s innovative market
strategies emerged largely from the age, stage and experience of Bowen, its founder. By the time he founded PlastiComp in 2003, he’d already acquired a life’s experience in the world of composite plastics, mostly from the perspective of OEM-level companies like 3M, GE and Bethlehem Steel. In 1983, he moved to Winona to become CEO of Polymer Components Incorporated (PCI), where he stayed 16 years. He started PlastiComp in 2003. “I wasn’t 20 years old and looking at a 50-year future career,” he says. “I wanted to get this company into a global leadership position in about 10 years.” To do so, Bowen largely avoided the lucrative by overcrowded automobile industry, even though it accounted for 80 percent of the composite business. Carmakers love how lightweight composites help make cars more fuel-efficient without sacrificing safety or durability. What’s more, where these parts were once welded-together assemblies of numerous metal-stamped components, long fiber injection components
are produced as a single molded part. “You are making new, large complex parts out of a single material. It obviously lowers the cost of production.” Bowen says. But Bowen avoided it. “The market we chase it a little different,” he says. He wanted PlastiComp to be a “value added enterprise” that wouldn’t compete merely by finding cheaper alternatives to produce products that others were already making. “I can get philosophical and say that capitalism has gone bad over the past decades,” he says. “In the beginning of America’s greatness, capitalism was about investing earnings or having an invention that created new products, new innovation and new business. Today it is about taking business away from somebody else because you can be cheaper.” PlastiComp’s interest, Bowen says, is “to make things better.” And to do so, in Bowens model, requires partnerships. Instead of creating products in-house and looking for markets, they first look at how their technology can enable market-leading companies to improve their products and earnings. They then propose to partner with those companies with regard to design, materials and process. PlastiComp also licenses its unique technology to other companies, including BASF, Samsung, and others. “We offer it to competitors to make them partners,” Bowen says. Bowen says the other, quieter attribute of PlastiComp is agility. “We aren’t very rigid in our strategy, except that our strategy is to be very adaptive,” he says. “We’ve been quick to listen to the market and to determine if there is something different we should be doing.” Bowen says he learned this from his experience at OEMs. “The disadvantage of big companies is that they have such strong strategies,” he says. “In a big company you spend a couple years developing a strategy and getting it approved. And then every year you’re measured on how you do against the goals in that strategy. “The world changes much faster than that,” he says. “You’re probably
working on the wrong program after eight months.” In addition to selling its parts, Bowen looks to expand PlastiComp’s market reach through distinct markets over the next few years, each of which could develop into stand-alone subsidiaries. For example, the company recently received a patent for composite rebar for concrete, Bowen says. “Sporting goods, too, represents a market where we know people will pay for visible or measureable performance, like golf clubs or archery or tennis.” Another development focus is what Bowen calls the “light-weighting” of automobiles. PlastiComp has development partnerships as the composite supplier for research projects with the Pacific Northwest National Research Laboratory, Oakridge National Research Laboratory, and the Rocky Mountain Research Institute, all of which are trying to find ways to make future cars lighter, using carbon fiber reinforced materials. “It’s good company to keep,” Bowen says. “We participate on the development program because we know it is a way to get exposure, a way to learn new things and a way to teach people things we know.” In addition, PlastiComp is planning an announcement in the near future that will highlight its foray into health care, its fourth focus for growth. Thanks to a current customer relationship, PlastiComp is exploring the use of composite materials to improve medical devices and ultimately, develop implantable, replaceable joints. Instead of simply supplying components to a customer’s specifications, Bowen says PlastiComp will consider “what the industry needs and where it might go with new technology based on our composites. And the best way to do that is to partner with leading healthcare providers. We are not focusing on the needs of the equipment makers, but focusing on the needs of the industry, from the perspective of the provider.” To learn more about PlastiComp, visit www.PlastiComp.com.
“Employers need to start looking at the Affordable Care Act to avoid future penalties.” ~ Tonya Rule, Tax Manager
VISION The IRS has issued new rules on the Affordable Care Act that provide much needed guidance as to how employees will be categorized for health insurance coverage. The hours they work in 2013, could be used to determine potential penalties. Eide Baillly can help you clearly see how these rules and potential penalties will affect your business and help you determine your best options.
Experience the Difference Call today to learn more! 855.220.8634
www.eidebailly.com ENTERPRISE MINNESOTA APRIL 2013 5
Problem Solved Stern Companies uses A3s to create a ‘culture of problemsolvers’ Not long ago, employees at Baxter-based Stern Companies were confronted by a production challenge. The company was manufacturing a rear box for a Polaris Sportsman, a sixwheel ATV. A decal that was supposed to be molded into the plastic on the box was creating a problem. In order to cool that area down – it has to be cooler than the rest of the box to accommodate the decal – they sprayed water in that area. But when water spray got on the floor and mixed with resin dust, it made for a very slippery surface with a safety issue. A group of company employees had just gone through Practical Problem Solving instructions with consultants at Enterprise Minnesota, where they had been introduced to Toyota’s A3 process, a standardized methodology for innovating, planning and problem solving. Company president Shawn Hunstad convened an A3 meeting to brainstorm possible solutions. How could they minimize the amount of spray? Could they make it a mist? Could they find ways to mop the floor quickly beforehand? Someone researched the use of cooler guns that could be hooked to an air hose. The group then determined that a targeted nozzle could cool the decal area and eliminate the water completely. “They used forced, conditioned air on the spot,” Hunstad said. “And the safety issue went away.” But more to the point, the solution showed employees how to collaborate on creative solutions. Hunstad said he could feel unmistakable enthusiasm from the team when it presented its findings. “It was exciting to see some of these employees, who you didn’t hardly hear a word from otherwise, 6 ENTERPRISE MINNESOTA APRIL 2013
Stern Companies president and CEO Shawn Hunstad (far left) brings Rep. John Ward (second from right) on a company tour with Rotomolding Supervisor Marco Marquetti and Manufacturing Engineer Jeremy Werhan. photograph by PATRICK KELLY
get excited about the project they were working on,” he said. Stern Companies is a global sourcing and manufacturing specialist that produces polymer components for recreational vehicles, sporting equipment, industrial waterworks, medical and food packaging and agriculture. The 50-employee company was incorporated in 1995 as a spin-off of Stern Rubber Co., and is now privately owned by Hunstad. To help Stern improve its work processes, Enterprise Minnesota consultants are now leading the company’s plant floor operators through the principles of Practical Problem Solving, which include defining a problem, analyzing the issue, developing an implementation plan and taking steps to solve the problem at the source. The operators will then be expected to share their knowledge with other employees. Stern will further benefit in its investment with Enterprise Minnesota with a 25 percent grant from the state’s Growth Acceleration Program (GAP). “We worked with Enterprise Minnesota in the old days when they were Minnesota Technology and we’ve kept in contact throughout the years. Prac-
tical Problem Solving will help make Stern a more competitive company for our customers and a more effective company internally,” Shawn says. He said the Practical Problem Solving curriculum addresses the challenge of trying to inspire employees to think and act creatively. “There were so many times we would say, ‘this is just common sense,’” he says. “ I don’t know if it is schools not able to teach common sense. Some of the common sense is, I swear, just out the damn window.” And it had to be a team effort, he adds. “I can’t have one guy solving all my problems. I have to have people on the floor, who are close to this, understanding what they are up against and giving them some tools to solve problems.” After meeting with Enterprise Minnesota, he determined that Practical Problem Solving would provide a good starting point. Glenn Pence, a business growth consultant at Enterprise Minnesota, said the curriculum’s goal was not only to help Stern solve a particular problem, but also “a means to bring their culture together in terms of responsibility and accountability.” He added
Innovations that it seemed well timed, as Stern was moving part of its manufacturing facilities from Riverton to Brainerd, where the company was bringing in new and more sophisticated equipment. The initial training consisted of 15 employees divided into three separate groups working on three specific problems. Early successes on what Hunstad called “low-hanging fruit” are now gradually transforming his employees into strategic problem solvers. He’s adding new and different employees to subsequent problem solving groups. “We have this nice rotation so that now everybody in the plant has had exposure to it,” he says. “We now have a culture of that no longer fixes things with Band-Aids. This has given us an opportunity to learn how to fix issues long-term.” To learn more about Stern Companies, go to www.sternindustries.com.
Rep. Ward Tours Stern Baxter-based Minnesota Representative John Ward recently led other policymakers in a tour of Stern Companies to examine an individual company’s success with the highly effective Growth Acceleration Program (GAP). GAP is a state-funded matching investment that enables small and medium sized manufacturing companies to access business improvement services they would otherwise be unable to afford. GAP received legislative funding in 2007, with a one-time allotment of $750,000, another one-time allotment of $1 million 2009, and $500,000 in 2011. Stern used the GAP funds to help underwrite Practical Problem Solving training from Enterprise Minnesota. The legislature is currently assessing the levels at which it will fund the program in the coming biennium. “Thank God for manufacturing in our area. I’m thankful for the jobs that manufacturing creates,” Ward said. “I listened to three Enterprise Minnesota client companies testify to the value of GAP during a legislative hearing back in January. They were very impressive. “It’s a no-brainer for me to carry the Growth Acceleration Program bill this session,” he added. “GAP is a proven and effective tool to grow business and jobs in the state of Minnesota.” Ward said he is championing the GAP bill in the legislature “to help our manufacturing companies grow and create jobs again. We’re back making things again in this country and we owe it all to manufacturing.” Stern Companies President Shawn Hunstad added his endorsement of GAP: “I would not have done Practical Problem Solving, a key service to help grow Stern Companies, without the Growth Acceleration Program.”
Tailored Business Solutions from U.S. Bank since 1863. From managing your cash flow to providing tailored business solutions, U.S. Bank can propel your business to new heights. Our local & experienced Business Banking sales managers and their team of Business Banking Officers are ready to take your business from where you are to where you want to be. Call us today for a solution tailored to your business.
Craig Veurink, Sr. Vice President Region Manager, 952.927.1277 Mary Charbonneau, Executive Assistant, 952.927.1275
usbank.com Deposit products offered by U.S. Bank National Association, Member FDIC. 130135
ENTERPRISE MINNESOTA APRIL 2013 7
Export Expertise Local Manufacturers get unique access to export information this Spring.
8 ENTERPRISE MINNESOTA APRIL 2013
Photograph courtesy of Delkor Systems
Mike Wilcox, a vice president at Delkor Systems, will be among the featured speakers at one of two national export conferences in Minneapolis this spring, both sponsored by the Minnesota Export Council and the U.S. Commercial Service. Wilcox is a graduate of Global Market Strategies, a service created by Enterprise Minnesota, along with the U.S. Commercial Service, The Carlson Global Institute and The University of Minnesota Center for International Business Education and Research (CIBER). The service helps manufacturing enterprises make a strategic decision to export, and guides them through the steps of discovering which foreign markets hold the greatest potential for their products, and how to target each market most effectively. Wilcox will speak at Access the Western Hemisphere, which will be held April 23-24 at the Radisson Plaza Hotel in Minneapolis. The Gateway to Europe will be held June 4-5, also at the Radisson Plaza Hotel. Attendees at both conferences will be able to consult one-on-one with 25 senior commercial diplomats covering more than 15 markets across the Western Hemisphere. Participants will discover how to identify new export opportunities, increase market share and competitive edge, and develop strategic relationships with those that are on the forefront of business and exporting in these key markets. “These types of conferences are usually reserved for New York or L.A., so the fact that Minnesota is selected, says how promising Minnesota manufacturing is seen around the world as an exporting player,” said Roger Hurd, a business consultant at Enterprise Minnesota. Hurd also advised export-minded manufacturers to consider the next session of Global Market Strategy, beginning May 21 at the Carlson School of Management.
In that program, companies participate in three one-day group sessions scheduled over a three-month period. In between sessions, each company works on the development and implementation of their international growth plan, with the support of Enterprise Minnesota and CIBER. Past participants have reported high levels of success. The average participant increases sales by $170,000 and reports cost savings of $34,000. Many companies generate export sales within 3-6 months of completing the program, and some have negotiated sales before the program’s final session. Global Market Strategy helps companies to develop a simple, actionable, international growth plan by connecting participants with a wide range of reputable international business experts who can help navigate the export process. The program provides group and individual coaching. Experts are selected based on participants’ specific needs. Planning exercises and peer discussions help executives apply knowledge to their own companies. In the final group session, each company’s plan is reviewed and vetted by a panel of experienced international business people, to help them avoid costly mistakes and see new opportunities. For more information about Delkor Systems, go to www.delkorsystems.com.
The Legislative Case
business plan for improvements and demonstrate an economic need for GAP. The program is administered by Enterprise Minnesota and the Minnesota Department of Employment and Economic Development is the fiscal agent. “GAP works solely to benefit smaller manufacturing companies and is beneficial to the creation and retention of Minnesota manufacturing jobs,” Shelton said. “We all know that manufacturing is a key economic driver of our state’s economy, and particularly in Greater Minnesota, where manufacturing jobs are oftentimes the lifeblood of local communities,” she added. “Manufacturing is the key to our economic recovery and job creation.” She encouraged legislators to consider the value of manufacturers to their home districts. “Many of you have small manufacturing and related companies in your districts – perhaps you have toured manufacturers in your area with Enterprise Minnesota,” she said. “Many of these companies could benefit from GAP and the services, personnel and expertise that Enterprise Minnesota offers directly, and/or leverages from its wide network of experts. “That means more high-quality jobs in your districts.”
To learn more about the Growth Acceleration Program, go to www.enterpriseminnesota.org/resources/growth-acceleration-program.html.
The best marketing formula includes a catalyst. Go East will be yours. Engage your target audience Differentiate from competitors Leverage digital and nondigital tactics Enjoy marketing ROI Consult with a Go East strategist:
Lynn Shelton, director of marketing and communications at Enterprise Minnesota, told a legislative panel that the remarkable success in the Growth Acceleration Program (GAP) for manufacturers makes a solid case for a significant general fund state investment. GAP provides a $1 rebate to manufacturers for every $3 they invest in consulting services that increase operational efficiencies and promote growth. “The GAP dollars directly enable small and medium-sized manufacturers to get access to job-creating systems and processes that would otherwise be beyond their financial reach,” Shelton said. GAP received its initiation legislative funding in 2007, with a one-time allotment of $750,000. That amount was increased to $1 million 2009. During that time, 245 manufacturers have utilized the GAP program. “The results are beyond impressive,” Shelton said. An independent survey of clients using GAP funding found that collectively, manufacturers created and/or retained 1,700 jobs in Minnesota; they boosted company sales by $106 million; they saved $15.9 million in business costs; and on average, generated a $30-to-$1 return on investment. To be eligible for GAP, companies must be located in Minnesota. They must be in manufacturing or in a related industry. They must operate as independent profit centers, employ 250 or fewer full-time employees, have a
photographS by PATRICK KELLY
Enterprise Minnesota shows legislators how GAP will help small and medium-sized manufacturers continue to drive Minnesota’s recovery.
10 Marketing Trends for Manufacturers
GoEastDesign.com/Trend-Impact © 2013 Go East
ENTERPRISE MINNESOTA APRIL 2013 9
INNOVATiONS Truth Hardware Safety Manager Travis Groh leads a stretching session for employees.
photograph by PATRICK KELLY
Stretching Productivity Truth Hardware incorporates in-shift stretching breaks as part of an overall wellness program. Up to 15 minutes each work-day,
sometimes split into three different segments, employees on the manufacturing floor at Owatonna-based Truth Hardware take a break to stretch. The concept of performing stretching or other exercises during the manufacturing day is not new. Repetitive work and the aging process take their toll on muscle and joint extensibility, which can increase a worker’s vulnerability to strains, sprains and other problems related to repetitive motion. Some experts suggest that there are physiological benefits of stretching, including reducing muscle-related discomfort and musculoskeletal disorders. Stretching exercises, they say, increase tendon flexibility and develop strength. Truth Hardware is a 50-year-old company that designs and manufactures operating hardware, with a line of hinges, locks and operators for the window & door industry. “Our goal of the stretching program wasn’t injury reduction. I think the stretches are more of a wellness program for our employees,” says Travis Groh, health and safety manager at Truth. Groh says stretching has become 10 ENTERPRISE MINNESOTA APRIL 2013
part of Truth’s culture. “The majority of employees are on board. They like it,” he says. Groh says employee engagement has improved greatly as the company has altered the stretching regime, adapting different exercises for different parts of the production process. “For about four years, they were doing the same stretches all the time. We looked at the specific work areas and the muscles and movements and modified those stretches to match up to what kind of work they were doing. What an assembling person is doing is different than what a die-cast person is doing.” The company changes it stretching routines every quarter. “We tweak them,” Groh says. “We’re working on hands this quarter. Next quarter, maybe we’ll work on the lower body. I’ve found that if I’m not on top of changing those out, I get emails and phone calls reminding me to change them out.” Groh says the company doesn’t formally evaluate the return on investment for the stretching program. Like most safety programs that are designed to prevent accidents and injuries, he says, it is difficult to calculate what you have prevented from happening.
At the same time, he says the company and employees “definitely see value” in the program. “A majority of our employees enjoy and look forward to the stretching program,” he says. “We have such a highly repetitive type of work, that they know stretching is part of a preventative wellness program.” Groh says the company’s larger commitment to employee wellness is still evolving. This year, for example, Truth became a tobacco-free campus. It also imposes a tobacco-use surcharge as part of a health benefit program. “Some companies that feel there is a huge benefit to stretching,” he says. “Others feel that productivity outweighs everything else,” -- that the 15 minutes they spend on stretching is simply lost productivity. “We disagree,” Groh says. “If you’re able to help reduce the fatigue that muscles experience over an eight or a 12-hour day, employees are definitely going to stay productive. At the end of the day they start slowing down. I think there is an increase in productivity.” To learn more about Truth Hardware, go to www.truth.com.
Photograph courtesy of Graco
with David Ahlers Position: Chief HR officer at Graco, a Minneapolis-based manufacturing company. In 2008, he was the architect of what became a hugely successful plan to curb health care costs by giving Graco’s 1,500 employees incentives to live healthier lifestyles.
What inspired Graco to consider rewarding employee wellness as a tool to help reduce your overall expenditures for health? There were two dynamics at work. First, we were really getting squeezed by foreign competition. What was squeezing us was cost, and one of our cost drivers was our medical expense, which is tied to the fact that we are selffunded. And when we were looking at annual increases in our medical expense of between 8 and 10 percent, it was pretty obvious that if we didn’t slow this down we would become less competitive – and we would create fewer job opportunities in the U.S. The second dynamic was a study from the Centers for Disease Control (CDC) that said 70 percent of health care costs are behavior based. That got us thinking that if we can affect 70 percent of our expense by changing behaviors then we need to start down that path.
How did employees respond to the initial idea? We expected some pushback, but didn’t really get any. That starts with the fact that our CEO got up and talked very openly about it. We then provided employees with as many facts as we could from the Centers for Disease Control, so they could see that this is a reasonable, fact-based approach by the company, not an attempt to shift the expense from the company to the employees. The way it works is that every year we take the total expense that our employees generate for the medical benefit. The company covers 80 percent of it and the other 20 percent we give to the employees. The company will always cover 80 percent.
What was the net effect? Did employees think of themselves more in partnership with you on health insurance? The health of Graco’s employees has improved significantly, as measured through blood pressure, cholesterol and
obesity. The number of employees with zero health risk factors in 2008 was only 38 percent of our 1500 employees. Today, 51 percent have zero health risk factors in their health risk assessment. That’s a dramatic improvement. The obesity rate has also dropped significantly. In 2008 our BMI obesity rate was in the high 30s. It has now dropped to the low 30s. (31% if you want to be exact). We’ve seen a causal connection with workers comp, recordable injuries, even our FMLA usage. Safety and absenteeism have improved dramatically since ’08; and the use of short-term disability is also reduced. In addition our health expense is improving relative to the national rate of increase.
What should other manufacturers learn from your experience? The first thing is to set up the program for people to succeed. For example, we have standards, but we don’t hold people to the standards for blood pressure, cholesterol and obesity of the National Institutes of Health. For example, the standards say that your BMI should be 25. We gave everybody the maximum discount if they were at 29.9 or below. Every year we’re slowly ratcheting that down. This year it is at 29.4. We also use carrots, rather than sticks. All of this is voluntary. If you’ve got a philosophical issue with a company using a BMI score to impact your premium, you don’t have to participate. You’re going to pay more, but you don’t have to participate. If you participate and you don’t smoke and you keep your blood pressure under control, then you get a reduction in your premium, as opposed to an increase in your premium. The final lesson is to have the CEO and executive support. Our CEO was right there with us every step of the way, not only in how he takes care of himself, but also being willing to get up there with his megaphone to fully support the program. ENTERPRISE MINNESOTA APRIL 2013 11
Forecasting Through Fog
The challenges of health care and the shortage of skilled workers still loom large for manufacturers. But economic uncertainty and Washington gamesmanship are hindering their ability to plan for growth. By Rob Autry 12 ENTERPRISE MINNESOTA APRIL 2013
longstanding confidence in the future of their firms is offset this year by a range of issues impeding their business planning and forecasting abilities. Over two weeks in March, we conducted our fifth annual poll of 400 manufacturing executives from a diverse cross-section of Minnesota companies and locations. Here are this year’s findings.
The Mood: Tempered Confidence
Since our first survey in 2008, executives have remained confident in the future of their own companies, with 82 percent of respondents reporting confidence this year. This high confidence level is identical to 2012 data, and spreads across companies of all sizes, locations and revenues. However, manufacturers appear to be less economically hopeful than they were two years ago, when respondents showed a marked return to optimism emerging from the recession. When asked whether they anticipate an economic expansion, a flat economy or a recession, 15 percent of executives say they expect a recession this year, up from 10 percent in 2012 and 9 percent in 2011. Things also appear slightly less rosy when it comes to manufacturers’ projections for their own companies. The percentage of executives who believe they will see an increase in their gross revenues this year has dropped to 41 percent, down from 47 percent in 2012 and 51 percent in 2011. About one in three (32 percent) and one in four (28 percent) manufacturers projected increases in profitability and capital expenditures, respectively. These numbers remain closely in line with last year’s survey results.
For the fifth year in a row, the cost of healthcare coverage continues to be the top concern among all manufacturing executives. Not only does it remain the most important issue overall, but it’s also important to note that that percentage is almost identical to what it was last year, dropping just one point from 68 percent in 2012 to 67 percent this year. Health care has also increased in importance as a workforce recruitment factor, with 54 percent of executives listing it as an important
tool for attracting new workers to their firms. This is a 4-point increase from 2012, and a 15-point increase from our first survey in 2008, when 39 percent of manufacturing executives considered it an important recruitment factor. The second-most important (and closely tied) factor, a competitive benefits package, has also seen an up-tick, rising from 22 percent in 2012 to 27 percent this year. In a new poll question this year, we learned that executives expect this problem to get worse before it gets better. A staggering 54 percent of
ENTERPRISE MINNESOTA APRIL 2013 13
respondents said they expect their healthcare costs to increase “a lot” in the next two to three years. An additional 15 percent expect their healthcare costs to increase a little. In total, this means nearly seven in 10 executives (69 percent) expect a bumpy road when it comes to healthcare costs over the next few years. This majority is observed across companies of all sizes and revenues. Anxieties over healthcare costs are not inspiring more firms to pursue wellness programs or other initiatives, either. In fact, the percentage of executives who say their firms offer some type of wellness or health management program has decreased for the second year in a row, from 34 percent in 2011 to 31 percent in 2012 and 30 percent this year.
14 ENTERPRISE MINNESOTA APRIL 2013
Health Care Has Company
Though the cost of health care retains its status as the most important concern among manufacturing executives, a second issue has risen to tie it for the first time in the poll’s history. Fully 67 percent of executives cite uncertainty in Washington surrounding the budget and taxes as a concern for their firms. One key contributor to this statistic is manufacturers’ lack of confidence that Washington can find consensus on a budget and tax plan. About half (48 percent) say they have no confidence at all, and more than three out of four (78 percent) have little or no confidence that Congress and the president can reach an agreement and take action. As a result, manufacturers are
finding it very difficult to plan ahead in their businesses. Seventy-three percent said this uncertainty would have at least some impact on their business’s ability to plan ahead, and 42 percent anticipated it would have either a great deal of impact or a lot of impact. The companies more inclined to say it would have a significant impact tended to be smaller firms in terms of employees and revenues. For example, 46 percent of those who make less than $1 million in revenue said that uncertainty would have a great deal or a lot of impact on their business—18 percentage points higher than those who make more than $5 million in revenue.
Over the past few years, manufacturers’ concern over the ability to attract and retain qualified workers has grown considerably. In 2011, only 14 percent of manufacturing executives listed it as a concern. But in 2012, that number jumped to 31 percent, and remains steady at 30 percent in 2013. Concern about the lack of qualified workers has also become more widespread, with 24 percent of executives listing it as a concern in 2013, up from 20 percent in 2012 and 14 percent in 2010. These executives have good reason to be concerned. This year, 60 percent said it was difficult to attract qualified candidates for their firms’ open positions, up from 40 percent in 2010. Interestingly, this difficulty is especially prevalent among firms
with higher revenues and more employees. Seventy-one percent of firms with more than $5 million in revenue say finding qualified candidates is difficult. That number jumps to 73 percent among firms with between $1 and $5 million in revenue, and firms that employ more than 50 people. The challenge of attracting and retaining qualified talent might be attributable, in part, to the types of applicants these employers are seeking. When it comes to training and experience, it’s not an either/ or proposition. Fully 49 percent of manufacturing executives said they look for applicants with both technical training and experience, while only 19 percent said they seek employees with technical training without experience. The inability to find qualified workers also appears to be affecting manufacturers’ revenues, with one in three (34 percent) manufacturing executives saying the worker shortage will affect their bottom line this year, up from one in four (26 percent) in 2012. Larger firms in terms of revenue and employees are more likely to say the qualified worker shortage will affect their bottom line, in keeping with their more widespread reports of difficulty when it comes to finding qualified candidates to fill open positions. More than half (55 percent) of executives at companies with more than 50 employees anticipate that the qualified worker shortage will affect their bottom line. Among executives at companies with more than $5 million in revenue, 47 percent expect the shortage to deliver a bottom-line impact. Manufacturers do not appear to be hiring as much as they were one year ago, either. The percentage of manufacturers who grew their workforce within the past 12 months sits at 22 percent, a 5-percentage point drop from our 2012 survey. The forecast for the year ahead is also down from what we saw in last year’s data. One in four (25 percent) manufacturing executives expect their company’s
workforce to grow over the next 12 months, down from 29 percent in 2012. Among firms with more than $5 million, the contrast to one year ago is even more apparent, with 33 percent of executives predicting growth over the next 12 months, compared to 46 percent in 2012.
Wages Hold Steady
Though evidence in last year’s survey pointed to a widespread “thawing out” of recessionary wage freezes, and the trend has tempered in 2013. Close to half of manufacturing firms (43 percent) say their wages have increased over the past year, consistent with 2012 data. However, the percentage of executive that expect their firm’s wages will increase over the next two years has dropped to 48 percent from 54 percent in 2012, ending a four-year trend of increases. Most executives do not plan to spend more on developing their employees, either. About one in five (18 percent) manufacturers plan to increase their employee development spending. However, the large majority of firms (68 percent) expect there will be no change in employee development investment compared to 2012. This is a number that has remained remarkably consistent, fluctuating only 4 percentage points since 2008.
International shipping trends are down slightly from our 2011 and 2012 survey data. About 14 percent of Minnesota manufacturers say they ship 11 percent or more of their product internationally, marking a 4 percent drop from 2012. Executives have also shifted perspectives when it comes to markets they believe hold the greatest potential for future business. In 2012, China topped the list with 22 percent of executives listing it as their top international market for future business, and Canada came in second with 20 percent. This year, Canada has gained the top spot with votes from 22 percent of executives, and China has fallen to second, with 19 percent of the votes. Latin America holds steady in the third position, rising from 10 percent of votes in 2012 to 13 percent in 2013.
Rob Autry is a managing partner of Public Opinion Strategies, a national political and public affairs survey research firm based in Alexandria, Va.
ENTERPRISE MINNESOTA APRIL 2013 15
The State of Manufacturing®
Finding Their voice We scoured transcripts for each of this year’s 19 State of Manufacturing focus groups for a representative response to each of the top concerns.
How much has economic uncertainty affected your ability to plan for your business?
• We don’t talk about it. We try to make all of our decisions based on finances. If costs in the state of Minnesota go higher, then we will ship more work to a very large plant we have in Sioux Falls. If the costs in the United States go up, then we have a plant in China and will ship more work over there. We don’t read the paper and make decisions every day about hiring based on what someone said. But at the macro level, as the costs swing, they will affect what we do. 16 ENTERPRISE MINNESOTA APRIL 2013
• We don’t day in and day out react to the rhetoric in Washington. We have constant pressure to squeeze out a few extra pennies of profit. When you have that, you are making every decision from a financial perspective in an effort to make sure that you can continue to be competitive in the marketplace. • Everybody’s inundated with information and when your hear enough of it, then you start to believe it. This year we’re 25 percent ahead of last year through February but looking at the forecasts, I’m still calling for a flat year just because of what happened in 2012. We’re starting out incredibly busy this year; I don’t have the confidence that it’s going to sustain looking at the backlog and talking to customers. • I notice that I see more ups and downs than I did before. It’s hard to get confident when you get two or three months of success because
we’ve seen it drop off before. It seems like a lot of false starts. • It creates a lot of doubt, if you were feeling that you should add on or move forward, you need to think about how those things going to affect me, how do tax changes affect my business, how to plan around them? For instance: materials for production, drought, and individual expenditures. Maybe as a customer I’m not sure if I will buy that tractor because I don’t know how things are going to go this year. I see that nervousness in the egg industry, and see it when I talk to other business owners when they are trying to plan and understand what’s going on in the government, both federal and state. • I don’t watch it that close, it’s almost like an entrepreneurial thing kicks in, and the government is going to do what they are going to do so I just focus on what I can do. We are minding cash to be prepared for
whatever happens. • A lot of companies are trying to hold on to cash. We had a huge expansion in 2007 and then the recession hits, so that is our focus. We’d be in a mess if we made huge investments right now. • I’m feeling the inability to forecast, or give us any planned direction — and yet the work keeps showing up. We are doing some automation and are spending capital so that we can get the work done that our customers are asking for. • We’ve gone with temps the last couple years because we’re not sure how things are going, how long is this going to be the way it is. We are getting little information from the government so why pay more on healthcare, benefits, etc. and add cost. • The trend was to keep buying new, keep buying new and some people got caught. They had all this new equipment out there and when I was on the North Shore in the fall of ’08, it was scary to see $1 million machines sitting idle. Since then it has come back, but because of that experience, I think people are more fearful of buying than they were. • We are taking the exact opposite tack. We are doubling down. We’ve got 45 salesmen, we put up sales offices in China and in Argentina and Brazil, and we’ve hired staff in Europe and 23 people in the United States. So we see it as an opportunity to make deals. It is purely a strategy to take a market share. • I know what you mean about doubling down. There are obviously opportunities to go after new business, but I don’t know that most companies will go out there and invest heavily and up their debt in this market. I think what you have to do is be very cautious of what could happen on the downside. • The fiscal cliff is nothing as far as the real problem. The real problem is the entitlement society that we’ve built in this country. There’s a great book that I just read called A Nation of Takers. The book lists all statistics and analysis of the trends from 1960 to today and what’s gone on.
And when you see the growth in entitlements and how much they are growing, our problem is not our defense budget or even the out of control operating budget of the federal government itself. It’s all the entitlements. • We don’t want to have all our business in the US basket anymore. We’re changing our business model. We’re a small company, but we are actively and aggressively moving toward a global platform. We will not be a Minnesota company exclusively, in the future. There is plenty of capacity in the world as far as making stuff. The issue is having the right business model and tailoring your offering and not just your product offering but all the services and everything that you wrap around that, that differentiates you from the next guy over, design, development, all those things. • Actually we’re putting more money into our company, adding programs, new equipment and we have been doing that for the last three years, even though the economy has been bad. We’re not going to sit on our hands.
Does the shortage of skilled workers constrain your growth?
• Five years ago, we didn’t have a robot in our facility. Now we have five that we’re kind of good at. We would have eight, at least, if we could. I’ve heard the boss say again and again, ‘I’ll buy four more robots if we can find somebody that can make them work.’ I can’t find those people. • It’s skilled labor. The day of general laborers is gone. An employee is terribly expensive, so if you can automate some repetitive work, companies are tending to do that to stay competitive. Those people are being replaced with highly skilled people. It’s gold collar jobs replacing blue collar jobs. • With the right skilled people coupled with automation, what used
“Five years ago, we didn’t have a robot in our facility. Now we have five.”
to take one operator to run one piece of manufacturing equipment, now takes one special operator to maintain three robots that are running three pieces of manufacturing equipment. • We want to change our business so that people are paid based on their skill sets, not on their tenure. I want people that are comfortable and familiar with variable speed drives today; I want people that can do PLC programming. I don’t want the 30year-ago maintenance guy. I need the guy that’s two years out of tech school and can come in and be an immediate contributor. Honestly, I don’t want to hire $9.50-per-hour people. I want to automate that process and hire $15$20-per-hour people. • There is a level of urgency. I don’t think the kids that are coming out of high school these days recognize the opportunities in the manufacturing sector because they have such little exposure to it in high school – and their parents are necessarily touting it as an opportunity. So I’m not seeing that great a level of candidates coming out for operator jobs or technician jobs or engineering, for that matter. • I hire farm kids. They know how to work, really. They grew up learning how to work at any skill level---at an engineering level, at an operating level, a welder level. I think that’s something that’s beyond the school’s responsibility or the education responsibility, and more as a symptom of a bigger problem. • We all struggle. The whole ENTERPRISE MINNESOTA APRIL 2013 17
system is down this year. We struggle to attract students every year, and can you train them with the basic skills? Sure. Is it what they want to be doing? • I don’t think parents want their kids to go into those types of professions. They think that they all need to be doctors and lawyers. Second, to be honest, the technical schools have taken away many of the programs that we used to use: the engineering graphics program for the designers, the machine programs, the die makers, the machinists and the welding certificate. I know they are very expensive and I know that’s why they’ve been taken away. It’s very expensive to have the equipment, and it’s very expensive to have the training staff because the student-teacher ratio is lower. • I think it does come down to aligning jobs with interests. With the economy, a program just can’t survive if we can’t get any students in the door. I think it comes back to all students thinking they need to get the four-year degree. • I think it comes down to the high school lacking funding for some of the tech programs like they had in the past. The local high school doesn’t have any automotive or tech classes. They have agriculture because we are in an agricultural community, but that’s it. • Our workforce grew from 108 to 160. We did find the people, but are not sure where we’ll find more
“We need to change the culture of what people think manufacturing jobs are.”
18 ENTERPRISE MINNESOTA APRIL 2013
to hire. We did have to put a lot of training in for new employees. There are not a lot of Operators on the street today. • We are trying to reach the younger generation, 5th – 9th grade, to educate them about manufacturing -- what it is, and how to get into it. We also need to educate the parents about what it is now, do tours to get students involved and to help them understand there are good, clean careers in manufacturing. We need to change the culture of what people think manufacturing jobs are. Once they are in high school it is too late to change their perceptions. • There aren’t a lot of people coming into the work force, almost no one coming “off the farm” now. The population dropping in rural areas. The labor market has tightened up here, especially for trades. We are looking for the same guys: we need welders, we need CNC machinists, operation guys are really hard to find, and you really have to grow them yourselves. • One of the high schools partnered with one of the community colleges. They started classes in school for welding. They went over to the manufacturers in Two Harbors for tours. Kids can now go from high school and get college credits right away during the night, and work during the day. I’m real excited, I think that’s what we need more of here in Duluth • I think the high school does a good job now of connecting with the kids there. But I think it’s really important that there be some communication between the high school the vocational schools, and then the manufacturers that have some needs for this. It’s important for manufacturers to be open to these kids coming to do job shadows. You’ve got to be open to taking that phone call. • I went to tech school 40 years ago. We had two years of learning the machines. You would get on the machine, you would learn it. Now it’s CNC machines and they are little bit more complicated to set up, and
a lot more involved. I would guess there’s probably three or four times as much information you have to learn how to be a machinist. Back when I was going to school, every high school around had the machine-type program. So you’ve got four times as much information to learn in two years of college. • If you could flip the switch, turn back the shop classes and put them in place today, I bet you, everybody would say “do it.” They don’t even teach the basics in high school anymore. I talked to the superintendent about that, and they say they’ll only get 15 or 10 for shop class and that’s not enough. But I think now it might be different. I don’t know how to get the system to adapt to what we need. • And how many historians are looking for work up here?
Does health care reform give you confidence that your costs will be contained?
• Nobody knows exactly what’s going to play out how it’s going to play out, nor do you know exactly how the consumer or your workforce will react. It could be a nonevent, or it could be a huge issue. You have to plan around it. • You put plans in place to be smarter about it and drive more participation in wellness efforts, but you’re always working that part of your business. It’s a cost center and you are working it. One question a lot of people have is whether it is cheaper to drop all of their insurance and have their employees get insurance on their own. • A precious few know how much Obamacare will affect their business. I don’t see this healthcare issue going away anytime soon. • You can mitigate some of your top line costs by shifting responsibility onto the individual. At our company, if someone has a BMI that’s not good, but has a plan to address that, then we give them the benefit of the doubt and cut their rate. So we’re trying to encourage behavior, not to score them and say it’s too bad.
It has had an amazing impact on our employees’ individual behaviors. • I’m going to save some money. It doesn’t solve anything. It’s going to create a big problem. But in a bigger picture, someone’s got to pay it. I’m just being incentivized for something I would be doing anyway. • I dislike robbing the rich to take care of the poor. Am I, as a corporation with a major payroll, or am I, as a taxpayer, helping to assist those in my community? Or is it now covering a much larger than my community area, and are there communities that are benefiting from the incomes and worker, you know, the backs of the workers in the areas that are working harder? • If you can get everybody into the pool, that is going to help some. I know you’ve got a lot of freeloaders out there that get sick and go to the emergency room. If we can get them paying their fair share, it is going
to help. Whether it will solve the whole solution or not, who knows. • We have talked about getting a group of manufacturers together and hiring our own family practice physician and putting in an office, and have that person do all the basic simple stuff that costs so much to do at a hospital. There is so much overhead for one simple procedure. • Single- payer is what Obamacare is — governmentrun medical care. That’s the system of government that we are running into now. We’re probably the only industrialized country that doesn’t have socialized medicine. We are fighting it, and it’s costing us a fortune. To heck with it, go to it, and you know? Rationing has to be some way; it doesn’t make sense to just keep jacking the price up, because eventually nobody will be able to afford it. Liability is the other
“A precious few know how much Obamacare will affect their business.”
thing. They don’t have big lawsuits for medical malpractice in Canada and England. It really has to be the guy that intentionally went and cut out the wrong leg before anything happens. • Healthcare costs are 15-20 percent of our total labor costs. Costs have grown 6-10 percent annually. We are trying to drive some of those continued on page 31.
You DRIVE the INNOVATION. We ride SHOTGUN. Because the manufacturing industry moves fast, it’s important to have someone by your side to help navigate the hairpin turns. Baker Tilly Virchow Krause’s knowledge of the road ahead can help provide solutions to Minnesota manufacturers in an ever-changing global marketplace. There’s no telling how far we’ll travel together. Connect with us: bakertilly.com/manufacturing 612 876 4600
© 2013 Baker Tilly Virchow Krause, LLP Baker Tilly Virchow Krause, LLP is an independently owned and managed member of Baker Tilly International.
ENTERPRISE MINNESOTA APRIL 2013 19
Interview with Dr. Rassoul Dastmozd
The Urban Workforce How Saint Paul College capitalizes on explosive student growth to replenish manufacturing careers.
For more than 100 years, Saint
Paul College has been preparing students to work in manufacturing industries. Today, in its St. Paul location, the school combines liberal arts education alongside its traditional role as a technical college. Its affordable tuition and urban location has helped todayâ€™s enrollment to reach 9,900 students, an increase of 86 percent growth over the past 10 years. Dr. Rassoul Dastmozd, a veteran of 29 years of post-secondary school experience, became the collegeâ€™s president in July of 2011. He had served most recently as vice president of instruction and workforce at Clark College in Vancouver, Washington. Dr. Dastmozd holds a Bachelor of Engineering Technology from Southwest State University in Marshall, Minnesota. He earned an M.S. in Educational Administration at Drake University and a PhD from Colorado State University in Education and Human Resources. Enterprise Minnesota interviewed him in late March about the evolving role of his diverse, urban institution in the increasingly sophisticated world of local manufacturing.
20 ENTERPRISE MINNESOTA APRIL 2013
Dr. Rassoul Dastmozd, president, Saint Paul College
The State of Manufacturing® poll shows that Minnesota manufacturers are concerned about finding employees with the skills necessary to handle the needs of their companies. How do you view that? And is there a role for Saint Paul College to be part of the solution? I think the manufacturing firms may have a point here. But, this problem is quite complex. Over time, society as a whole may have ignored the manufacturing sector jobs, and
photograph by PATRICK KELLY
photograph by PATRICK KELLY
Enterprise Minnesota: People say that you can determine a person’s practical priorities by looking at his or her schedule. What does your schedule say about your priorities? Dr. Dastmozd: I am a pragmatist and I like to be involved with campus and in the community surrounding Saint Paul College. I keep a balance of about 30 percent for outside activities and 70 percent inside. By spending the greater portion of my time here on campus, I am able to understand our students and keep abreast of the innovations in our programs and the pursuit of excellence that our faculty, staff, and administrators strive for on a daily basis. By spending the time here on campus, I truly know who and what we are and what we represent as a college. Knowing our college and students so well allows me to be the best advocate of Saint Paul College and I can assure the businesses and industries in Minnesota who hire our graduates that they will have access to qualified graduates from our Career and Technical Education programs. Our focus is to serve our community. This means serving our students and it is all about “our students.” With that said, my goal is also to get the identity of Saint Paul College out into the community as a partner of choice and a convener. In my first year here, I met with close to 300 community leaders. In my opinion, when you like what you do, it will consume you and in many ways, it becomes a part of your daily routine, life style, and life balance.
Saint Paul College Pres. Rassoul Dastmozd, far left, chats with (from left) student Fran Kuehn, student, Machine Tool Instructor Terry Murray, and CNC Instructor Mike Vizenor.
often times, parents of our high school graduates consider a four-year degree as the only path to a good career. Additionally, the elimination of industrial technology programs in the high schools depleted pathways that guided students to explore career and technical educational options, such as post-secondary manufacturing programs. For some, it probably feels as if the No Child Left Behind Act ended up with a consequence down the road of “our manufacturers were left behind.” We must do a better job of informing the public about manufacturing jobs and the products that affect every aspect of our lives. We must dispel the stigma that manufacturing jobs are dirty and dead-end jobs. Not everyone is aware of how drastically the manufacturing landscape has changed due to automation and high-tech integrated systems. Today’s manufacturers need graduates who are versatile, flexible, and possess essential soft skills beyond the skill set required of a specific manufacturing process. That is where Saint Paul College fits in. I am very optimistic. The College has a strong, supportive membership in our technical advisory committees for our manufacturing programs, as well as dedicated faculty members. For our college to remain responsive to manufacturers’ needs in our community, we must work closely with them, listen to their needs, and customize training programs specific to the needs of each company. This relationship can also be strengthened with local manufacturing firms that provide scholarships and internship opportunities for our students and externship opportunities
for our faculty members’ professional development opportunities. They can help us by donating equipment that we can use to train our students to be prepared for the environment they will encounter in the workplace. For example, our investment in equipment in two manufacturing cluster programs alone approaches the $3.5 million mark. This is costly for a twoyear community college when the state investment in higher education has been gradually diminishing over recent years. How much do you rely on adjunct faculty? According to our faculty association contract, we must maintain a balanced ratio between full-time and part-time faculty members. Our manufacturing programs mainly operate using full-time faculty members, but we do have a handful of part-time faculty in these programs. The challenge is finding qualified individuals who can also teach on a part-time basis. Do you have a sense, along with many manufacturers, that there is a looming shortage of folks who are qualified to work in manufacturing? Yes, I do think there is an impending shortage of qualified people. In terms of output, we are doing our best to accelerate the pace at which we produce qualified graduates in our manufacturing programs. Another concern is mobility; some graduates may not want to travel to areas outside of the Twin Cities to find positions in their field. We also need to insure that someone with ENTERPRISE MINNESOTA APRIL 2013 21
Saint Paul College Pres. Rassoul Dastmozd, top, checks in with (clockwise from top right) Electrical Instructor Ed Schones, and students Jeremy Sheldon, Julie Selton and Paul Lunzer.
photograph by PATRICK KELLY
great manufacturing skills can earn a livable wage. In order to choose manufacturing as a viable and sound career opportunity, you have to have the mechanical skills, aptitude, cognitive skills, and the psychomotor skills to perform the tasks required by the job. It’s not for everyone. The new normal may be that our manufacturers are cautious about the number of new employees they will hire at this time or in the near future, wary that we might again dip into a recession. I believe that potential workers are also aware of this cautious attitude. We must be engaged and involved with our area manufacturers to continually assess their needs so we can best meet their workforce demands. I welcome manufacturers to work closely with their local community colleges and give us an opportunity to address their needs; moreover, these companies need to provide competitive wages and benefits for our graduates. As part of MnSCU’s legislative agenda, we are requesting resources to expand internship opportunities for our students. These internship options can be a great opportunity for our manufacturers to get to know a potential employee prior to employment. They provide the students with a viable opportunity to integrate their studies into an on-the-job training environment. Research confirms that internships can lead to expedited employment opportunities for gradu22 ENTERPRISE MINNESOTA APRIL 2013
ates of colleges and universities. MnSCU Chancellor Steven Rosenstone initiated a listening tour last year to improve the communications between manufacturers and MnSCU schools. How did that process help guide what you’re doing? MnSCU’s strategic direction focuses on: (a) advancing the competitiveness in Minnesota’s workforce; (b) increasing access and affordability for our students; and (c) accelerating completion and graduation at our institutions. To accomplish these goals, it is critical that we listen to what our businesses and industrial firms are seeking in terms of the desired and preferred skill sets of our graduates. Our colleges and universities span across all of Minnesota and provide access points for our business and industrial firms to secure qualified and workforce-ready graduates. The listening sessions helped us gather more information and understand further what our employers need. I view the information gathered from our external stakeholders as valuable and beneficial in shaping and aligning our programing efforts in each of these career clusters or sectors. We strive to integrate the feedback from these listening sessions into our programs. We have modified our curricula to remain state-of-the-market to provide our business and industrial firms with the best-qualified work-
force talents. Saint Paul College continues to have great relationships with business and industry and we will continue to maintain these relationships. I can say that those listening sessions helped us create a trajectory to further continue our dialogue with these businesses and industries. How much of the response to the listening tour is uniform across the MnSCU system? How much is left to each of the schools’ individual presidents? I think the listening sessions served as a guide for us to look at and review our internal programming (i.e. shortterm and degree granting processes). Since the listening sessions, the input that was gathered worked itself into each of the college and university presidents’ work plans. At Saint Paul College, we started developing a relationship with the Saint Paul Port Authority and the City of Saint Paul to be a partner of choice for many of their workforce training needs. Working in conjunction with several non-profit organizations, we assessed their training programs and mapped their workforce training into our existing program, articulating their workforce training programs into our programs at the College. I must say that what we heard from the listening sessions has become beneficial in terms of addressing the potential needs of our stakeholders in
“For our college to remain responsive to manufacturers’ needs in our community, we must work closely with them ... and customize training programs specific to the needs of each company.”
various geographic regions of Minnesota, for programs such as wind energy in Southwest Minnesota and mining for the Northeast Education District on the Range. We know that Minnesota’s fastest population growth will be in the Twin Cities, and this demographic will be individuals traditionally underserved by higher education. As our employers desire to attain a diverse workforce– one that is talented and mirrors the communities where their firms are located– we will need to work together to ensure that the diverse pipeline of human talent is there and, ultimately, has employment opportunities.
Dr. Rassoul Dastmozd, President, Saint Paul College
We also revised our strategic plans to ensure that we are fulfilling what our customers want, which ultimately helps our graduates to secure meaningful employment and to be successful. You have developed a reputation for tireless networking and coalition building. I believe that we must continue to promote collaboration and develop sustainable partnerships with our communities: secondary institutions that trust us with their graduates; non-profit community based organizations that have a special niche in training their constituencies for
workforce opportunities; business and industrial firms that hire our graduates or send us their employers for retraining and capacity building; and ultimately the college and universities that receive our graduates. I view the education system as a spectrum, and if we do not integrate and align our resources to better meet the needs of our constituencies, then it will be detrimental for everyone. I believe in our partnerships with our communities of interest, and together we must explore new ways to secure the limited resources to develop programs that meet the needs of our business and industrial firms. The partnerships between public and private sectors will hold us all accountable and also keep us competitive, nimble, and responsive to what the market demands. For more information about Saint Paul College, visit www.saintpaul.edu.
THANK YOU FOR CONTINUING TO INVEST IN
MINNESOTA We celebrate your
commitm ent to inno vate, h ire and develop our
skilled workforce, produce quality products and
keep Minnesota on th e map of manufacturing leaders.
Power comes from being understood.SM When you trust the advice you’re getting, you know your next move is the right move. That’s what manufacturing professionals can expect from McGladrey. That’s the power of being understood. Experience the power. Call 800.274.3978 or visit www.mcgladrey.com/manufacturing.
©2013 McGladrey LLP. All Rights Reserved.
ENTERPRISE MINNESOTA APRIL 2013 23
photograph COURTESY OF REDEYE
3-Dimensional, Unconventional Manufacturers use RedEye On Demand’s 3D printing service to design and manufacture prototypes and finished products in less time. By Andrea Lahouze
24 ENTERPRISE MINNESOTA APRIL 2013
In 2009, Winnipeg-based engineer-
ing group KOR EcoLogic had designed what they hoped would be the world’s most fuel-efficient car. The two-passenger, three-wheeled Urbee, so named for urban electric with ethanol as backup, would be able to achieve nearly 200 miles per gallon on the highway, and 100 in the city. KOR Ecologic President and Senior Designer Jim Kor had worked with his design team to create an aerodynamic shape that minimized the vehicle’s coefficient of drag (Cd) to just .149 in comparison to the Prius’s .26, according to computer test models. There was just one problem. Portions of Urbee’s precise aerodynamic design, such as its fender, could not be produced with traditional manufacturing methods. “We had everything in the computer but no way out,” Kor says. While current car fenders are made to be a constant thickness from end to end, Kor says this is unnecessary and adds to the car’s weight and inefficiency. He compares Urbee’s design intricacies to
KOR Ecologic President and Senior Designer Jim Kor with a one-sixth scale model and full-size portions of the 3D-printed Urbee prototype.
those seen in a bird bone. “If you look at a cross section of a bird bone, you’ll see that there is bone only where the bird needs strength,” he says. “The bone looks like chaotic webbing.” Kor and his team turned to 3D printing technology at RedEye On Demand, the service division of 3D printer manufacturer Stratasys in Eden Prairie. Unlike other manufacturing methods, 3D printers create products layer by layer from the bottom up according to a CAD file. After confirming its design with a one-sixth-scale model, the team 3D-printed a full-scale Urbee in 2011. Kor says the flexibility and speed of 3D printing made it easy for his team to tweak Urbee’s design along the way. Elimination of tooling and machining also made it more cost-effective. “To have an aerodynamic-efficient shape and make it possible with an emerging technology, it came together very well,” says Jeff Hanson, business development manager at RedEye. KOR EcoLogic is now working with
Factory of the Future
RedEye plays host to an eclectic array of products and innovations. When the Smithsonian’s National Museum of African American History and Culture (NMAAHC) wanted Thomas Jefferson to be the centerpiece of a new exhibition, it called RedEye to create a replica of an existing bronze statue that sits in the visitor’s center at Jefferson’s Monticello plantation in Virginia. 3D laser scans were taken of the statue, and then sent to RedEye as a digital file. The statue’s large size required it to be The Smithsonian’s 3D-printed replica of a bronze statue of split into four parts for production, and Thomas Jefferson required 368 hours of build time. then bonded back together. To reduce cost and time yet maintain detail, the statue was created in layers as thin as .005 inches using a “sparse fill” concept, with a solid outer layer and a honeycomb-like interior structure. After 396 hours of build time, the assembled statue was sanded and finished with layers of gold paint and black wax to give it a convincing bronze effect. NMAAHC Project Manager Dorey Butter dubbed the 3D model “the perfect solution,” adding that she was surprised at the level of detail. “It was awesome. The technology has opened our eyes to different possibilities.”
Magic Arms Stratasys technologies have also enabled a little girl to move her arms for the first time. Two-year-old Emma was born with arthrogryposis multiplex congenita (AMC), a condition that prohibited her from moving her arms. But when her mother Megan Lavelle saw a device called the Wilmington Robotic Exoskeleton (WREX) at a conference for AMC families that enabled arm movement for AMC patients, she knew it would change Emma’s life.
photograph COURTESY OF REDEYE
The Urbee is one design among thousands to come alive in a RedEye facility. A global network of 144 Stratasys 3D printers scattered across Europe, Australia and the U.S. churns out as many as 10,400 prototypes and end-use parts each month. Most customers receive their orders within three to five days, but Hanson says some are ready within 24 hours. Despite lightning fast lead-times, the 100-machine production floor in RedEye’s Eden Prairie headquarters is paradoxically quiet, requiring just two operators per shift. Jeff Hanson says key to RedEye’s on-demand capabilities is “additive” manufacturing technology. “There have only been two types of manufacturing processes up until today,” Hanson explains. “The first one was subtractive, whittling a stick. That process of taking material away from something to shape an object is 250,000-year-old technology. The other manufacturing process is about a 4,500year-old process and that’s called formative manufacturing – injection molding, thermoforming. “So here we come with this additive process, the ability to grow something from nothing into a part. I use the words evolution and revolution pretty frequently when I describe our technology and our industry. We’re sitting on a revolution for manufacturing.” RedEye’s Stratasys 3D printers range from the microwave-sized Mojo, which can make parts that are up to 5 inches tall, wide and thick, to the industrial refrigerator-sized Fortus 900MC, which can produce parts up to 900 cubic centimeters in volume. But each employs the same Fused Deposition Modeling, or FDM technology. A spool of very fine thermoplastic
photograph COURTESY OF REDEYE
RedEye on a functional prototype called Urbee 2. The 1,200-pound vehicle will still have a metal engine and base frame, but will be primarily made from ABS plastic 3D-printed at RedEye. Once complete, Kor intends to drive it from San Francisco to New York on just 10 gallons of pure ethanol. The next step will be low-volume production for a global market.
A Stratasys 3D printer allowed engineers to alter an existing medical device to help two-year-old Emma move her arms.
Made of hinged metal bars and resistance bands, the original WREX was attached to a wheelchair, and suited for children as young as six. As Emma was just two and had the ability to walk, her mother met with WREX designers Tariq Rahman, Ph.D and Whitney Sample, both of Nemours/Alfred I. duPont Hospital for Children, to create a lighter, mobile version. They turned to the small Stratasys 3D printer in Sample’s office to print a prototype in ABS plastic, and then attached it to a small plastic vest. When Emma tried the smaller WREX on, “She just started throwing her hands around and playing,” Sample says. “To be a part of that little special moment for someone else, can’t help but tug at your heart strings.” Calling it her “magic arms,” Emma now wears her WREX every day. When she outgrows it, they simply adjust the design size and print a larger one. If a part breaks, they can print another within hours. Fifteen children now use custom 3D-printed WREX devices, and Rahman and Sample say the flexibility of Sample’s 3D printer allows them to continually improve upon its design.
ENTERPRISE MINNESOTA APRIL 2013 25
Jeff Hanson, RedEye On Demand business development manager, examines new items created by a Stratasys Fortus 900MC in RedEye’s production facility. photograph by patrick kelly
“wire” is loaded into the machine, where it is warmed to a semi-liquid state. It then comes out through a moving nozzle, which distributes it layer by layer according to a threedimensional CAD file sent from RedEye’s digital ordering system. Machines can accommodate a variety of plastics, from ABS and polycarbonate, to additional medical and aerospace grade varieties. Depending on the complexity of a design, layers can be as little as .005 inches thick. The machine software automatically calculates all “overhangs”—places where the product needs support in order to solidify correctly, and simultaneously generates a support structure to accommodate them. While strong, the support structure is also water-soluble, sending each finished piece to a wash tank for a 45-minute bath in warm water. With support material removed, end-use parts are transferred to a ceramic bead tumbler to remove the tiny lines that result from the technology’s layer-by-layer approach. Between most 3D-printed and injection-molded parts, it would be challenging to tell the difference, save for injection molding’s ejection pin 26 ENTERPRISE MINNESOTA APRIL 2013
mark and parting line. But Melissa Hanson, RedEye marketing manager, says 3D printing should be considered a complement, not a substitute, for other manufacturing methods, which are typically more time and cost-effective to use when volumes exceed 1,000. “It’s not always one or the other,” she says. “Sometimes it’s about bringing the different technologies and processes together to complement and improve upon what you’re already doing. For example, you can look to 3D printing technologies to provide more options for your prototype and product development work.” For prototyping and low-volume orders, manufacturers can upload their CAD designs to receive instant quotes via RedEye’s website. Quotes are calculated automatically according to an algorithm that measures each design’s height, width, thickness, surface area, volume and support material required. They also tell potential customers when they can expect delivery, based on the calculated build time for their project and for all projects ahead of theirs in the appropriate machine’s queue. Jeff Hanson says a steady 30
percent of quotes turn into orders. Company staff can monitor quotes and orders as they come in on an HD computer screen mounted on the office wall. The screen refreshes every 90 seconds, and also provides a digital “snapshot” of RedEye’s factory floor, with the number of production hours each machine is booked into the future. “We know every file’s attributes, so we can look at our factory, and know what our factory load is down to the hour. For example, we know that the 30 orders placed today equal 1,779 hours of production work, and we haven’t even looked at them yet. We use technology to calculate our delivery dates. We call it factory physics.” Once an order is placed, an engineer processes the file and software scans the company’s global network for the most appropriate machine to make it, then sends the file to that machine for production. In cases where all machines required for a specific order are booked in the closest location, an order can be “3D faxed” to another location for production, then shipped to the customer. Apart from time and cost savings,
Melissa Hanson says additive manufacturing technologies are also more environmentally sustainable. “There is less waste because you’re building up and you’re using only the material you need, versus taking a big block and whittling away to make a final product, ending up with a lot of scrap,” she says. And RedEye’s global network of facilities means a customer’s design can be sent from anywhere in the world and printed in the location closest to its final destination, saving on transportation costs. Likewise, customers who decide to purchase a Stratasys 3D printer can send CAD designs directly to it from anywhere with an Internet connection. Jeff Hanson says this has been particularly useful in military applications for printing parts on-site to repair equipment quickly.
Merging Methods, Expanding Markets
RedEye has gained additional 3D printing capabilities this year thanks
to a December 31 merger between Stratasys and Israel-based 3D printing manufacturer Objet. Objet’s PolyJet™ technology sprays a liquid photo polymer resin in super fine layers down to 16 microns to create very detailed 3D parts. A UV light integrated into the spray arm cures each layer within fractions of a second. Jeff Hanson says the technology is an excellent complement to RedEye’s existing FDM capabilities, and expects it will help increase company sales this year. Recent year-over-year sales have increased 10, 25 and 26 percent in 2010, 2011 and 2012, respectively. While the Objet-Stratasys merger will undoubtedly funnel more business to RedEye, Melissa Hanson says the company’s steady growth is due in large part to its staunch attention to customers’ wants and needs. “Customers teach us a lot about new applications,” she says. “With the sheer number of orders we get in a day, in a week, in a month, we’re getting all kinds of new ideas for FDM
and PolyJet™ technology applications and what is possible.” In the past two years alone, a growing customer base of corporate aerospace manufacturers has inspired the company to wrap its production facilities with ISO 9001 and AS9100C certifications. It also received an International Traffic in Arms Regulations (ITAR) badge earlier this year in order to manufacture parts for the U.S. military. Its next target market is the medical device industry, for which it will pursue an ISO 13485 certification this year. “This truly is the factory of the future,” Hanson says. “This process is finding utilization throughout the whole product development cycle, from concept to prototype all the way to end-use parts. If manufacturers are not adopting this process in their product development, then they are going to be left behind.” To learn more about RedEye On Demand, visit www.redeyeondemand.com.
Gray Plant Mooty is proud to support the State of Manufacturing Survey for Enterprise Minnesota Magazine. Serving the legal needs of businesses and organizations nationwide for over 140 years.
Minneapolis 80 South Eighth Street 500 IDS Center Minneapolis, MN 55402
St. Cloud 1010 West St. Germain Suite 500 St. Cloud, MN 56301
Washington, DC 600 New Hampshire Ave, NW The Watergate - Suite 700 Washington, DC 20037
ENTERPRISE MINNESOTA APRIL 2013 27
The Industrial Evolution The State of Manufacturing® demonstrates just how far manufacturing has come in five years. By Bob Kill continued from page 2. But by late 2008, manufacturers had back-burnered all those frustrations to tackle the dive in the American economy that swept through their businesses with the sudden devastation of an unexpected economic hurricane. While our political leaders in Washington frantically struggled to keep the problems from spiraling down into a full-blown economic depression, the manufacturers who sat in for our focus groups were still trying to figure out what happened – and what to do about it. “It was as if someone had flipped a switch and turned off the orders,” one said. This is where it got interesting:
28 ENTERPRISE MINNESOTA APRIL 2013
From the very first focus group we conducted that year, almost no one had their fingers punching panic buttons. Instead, they asked: Where are the opportunities? The conversations were calm and measured because these executives had been through this before. They knew they would survive. They knew sales would be down, and might force some painful decisions, but most of the conversations revolved around the question: How do we use this downtime to make sure that we grow and thrive in the recovery? As more than one participant said: “A recession is a terrible thing to waste.” I’ve been in manufacturing for 35 years, through two previous
recessions and I’ve never seen anything like it. • They talked about how they could use the downtime to invest in their employees training. • They talked about improving and expanding product lines so they could go after new markets. • They talked about pursuing international markets and customers. • They looked to buy equipment while the terms were right. • And in some cases, they looked for ways to acquire other companies. I believe 2009 was a hinge moment for manufacturing in Minnesota. And that’s where we can see value in our focus group benchmarks. There is a huge difference between talking
about what you are going to do and what you actually did. I think it is fair to conclude, after five years, that Minnesota’s manufacturers actually walked the talk. I should make this clear: Not one manufacturer was happy about the downturn. The business cycle is a cruel master. Not one manufacturer enjoyed slogging through a recession. Tough decisions – sometimes excruciating decisions -- had to be made. Some people lost their jobs and some companies went out of business. These were confident, self-aware executives. They knew their products, they knew their customers, and they knew their industries. They analyzed opportunities that would enable them to soar when the economy bounced back. These executives oversaw LEAN companies in a fully evolved industry. That wasn’t always the case. To understand how this period was utterly transformational in manufacturing, let me recall another personal anecdote. Back in 1983, I bought a Honda Accord. It had a 4-cylinder engine and a five-speed manual transition. At a family gathering I proudly showed it off to a couple of my uncles. They were smart, solid, traditional American businessmen. They opened the hood and looked underneath for probably less than a minute. “This is just junk!” they said. Like American manufacturers of that day, they correlated quality with size. A high-quality car needed to be big and substantial. It had always been like that. It needed a heavy V-8 engine and thick tires. They assessed its safety by how heavy it was. My little Accord had none of these things. We all know now our cars today produce as much power in a 4-cylinder engine than we ever dreamt of in V-8s. Our cars are lighter, more efficient, safer, and they rarely break down. The reason? We removed unnecessary parts. We made them lean.
The same thing happened to American manufacturing over the illuminating shocks of the 1980-81 and 1990-91 recessions. If we had conducted a focus group of Minnesota manufacturers after the recession of ‘80-’81, the discussions probably would have little in common with the ones we just finished. They would have been in full panic. They were caught flat-footed by that recession and it hit them hard. It was a bad recession, at that time referred to as “the worst recession ever endured.” And a lot of manufacturers did not know how to cope. And a lot of them failed – a lot of them failed. The reason? Like my uncles, they measured quality by size and calculated progress by status quo -- the ways things were always done. The world was changing around them and they just didn’t see it: • Quality was inspection after manufacturing, not a part of it. Leading to the belief that the less
junk you wrote off at the end of the year, the better you were. • Automation was still in its early stage and not embraced. • They understood the value of Cost, Quality and Delivery Time, but thought products should achieve just one, maybe two, of those attributes – never all three. • They dismissed outsourcing to a skilled supplier as a competitive asset. Why would you outsource something when you could employ your own people to do it? • And there was no competitive reason to change. Their markets and their rivals were all local – and they all behaved the same way, so why change? But the recession of ’80-’81 gave them an answer. The failure rate was high. And worse, many manufacturers realized that they had fewer and fewer friends. Local communities were not allies. They viewed manufacturing
Skills for manufacturing success t8FMEJOH JODMVEJOH "842VBMJåDBUJPO t$PNQVUFS5SBJOJOHo &YDFM "DDFTT 8PSE t$"%$".5SBJOJOH t(%5 t#MVFQSJOU3FBEJOH t41$
Relevant. Real world. Results.
t4JY4JHNB 2VBMJUZ1SPDFTTFT t-FBO$POUJOVPVT *NQSPWFNFOU t.BOBHFNFOU-FBEFSTIJQ 5SBJOJOH t04)" t1SPKFDU.BOBHFNFOU t$/$
Call 651.846.1800 to customize training for your organization!
This document is available in alternative formats to individuals with disabilities by contacting Caidin Riley, Coordinator of Disability Services at 651.846.1547 or firstname.lastname@example.org. For TTY Communication, contact the Minnesota Relay Service at 7-1-1 or 1.800.627.3529. Saint Paul College is an equal opportunity employer and educator and member of the Minnesota State Colleges and Universities system.
ENTERPRISE MINNESOTA APRIL 2013 29
Does your accounting/ERP software do this? Reduce your manufacturing cycle time Improve customer service Provide real time information Streamline operations Reduce administrative costs
Call Rob or Russ at Solution Dynamics, your local Microsoft NAV manufacturing experts at 952-854-1415 or email@example.com
Reserve Your Ad Space TODAY! June 2008
Helping Manufacturing Enterprises Publisher Grow Profitably Lynn K. Shelton Daktronics Scores in Minnesota
PHOTOGRAPH BY CRAIG BARES
Inside Enterprise Minnesota® magazine youEditor will find in-depth Tom Mason information and unmatched Contributing Writer Andrea Strand insights into the latest innovations, business successes, and ingenious company leaders among Minnesota’s ing operational Managing Editor Sarah Asp Olson d competitive position. manufacturing community.
o our state’s
Waterous Surges into 125th Year
Page 1 Printers’ TWI Success
Helping Manufacturing Enterprises Grow Proﬁtably
Blazing Trails to the
Women leaders in Minnesota’s manufacturing industry tell us how they got there, what it’s like to be a woman at the top in a historically male-dominated industry, and why women today can thrive within it.
With the recession fading, companies look to hire new talent. 18
Traci and Lori Tapani, co-presidents of Wyoming Machine
Contract manufacturer LouRich takes a unique approach P Ranks ǚ 22 to exporting. Zierke
s with ISO
How Enterprise Minnesota’s Business Problem Solving course energizes continuous improvement eﬀorts. 26
ǚ Dual Languag
e Training at
St. Paul Brass
The magazine reaches Shari Schumacher Advertising Sales over 42,000 readers, om lean manufacturing THE NEW Laura Cohen iciency expertise to NORMA including CEOs and 612-373-9562 L t, and supplier and firstname.lastname@example.org additional key lients across their Editorial Director, Custom Publishing Sarah Wyatt Elbert e renaming and decision-makers. www.enterpriseminnesota.org
Helping Manufac turing Enterprises Grow Proﬁtab ly SEPTEMBER 2011
New appro aches manufactur that will help ers prospe r
not abandoning our have developed organization” through
Design Director, Custom Publishing Geoff Kinsey
Toyota Way discusses the expert David Meier beneﬁts of Practi Problem Solvin cal g 12 How strate gic thinking can refocu your operat s ion and target new customers 22 Seven tips to improve skills from your leadership the inside out 26
Anna Rivard Biss
>> Jim Schottmuller,
s develop needed Enterprise Minnesota Relationship Manager atively new program, >> email@example.com effective supply chain Enterprise Minnesota, Inc. rket new products >> 612.455.4225 310 Fourth Ave. S., #7050, Minneapolis, MN 55415 612-373-2900 This program applies >> www.enterpriseminnesota.org Enterprise Minnesota helps manufacturing enterprises grow idea engineering, profitably. cts to market. The ©2008 Enterprise Minnesota ISSN#1060-8281. elopment and trains All rights reserved. roduct ideas from Reproduction encouraged after obtaining Minnesota magazine. APRIL 2013 permission from Enterprise MINNESOTA ny client testimonials 30 ENTERPRISE Additional magazines and reprints available for purchase.
he first issue of
Contact Laura Cohen at 612-373-9562 or firstname.lastname@example.org.
facilities as dirty and polluting and contributing very little to their local economies. Manufacturing jobs were seen as unsafe, boring and poorly compensated. Economic developers fought like crazy to avoid being seen as a manufacturing community. They wanted to attract clean, progressive white-collar jobs. Then the recession passed and those that survived largely returned to the way they did things before. Until the recession of 90-91. By then, competition from low-cost Asian countries was a reality. The Japanese were remaking the market by offering quality, competitive pricing, and predictable delivery based on Lean, Continuous Improvement, and the Toyota Way. Good companies had begun to embrace lean as they knew they had to change. They started to respect operational efficiency. And by the time we reached the 2008-09 recession, they realized that efficiency actually had to be excellence as the entry point. The manufacturers at our 2009 focus groups had embraced lean and continuous improvement. For them, customer value became a leading process assessment measure. And as lean companies, they competed worldwide. And because of this, manufacturers were again seen as community assets, and are now heavily recruited into communities. Consider Dotson Iron Casting, a fourth-generation foundry located in downtown Mankato. Foundries are the oldest manufacturers in the world. They take virgin and scrap metal, and melt it down to make castings. And for years, the City Fathers in Mankato wanted them out of their city. They said these are not the kinds of jobs we want. We don’t want you here. Today, Dotson is in the same location next to a 60-acre park. The company is very energy efficient, very green and very clean in everything they do. They likely put out cleaner emissions in the air than the restaurant/bar down the street. And they have done this by
“Without lean, without operational excellence, and without continuous improvement, most of the high-quality, high-paying jobs associated with making stuff here in Minnesota, would be in some far-off country.”
reducing process and material waste in everything that they do. Manufacturing is back. Anyone who listened to President Obama’s State of the Union knows that “making stuff” is cool again. Using that lean journey, manufacturing has grown from a moribund, downtrodden industry that was getting smacked around by foreign competition and unloved by its communities to being the life-blood of its communities, and heartbeat of the American economy. Providing innovative solutions to its customers and meaningful careers to its employees. Without lean, without operational excellence, and without continuous improvement, most of the highquality, high-paying jobs associated with making stuff here in Minnesota, would be in some far-off country. This is the kind of information we all think we know instinctively, but the poll and the focus groups over the years have given us a valuable realization that we’re right. Every year, the poll provides policy-makers, media, and manufacturers themselves with a snapshot of industry trends and possible business developments through the insights and opinions of manufacturing executives. But this five-year reflection confirms that manufacturing is well founded as a stable job-creating economic engine for its local communities as well as the State of Minnesota.
Finding Their voice
continued from page 19.
costs back. Just the recent changes have increased our costs (having kids until 26 on health care). • It takes an enormous amount of time. I spent my week last week on health insurance and looking at employees. We self-insure to a point, and then we buy our insurance. I don’t think it’s fixed at all. It’s a huge cost; nothing is going up faster than that. It is going to get more complicated as the next two years go on. If you haven’t looked at it, you need to look at it. Because it’s happening, it is happening very fast, and it is changing rapidly. If there are seminars out there on it, go to them. Learn. If you don’t, you’re going to get caught and it’s going to be expensive. • Wellness is something we are putting a fair amount of emphasis on. We encouraging people to have healthy lifestyles through a variety of programs. But what I don’t know yet is what the return is going to be. It’s just too early to see.
• Health care is the single largest cost growth category we have. If we don’t get it under control, it’s going to eat up many businesses alive, I think. We are actually working with health facilities on site, we’re doing that in the larger facility so that we can see if we can control costs better. We would have medical people in the facility, so employees can come to an office on site for prescriptions or to deal with a cold issue, or other simple things. • We think that the employees are going to be the ones that use it first, but we will open it to dependents. We just started in January so it’s kind of an experiment right now. • We really don’t have a problem with our employees. People get sick and things happen but honestly the costs are far higher and far more consistent for the dependents in terms of what we see each year. How do you control that? • Nobody really understands what Obamacare is, what it really means.
THE LOOKOUT Always keeping watch to save his business energy and money.
The jury is still out for me, because health care is a very significant expense for us. If we are going to keep up with the mining companies, then we have to give our guys a really good health package. We have an exceptionally good one for a company our size. But in regards to Obama, I’m not sure what it will mean for our business at this point. • They ask for more money every year, but then they give you options: if you want to decrease your deductible then you can keep the premiums the same. So you basically are rolling the dice and they’re going to be a healthy workforce, and then you’ve kept your cost same. But if they are a sick workforce, then you’ve committed to paying their deductibles and you’re in deeper than you want to be. You’re at risk. To learn more about the State of Manufacturing® survey, go to www.stateofmanufacturing.com.
Minnesota Energy Resources helps manufacturers of all sizes save on high-efficiency equipment and projects. Be on the lookout for energy-saving rebates and programs at minnesotaenergyresources.com or call 866-872-0052.
It’s Worth The Energy®!
ENTERPRISE MINNESOTA APRIL 3/6/13 2013 315:02 PM
The Power of Open and Close
How manufacturing leaders can deliver more engaging, efficient and effective presentations. By Lindsay Strand When senior manufacturing leaders need to deliver a persuasive presentation to
Photograph Courtesy of Lindsay Strand
an internal or external board, funder or production team, there are three questions they most often ask. “How much detail is enough?” “How do I keep them engaged when they don’t want to listen?” And finally, “How do I scale delivery of information to different audiences?” I hear a similar question from manufacturing leaders transitioning their family-owned business to the next generation: “Why can’t my son (or daughter) communicate as effectively as I can?” In almost every case, it boils down to the same answer: Forget the content in the middle, and focus on your open and close. In two-plus decades of teaching and coaching senior leaders across business industries, I have seen this strategy proven, time and again.
The formula for a powerful open is simple. Start with a hook to engage the audience in you and your content. Then add a credibility-builder, either about you or the topic. This gives your audience a reason to pay particular attention to this presentation. Then state - out loud - what you are requesting and be sure it is delivered from the audience’s point of view. First, the hook. The hook might be a question you ask them to answer for themselves. For example, “What if we could achieve a 30-percent growth margin with no new budget spend?” It could be a fact, or a statistic written on a whiteboard. “Thirty percent. That is the growth we can achieve if…” Then, the credibility builder. This needs to be about you, or the issue at hand - whichever requires the most credibility for your particular audience. For example, “In all of my years here, I have not seen a stronger opportunity with the potential of a faster return.” Finally, deliver the “ask” from the audience’s point-of-view. This might sound something like, “I hope that today we can commit both to the project and the 90-day action plan that you have before you. If you green-light this project today, we will be on-track to achieve 30 percent growth in this next fiscal year.” This formula will immediately focus the audience on you and your point of view. It allows you to frame the issue and clearly lay out what is needed to move forward. Far too often, we jump to the middle of the presentation, assuming everyone knows the purpose of the meeting. This is a huge missed opportunity. Oftentimes, we don’t get past our open before the first question is asked. And when that happens, the audience will quickly begin to drift.
The close is equally important and not much different. The close includes both a ‘signal’ to close and a ‘recap’ of your ask from the audience’s vantage point. If your signal to close is clear, then you can be sure the audience will re-engage with you. It can be an obvious word choice, such as “In closing…” But it can also be a long pause, or a physical move, such as leaning forward in your chair, turning-off the PowerPoint, or turning on the lights to focus the attention of the group on you. Then, restate (again from the audience’s point-of-view) the same message you delivered in your open. When we sense our audience remains unconvinced, our likely response is to go deeper into the contents and the facts to persuade the audience. Instead, this is the time to deliver a big, “what it means” key message statement. The key message statement is the 30,000-foot view of how your call to action will move the process, people or organization forward. This formula is effective whether you are presenting to a few key individuals or to hundreds. By successfully “bookending” your presentations, you will engage audiences in you and your topics with speed and clarity, and achieve the more persuasive results you seek in less time. 32 ENTERPRISE MINNESOTA APRIL 2013
Lindsay Strand is president of Lindsay Strand Associates, Inc., a strategic communications consulting firm she founded in 1989. As an executive speech coach, Strand works with individuals preparing for critical announcements and presentations. She is an adjunct faculty member at the University of Minnesota’s Carlson School of Management Executive Development Center, and leads seminars and training programs on effective communications throughout the country. Strand’s media training experience is based upon her career as a television journalist, including her work as a political reporter at KSTP-TV in Minneapolis, Minn. and at the Illinois State Capitol as Bureau Chief for a group of television and radio stations. She also served on the Washington, D.C. staff of former Senator Charles Percy (R-IL). Strand holds a master’s degree in Public Affairs Reporting from the University of Illinois and a B.A. from Washington University in St. Louis.
To learn more about Lindsay Strand Associates, go to www.lindsaystrand.com.
ENTERPRISE DIRECTORY advertising section
Eide Bailly LLP
Eide Bailly is a full-service CPA and business advisory firm that serves more than 650 diverse manufacturing clients, ranging from food processors and household products to machinery, electronics and fabricated products. Our clients appreciate that we understand the complex issues they face and stay connected with them throughout the year. Using a team approach, clients benefit from seamless access to the services and resources they need to succeed.
McGladrey helps more than 8,000 companies compete in today’s complex environment. Combining industry knowledge, deep resources and personalized service, McGladrey offers solutions to reduce costs, increase efficiency and maximize profitability. McGladrey LLP is the largest U.S. provider of assurance, tax and consulting services focused on the middle market. McGladrey is a licensed CPA firm.
To learn more call 888.510.2687, or visit our website at www.eidebailly.com
801 Nicollet Ave., Suite 1100 Minneapolis, MN 55402 612.573.8750
U of M College of Continuing Education
We are focused on solving supply chain challenges for manufacturing and distribution companies while delivering real operational efficiencies through world-class, industry-specific, Microsoft business software. Your local Solution Dynamics team has extensive experience assisting organizations to select and successfully deploy ERP projects specifically for Minnesota distribution and manufacturing companies.
The University of Minnesota’s College of Continuing Education has been “opening doors” since 1913 for individuals looking for educational opportunities outside traditional paths. We offer interdisciplinary and applied degrees designed with the needs of working adults in mind. Our evening and online/blended course delivery and our supportive advisers contribute to your success. Credit and noncredit certificates, conferences, and individual courses provide distinctive opportunities for professional and personal growth.
usiness Solutions from Bank 2626 East 82ndU.S. Street, Suitesince 160 1863.
Bloomington, MN 55425 Voice: 952-854-1415 From managing your cash flow to providing tailored business solutions, Fax: 952-854-1442 U.S. Bank can propel your business to new heights. Our local & experienced www.solutiondynamics.net
612 624-4000 • fax 612 625-1511 CCEinfo@umn.edu www.cce.umn.edu
Business Banking sales managers and their team of Business Banking Officers are ready to take your business from where you are to where you want to be.
Tailored Business Solutions from U.S. Bank since 1863. From Call us today for a solution tailored to your business. managing your cash flow to providing tailored business solutions, U.S. Bank can propel your business to new heights. Our local & experienced Business Banking sales managers and their team of Business Banking Craig Veurink, Vice business President Region Manager, 952.927.1277 Officers are ready to takeSr.your from where you are to where you want to be. Mary Charbonneau, Executive Assistant, 952.927.1275
Craig Veurink, Sr. Vice President Region Manager, 952.927.1277
GSPNUIFLean efforts at their own co
Jeff Thill, CPA 651.766.2862 email@example.com www.wipfli.com
Mary Charbonneau, Executive Assistant, 952.927.1275 Flow
Member FDIC. 130135
Saint Paul College
Customized Training and Continuing Education provides quality, applied training at our site, your business, or online. We assist businesses and organizations throughout the metro area stay current and informed regarding best practices relevant to workplace and technical skills, leadership, organizational sustainability, and practical business solutions. Our partners can expect: • Customized training solutions to meet your organization’s unique needs and culture • Real-world applications taught by industry experts • Flexible training to ensure you get exactly what you need, when you need it.
Contact us at: 651-846-1800 www.saintpaul.edu/CTCE
With a strong regional focus, Wipfli LLP ranks amongSAVE the top 25 THE DATE accounting and business consulting firms in the nation. With 80+ years of experience serving over 1,800 manufacturers and distributors throughout the Midwest, we provide solid strategic thinking from different perspectives: financial success, tax optimization, operational excellence, and engaged workforce. Put the power of ourt5industry focus IJTPOFEBZFWFOUJTJEFBMGPSBOZPOF to work for you. MFBSONPSFBCPVULean Enterprise PS
t"UUFOEBOZPGUIFTFTTJPOTZPVMJLF BO QBSUJDJQBOUXJMMHFUall of the presenta materials from all six sessions.
Lean Enterprise Summit tRegister online by CLICKING HERE.
Tuesday, May 21, 2013 tThe cost is $90 per registrant. For ev attendees get 1 additional registrat South Central College • North Mankato Campus free.1MFBTFDPOUBDU5PN,BNNFS PG4 1920 Lee Boulevard • North Mankato, MN$FOUSBM$PMMFHF PS(SFH5IPNBTPG&O 56003
.JOOFTPUBUPUBLFBEWBOUBHFPGUIJTH This one day event is ideal for anyone wanting to learn more about Lean Enterprise, or to get more from the Lean efforts at their own company. 1SFTFOUFECZ .BJO4QPOTPS Keynote Speaker - Paul Akers. Founder and President of FastCap LLC and author of the book 2 Second Lean. For more information:
Tom Kammer • (507) 389-7336 firstname.lastname@example.org Greg Thomas • (507) 469-9183 email@example.com
-VODI4QPOTPS SAVE THE DATE
5VFTEBZ .BZ 4065)$&/53"-$0--&(&t/035)."/,"50$".164 -FF#PVMFWBSEt/PSUI.BOLBUP ./
t5IJTPOFEBZFWFOUJTJEFBMGPSBOZPOFXBOUJOHUP MFBSONPSFBCPVULean Enterprise PSUPHFUNPSF GSPNUIFLean efforts at their own company. t4JYUPQJDTXJMMCFQSFTFOUFEJOUXPTFQBSBUFUSBDLT
Lean ToolsLean Culture. t"UUFOEBOZPGUIFTFTTJPOTZPVMJLF BOEFBDI QBSUJDJQBOUXJMMHFUall of the presentation materials from all six sessions. tRegister online by CLICKING HERE. tThe cost is $90 per registrant. For every 4
Paul A. Akers
Keynote Speaker - Paul Akers 'PVOEFSBOE1SFTJEFOUPG'BTU$BQ--$ BOEBVUIPSPGUIFCPPL2 Second Lean. -FBSONPSFBUwww.paulakers.net All attendees will receive a copy of Paul Aker’s book, 2 Second Lean!
Published by Enterprise Minnesota www.enterpriseminnesota.org