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A PUBLICATION OF THE SOUTH CAROLINA MANUFACTURERS ALLIANCE • MADEINSC.ORG • NOVEMBER 2010

4 DAYS TO PROFIT Increasing Productivity While Decreasing Workdays

NEW HEALTH CARE LAW

How it will Affect Manufacturers and What You Can Do Now

APPRENTICESHIP CAROLINA

Preparing the Next Generation of Manufacturers

CLEMSON’S ADVANCE MATERIALS

Research and Development Transforms the Textile Industry

PALMETTO TEXTILES An Innovative History of Prosperity


Executive Editor Lewis F. Gossett gossett@myscma.com Managing Editor James A. Richter richter@myscma.com Creative Director Will Bryan will@gencreative.com Design/Layout Genesis Creative www.gencreative.com Contributing Writers Brian Gallagher Christopher LoPresti M. Brian Magargle Ann Marie Stieritz Sandra Woodward Advertising (803) 799-9695 James A. Richter richter@myscma.com Editorial Office 1340 Bull Street Columbia, SC 29201 phone (803) 799-9695 fax (803) 771-8738 www.madeinsc.org Copyright ©2010 SCMA. All rights reserved. Reproduction in whole or in part without the permission of the SCMA is prohibited. Printed in South Carolina. When you have finished with this magazine please recycle it.

Not Your

Grandfather’s

Apprenticeship

by Ann Marie Stieritz

From the President Our Roots are in the Textile Industry and it’s Future.

2

Economic Engine for South Carolina A Look at Clemson University’s Advanced Materials Center.

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Member News The Latest News About SCMA Members Across the State.

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4 Days to Profit The Pros and Cons of Moving to a 4 Day Workweek.

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T Your Not Grandfather’s Apprenticeship he term apprenticeship often conjures up an image of a blacksmith working with his new assistant or possibly the old-world baker teaching his son the family’s secret recipe. In each case, the older craftsman works to instill his knowledge and experience into the young worker in hopes of building his skills so that he too can become a master of the trade.

Palmetto Textiles The Past and Future of the Textile Industry in South Carolina.

6

In concept, the idea behind apprenticeship has not changed all that much. In fact, almost anyone starting a new job has encountered some sort of apprenticeship where they were most likely paired with a more experienced worker to learn the lay of the land for the given position. What has changed considerably over the years is the vast diversity in the types of industries that successfully use apprenticeship to develop and build their workforces. No longer is apprenticeship limited to the historical trades, but it has evolved to include such industries as advanced manufacturing, information technology, and healthcare, just to name a few. Just this past year, 30 new occupations were apprenticed in South Carolina. These positions are in a variety of industries. They include occupations such as aircraft structural maintenance techni-

12

cian, bank teller, coating machine operator, customer service representative, engineering technician, health information systems support analyst, logistics engineer, office manager, stamping press setup operator, and working crew leader, among others. Apprenticeship has truly evolved over the years. One of the most telling signs is the diversity of industries using apprenticeship as a workforce development tool. The registrations of apprenticeship programs representing a first in the state for their particular industry are wonderful examples of the diversity Apprenticeship Carolina™ along with the SC Technical College System is trying to achieve in South Carolina.

What is a registered apprenticeship program?

Apprenticeship is a time-tested means of employee career development. It combines supervised on-the-job learning with job-related education. A program “registered” with the U.S. Department of Labor (USDOL) shows an employer’s commitment to a highquality, highly skilled workforce that meets nationally recognized training standards. Registered apprenticeship programs also allow employees to receive incremental wage increases as they master new skills throughout the training.

Today’s New Breed of Apprenticeships. • Made in SC

www.madeinsc.org

12

Finding the Best Fit

The Times, They Are A’ Changin

25

30

Choosing Project Delivery Methods for Successfull Capital Projects.

How Health Care Reform Will Soon Impact Your Company.


From the President

O

ur roots are in the textile industry. That statement is as true for the manufacturing community in South Carolina as it is for the South Carolina Manufacturers Alliance itself. For over a century, South Carolina textiles have been among the leading manufacturing sectors in the state. Some folks have been quick to write textiles off, assuming that the various economic blows felt by the industry over the past three decades were more than enough to signal its collective end. On the way to that demise, however, someone forgot to tell the industry, its leaders, and its thousands of highly skilled workers. Instead, the South Carolina textile and advanced materials industry sector is very much alive and stands as a key component of South Carolina’s current and future economic picture.

Need proof? Begin with the study sponsored by New Carolina and conducted by North Carolina State University and Clemson University that reveals that these sectors comprise nearly 800 facilities across the State. Continue on to the remarkable run of textile economic development announcements by the South Carolina Department of Commerce in the last year alone. Finally, have a conversation with a textile industry leader, and you will be speaking with someone who knows he or she faces challenges but still has a sense of renewed optimism about the future. These industries have weathered extreme challenges over the last three decades, and they have done so without the first bailout from the United States Congress. Our companies have modernized facilities, increased employee productivity, aggressively pursued new markets, and developed some of the most high tech products in today’s consumer marketplace. As one challenge is met, though, others arise. The 21st century global economy presents an unlevel playing field for South Carolina textile and advanced materials companies. To survive, these organizations must work together to ensure that South Carolina’s business climate remains relatively favorable and that future policy decisions do not place this manufacturing sector at any further disadvantages. If nothing else, the New Carolina study provides us with an excellent opportunity to demonstrate to policymakers and the public at large that textiles are still alive and well in South Carolina and worthy of policy decisions that reflect the importance of this industrial sector to the future of this state.

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• Made in SC

Recently, a textile industry CEO whose company has been in South Carolina for more than 75 years told me that he firmly believed that we were on the verge of something of a renaissance in the American textile industry. He has a renewed sense of optimism, knowing that his company and his industry have been steeled by difficult times and are lean, fit, and ready to take on the global marketplace. That is exactly how we view the Textile Council and the industry it represents. We are more convinced than ever that this economy will recover only if the manufacturing sector takes the lead. The sprouts of optimism and growth that we have seen in the past year have occurred in large part due to a rebound in manufacturing. Textiles have demonstrated that they will play a large role in that recovery. As Mark Twain once said, “The reports of my death are greatly exaggerated.” That sounds about right for manufacturing in general and textiles in particular.

Lewis F. Gossett

President & CEO South Carolina Manufacturers Alliance gossett@myscma.com

www.madeinsc.org

photography by Renee Ittner-McManus

The South Carolina Textile Council, an industrial sector council within the SCMA, is a forum for top company officials to come together periodically to address issues most critical to the industry. Under the leadership of Rob Chapman of Inman Mills, the Textile Council has had significant growth in the past year and has reinvigorated its voice and its activities. The group is right in the middle

of the tax, trade, environmental, energy, and workforce development issues of our day. In fact, we are placing a particular emphasis on encouraging South Carolina’s school children to consider the textile industry as a career option. They need to see that this industry has ample opportunities for highly skilled, motivated people.


At the intersection of business and government With 15 lawyers selected for listing in The Best Lawyers in America速 and more than185 years experience in representing business and industry in Environmental and Regulatory matters.

David J. Tigges, Managing Shareholder/CEO McNair Law Firm, P.A. 1221 Main Street / Columbia, SC 29201 / 803 799 9800 / www.mcnair.net Anderson

B lu f f t o n

Charleston

Charlotte

C o lu m b i a

Greenville

H i lt o n H e a d I s l a n d

M y rt l e B e a c h

Paw l e y s I s l a n d


Member News

The South Carolina Manufacturers Alliance

Fava Joins Boeing South Carolina Team Boeing recently named Mark Fava Chief Counsel for its South Carolina site. In his role, Fava is part of the Boeing Commercial Airplanes legal team, and will serve as the lead attorney supporting and coordinating the company’s South Carolina operations. Before joining Boeing, Fava was a partner at Nelson Mullins Riley & Scarborough, LLP in Charleston, where his private practice focused on aviation law. He will be based in N. Charleston, S.C.

Hastings Appointed to Serve on the Manufacturing Council David Hastings, President of Mount Vernon Mills, Inc., has been appointed by United States Secretary of Commerce Gary Locke to serve on the Manufacturing Council. The Council provides a forum to identify and recommend ways for the U.S. Government to respond to challenges facing U.S. manufacturers. The Manufacturing Council is comprised of up to 15 privatesector executives who reflect a balance of U.S. manufacturing industry sectors, geographic locations, and business size. The Council advises the Secretary of Commerce on government policies and programs that affect U.S. manufacturing and provides a forum for proposing solutions to industry-related problems.

Johnson and Varn Named in Members of the Liberty Fellowship Class of 2012 R. Michael (Mikee) Johnson, CEO and President of Cox Industries, and Laura Varn, Vice President of Corporate Communications and Media Relations for Santee Cooper, have been named members of the Liberty Fellowship Class of 2012. The Liberty Fellowship is a statewide leadership initiative that fosters values-based approaches among rising leaders between the ages of 30-45 to diverse perspectives, critical thinking, and intellectual and personal development through an intense two-year program.

Stucker Named Director of the Lowcountry Manufacturers Council The South Carolina Manufacturers Alliance and the Lowcountry Manufacturers Council announce that Lindsay Stucker has been named the new Director of the LMC. Stucker will be responsible for the day-today operations of the Council along with community and membership relations.

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Milliken Among Twelve of America’s Safest Companies Milliken & Company has been recognized for a second time as one of America’s Safest Companies by EHS Today magazine. Milliken was first recognized in 2004 as one of America’s Safest Companies, and is the first award winner to be recognized twice. In recent years Milliken has received a great deal of recognition highlighting its standing as a good corporate neighbor. The Company has been named a FORTUNE “100 Best Companies to Work For” for five years, and an Ethisphere Institute’s “World’s Most Ethical Company” for four years.

BMW Manufacturing Begins Production of the New BMW X3 In early 2008, BMW Group announced that it would invest $750 million in the Greer plant, its largest investment in South Carolina to date. This commitment paved the way for construction of a new Assembly Hall built exclusively to produce the BMW X3 along with a significant expansion to the existing Paint Shop. The U.S. plant has become the exclusive manufacturing center for the BMW X Models.

Recent SCMA Member Expansion and Investment Announcements: 2AM Group – In a joint venture with CT&T,

the company plans to establish an electric vehicle production facility in Spartanburg County, creating 370 new jobs.

Parkdale Mills, Inc. - $45 million investment in the former Wellstone building in Cherokee County, retaining 145 jobs.

Southern Weaving - $1.5 million capital investment at its Greenville facility resulting in about 20 new jobs. Palmetto Synthetics - $7 million investment that will add a new building and equipment line, generating 75 new jobs. Behr Heat Transfer Systems - $3 million

investment to expand product portfolio that will generate more than 70 jobs over several years.

Mohawk Industries, Inc.

- $60 million investment to expand its Marlboro County facility that will create significant new job opportunities in the near future.

Boeing - At the new facility, the Interiors Responsibility Center South Carolina team will manufacture 787 interior parts, including stowbins, closets, partitions, class dividers, floormounted stowbins, used by flight attendents, overhead flight-crew rests, overhead flight attendant crew rests, video-control stations, and attendant modules. The facility is expected to create more than 150 jobs. November 2010 •

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Palmetto Textiles

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rom webbing in seatbelts to airbags, kayaks to bicycle seats, military and nursing uniforms, to everyday items used in our lives such as towels and clothing, the reach of textiles can be felt throughout the world.

South Carolina is home to hundreds of textile manufacturing companies that supply consumers with a vast array of products, services, and materials. In fact, a 2007 study sponsored by New Carolina and conducted by the Clemson University and North Carolina State College of Textiles, revealed that the South Carolina textile industry has significant impact financially for the state and that its presence is still strong. These results may seem quite surprising when the media seems to only produce headlines about another textile manufacturing plant closing.

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• Made in SC

www.madeinsc.org


DESPITE THE GENERAL PERCEPTION, there is still significant economic and innovative activity within South Carolina’s textile cluster. For instance, at Clemson University’s Advanced Materials Center, researchers are working to develop synthetic polymers and to enhance natural fibrous materials, including wool, cotton, and silk. Other research involves fiber-reinforced composite materials based on metals, ceramics, and polymers for high performance applications in the automotive and space industries.

The Civil War devastated South Carolina’s economy, including its existing textile industry. It took about 15 years after the War for the textile industry to “get its bearings.” Around 1880, South Carolina “embarked in cotton manufacturing in real earnest.” Men like William Gregg, Dexter Edgar Converse, and John Montgomery laid the foundation for the industry that would carry South Carolina’s economy well into the 20th century. The expansion of railroads enabled many South Carolina towns, including Spartanburg, Greenville, and Rock Hill, to become major cotton markets.

With the anticipated growth of global production and consumption of textile related products and services, there are opBy the turn of the portunities and challenges South Carolina Cotton Manufacturers for the South Carolina century, dozens Association Board - 1906 textile industry. The study of South Carodemonstrates that South lina towns, large and Carolina’s textile industry can have significant impacts not only small, were home to a textile mill. Dr. Walter Edgar, a history prothe South Carolina economy, but also on world textile markets. fessor at the University of South Carolina and best-selling author, Textiles in this State is not a dying industry, but rather a changing describes the changes in South Carolina: A History: one. It is a diverse sector with a long and innovative history. “Between 1895 and 1907, businessmen built 61 new mills and

History During the late part of the 18th century, while South Carolina’s Lowcountry busied itself with the politics and social activities that accompanied a cultural center as Charleston, Upstate farmers toiled to discover a profitable export crop. Little did they know that cotton was teetering on the edge of a revolutionary process that would forever change their lives.

illustration by Will Bryan

When Eli Whitney invented the cotton gin in 1793, cotton became a cost-effective crop almost overnight. Planting cotton for export, primarily to England’s growing textile industry, began in 1795 and spread rapidly. During the first cotton “boom” (1795-1819), almost everyone who planted cotton made money. As with most commodities, though, South Carolinians made and lost vast fortunes as the price of cotton rose and fell. In the 1840s and 1850s, as South Carolina agriculture balanced precariously between fortune and calamity, some forward-thinking citizens recognized that the state needed to expand its small manufacturing base. The industry that would one day rule South Carolina was a fledging enterprise. Eighteen textile mills were established before 1860, but, with the exception of the Graniteville Manufacturing Company’s mill, all of them were small enterprises (less than 1,000 spindles) that struggled to compete with Northern mills. ogether they employed fewer than 900 people. The Graniteville Mill, however, operated more than 9,000 spindles and had enough capital to compete successfully.

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expanded older ones… The newer mills were quite different from the pre-1880 ones that had only about 6,000 spindles and produced either yarn or greige goods (unfinished material). The new mills, modeled after those in New England, averaged 25,000 spindles and most produced finished cloth. Some of the mills were huge. The F.W. Poe Manufacturing Company in Greenville had 60,000 spindles and employed between 900 and 1,000 operatives.” Between 1880 and 1920, the number of mills in South Carolina increased by 1,300 percent, the number of textile workers 2,600 percent, the number of spindles 6,000 percent, and the value of textile products by 10,000 percent. The amount of money invested in textile mills was $3 million in 1880 and $140 million by 1920. The increased availability of hydroelectric power after 1900 greatly facilitated the textile expansion, which continued until 1920. After 1920, foreign competition, the introduction of synthetics, overproduction, and the depression slowed expansion. Textiles continued to be the mainstay throughout South Carolina. Companies invested heavily in existing mills during post-World War II, greatly expanding their size, technology, and product lines. Examples of facilities built or expanded during this period included at $60 million synthetic fibers plant in Rock Hill (Celanese), a $75 million orlon plant in Camden (DuPont), and three state-of-the-art mills in Pickens Counting (Deering Milliken, Inc.) By 1958, textile employment had risen to 160,000, and 80 percent of the state’s industrial payroll resulted from the textile industry. Arguably, textiles were a grand financial asset for the state. »

November 2010 •

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South Carolina Textile Industry Facts

• 16 major textile industry headquarters in SC • 80 other industry sectors affected by textiles

• 46 out of 46 counties in SC with at least one textile related business • 664 US patents generated by Milliken Research in the past 10 years

» Dramatic innovative changes that have continued to this day were on the horizon. Although cotton was king of textiles in the early 20th century, synthetics would usher in a new era. The first synthetic fiber, rayon, was introduced in the United States in 1910, but synthetic fabrics did not take hold until the 1940s and 1950s. By the end of the century, they would account for 70 percent of the United States fiber market. The second commercially successful synthetic fiber was nylon, developed by DuPont in 1935 and introduced to the public in 1939. While rayon had been derived from plant cellulose, nylon was made entirely from petrochemicals. Its first commercial uses were in women’s hosiery, sewing thread, and parachute fabric. When the United States entered World War II in December 1941, all nylon production was diverted to military uses. Nylon tires, ponchos, ropes, and parachutes all supported the country’s war effort. After the war, nylon production for domestic use soared, even as new synthetic fibers – acrylic, olefin, and polyester – came into production. By the 1950s, the synthetics industry was supplying more than 20 percent of the needs of textile mills. In 1952, the first “wash and wear” fabric, a cotton-acrylic blend, was introduced. Fiber innovation continued in the 1960s, with new fiber providing greater comfort, durability, soil resistance, and strength. Chemical and textile companies created fibers and fabrics for highly specialized uses, including protective clothing and other products for NASA’s space program. The introduction of synthetic fibers changed the textile industry forever. Although chemical companies created the new synthetic fibers, it was textile manufacturers that turned them into products could use. This often meant a complete overhaul of a mill’s processes and equipment, with changes required in spinning, weaving, and finishing, and many cotton manufacturers and workers initially resisted the dramatic changes required. Others, including South Carolina mills, accepted the challenge and combined a move to synthetic or blend fabrics with a comprehensive modernization program. Hamrick Mills experimented with rayon early in the “synthetic revolution” and eventually became a major producer of cotton-polyester blends. Other companies, including Inman Mills, Cheraw Yarn Mills, Spartan Mills, and the Graniteville Company undertook major modernization programs in the 1950s and 1960s that positioned them to thrive in the synthetic – and blend – dominated market of the 20th century. Many played leading roles in the new world of synthetics, including Graniteville, which invented the permanent press process, and Milliken & Company, which developed hundreds of new textile products in its extensive research facilities.

• #1 in US patents by a privately held US company over the last 20 years: Milliken Research

• 63,000 jobs in the Textile and Apparel Industries • 113,258 jobs from the Textile and Apparel Clusters and complementary businesses • 912 company location/branches throughout the state

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• Made in SC

In the 1980s and 1990s, a new world order began to replace the Made in the USA ideas. Buying from the lowest cost producer drove many textile manufacturers out of the production side and into imports. The face of the textile industry changed, but its presence as a productive and innovative industry did not.

Textiles Today The South Carolina textile industry of today has changed dramatically over the past 20 years. The industry is now high-tech and globally competitive. South Carolina has the world’s most modern and productive textile industry. Long gone are the days of dust and darkness in textile plants. Modernization has brought quiet, clean, ultra-modern technology to plants. Computer-driven operations, such as robots and lasers, are common sights in today’s textile plants. For over a century, the South Carolina textile and apparel industries have been the leading manufacturing sectors in the state. South Carolina companies have modernized facilities, increased employee productivity, aggressively pursued new markets, and developed some of the most high tech products in today’s consumer marketplace. » The 2007 study revealed that the textile sector remains a vibrant and essential component to South Carolina’s economy. The sector is comprised of approximately 810 facilities that have a presence in all 46 counties and employs roughly 63,000 South Carolinians. The industry consists of a

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©Shutterstock

• 2,200 US patents generated by Milliken Research since they opened in 1955


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or more than a century, the South Carolina Manufacturers Alliance has worked as a proactive voice for manufacturing, both in government and in the communities where our

members’ facilities are located. We have aggressively stood for pro-manufacturing policies and have worked hard to educate our public policymakers about the impact our operations have on South Carolina’s economy. Fortunately, many lawmakers and business leaders have listened. Some have done more than listen. Four years ago, the SCMA established its Defender of Manufacturing Award to recognize those leaders who have gone the extra mile in their support of South Carolina manufacturing. We intend to honor our previous winners as well as the 2010 recipients in a special dinner this fall. We hope you will join us.


» diverse, fragmented group of facilities that range from small, family-owned and-operated facilities that typically use older, traditional manufacturing techniques, to huge integrated mills that operate the most up-to-date machinery and production equipment.

SCMA Textiles Council As one challenge is met, others arise. The 21st century global economy presents an unleveled playing field for South Carolina textile companies. To survive, these companies must work together to ensure that South Carolina’s business climate remains relatively favorable and that future policy decisions do not place this manufacturing sector at any further disadvantages. The South Carolina Manufacturers Alliance’s revitalized Textile Council addresses these matters through a collaborative approach that consists of research, education, and industry leadership that will lead in the state. The challenges facing textile manufacturers in South Carolina are numerous. Significant tax challenges, workforce and industry image challenges, increased threats for organized labor activity, and an increase in environmental regulatory policies are just items that must be addressed in order to guarantee continued prosperity for the industry. The current economic climate is difficult for all manufacturing sectors - the industries that survive will do so not only through good sound business practices, but they will undoubtedly demonstrate a collective will and determination to stay viable. Textiles, now more than ever, need to demonstrate the unity of purpose and a cohesive approach to influencing public policy and to dealing with the various challenges that will face our industry. “I agree with that leading textile executive who said to me last year that we were on the verge of a renaissance in the American textile industry,” state SCMA President Lewis F. Gossett. “Economic development announcements once again include the textile sector. Its place in South Carolina’s manufacturing community is essential. It is just as important today as it was a century ago for South Carolina’s policymakers to do everything possible to create the best environment for its success. Mr. Milliken has said repeatedly that textiles are the “canary in the mine,” as difficulties faced by this industry have been harbingers of things to come for other manufacturing sectors. Likewise, the ability to adapt, innovate, and service are examples set by the textile industry for others to follow.” South Carolina and the textile industry - a rich history and a promising future. ### For more information of about the Textile Council, please contact Gloria Freeman at freeman@myscma.com ///////////////////////////////////////////////

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• Made in SC

www.madeinsc.org


Expanding Your Business. South Carolina St yle

We have a good thing going here in the Palmetto State. There’s plenty of room to grow, unmatched recreational opportunities, a low cost of living, a willing and able workforce, an unbeatable business climate and South Carolina’s Power Team. The Power Team is composed of Santee Cooper and the state’s 20 electric cooperatives. Together, we are committed to building strategic partnerships with smart, forwardthinking businesses. And we back this commitment by delivering quality service and reliable electric power at some of the lowest rates in the nation. So when it’s time to expand, ask yourself, “Why do businesses and industries that already call the Palmetto State home decide to expand here?” The answer is: they have it made in the shade in South Carolina. To find out more, visit www.scprimesite.com.


Not Your

Workforce Development

Grandfather’s

Apprenticeship

by Ann Marie Stieritz

T

he term apprenticeship often conjures up an image of a blacksmith working with his new assistant or possibly the old-world baker teaching his son the family’s secret recipe. In each case, the older craftsman works to instill his knowledge and experience into the young worker in hopes of building his skills so that he too can become a master of the trade. In concept, the idea behind apprenticeship has not changed all that much. In fact, almost anyone starting a new job has encountered some sort of apprenticeship where they were most likely paired with a more experienced worker to learn the lay of the land for the given position. What has changed considerably over the years is the vast diversity in the types of industries that successfully use apprenticeship to develop and build their workforces. No longer is apprenticeship limited to the historical trades, but it has evolved to include such industries as advanced manufacturing, information technology, and healthcare, just to name a few. Just this past year, 30 new occupations were apprenticed in South Carolina. These positions are in a variety of industries. They include occupations such as aircraft structural maintenance

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• Made in SC

technician, bank teller, coating machine operator, customer service representative, engineering technician, health information systems support analyst, logistics engineer, office manager, stamping press setup operator, and working crew leader, among others. Apprenticeship has truly evolved over the years. One of the most telling signs is the diversity of industries using apprenticeship as a workforce development tool. The registrations of apprenticeship programs representing a first in the state for their particular industry are wonderful examples of the diversity Apprenticeship Carolina™ along with the SC Technical College System is trying to achieve in South Carolina.

What is a registered apprenticeship program? Apprenticeship is a time-tested means of employee career development. It combines supervised on-the-job learning with job-related education. A program “registered” with the U.S. Department of Labor (USDOL) shows an employer’s commitment to a highquality, highly skilled workforce that meets nationally recognized training standards. Registered apprenticeship programs also allow employees to receive incremental wage increases as they master new skills throughout the training.

www.madeinsc.org


No longer is apprenticeship limited to historical trades, but it has evolved to include such industries as advanced manufacturing, information technology, and healthcare. Who is Apprenticeship Carolina™? Apprenticeship Carolina™ is a division of the South Carolina Technical College System. Apprenticeship Carolina™ works to ensure all South Carolina employers can access the information and technical assistance necessary for creating demand-driven registered apprenticeship programs. As a free service to the organization, our apprenticeship consultants work with companies to guide them through the development process from initial information to full recognition in the National Registered Apprenticeship System. Apprenticeship consultants enable certain employers to have a full understanding of the apprenticeship training model. They help employers structure their training programs. This includes identifying existing models for the occupations in which they are interested. In addition, Apprenticeship Carolina™ will connect employers with the appropriate resources and service providers to assist with training design and delivery as well as possible funding for the program. The apprenticeship consultants also assist employers with program revisions or updates as workforce needs evolve. One of the most highly-touted advantages of working with Apprenticeship Carolina™ is the filing assistance. The apprenticeship consultant will draw up the employer’s Apprenticeship Standards along with the Training & Education Outline for submission to the USDOL. Once approved, the program will be fully recognized in the National Registered Apprenticeship System

The benefits of a registered apprenticeship program The advantages of a customized registered apprenticeship program can be substantial. A few notable benefits include:

• Transfer of knowledge Organizations in all industries face the challenge of an aging workforce. As experienced, highly-skilled workers retire, organizations must find ways to ensure they pass along their knowledge and expertise to the next generation of workers. Apprenticeship does just this. It provides an excellent opportunity to transfer that knowledge from the experienced workers to new recruits.

• Consistent training The apprenticeship training model allows organizations with a registered program to reap the rewards of consistency in training and learning. These organizations also gain from the reputation that goes along with a credentialed workforce.

• Increased skills and productivity Participants learn not only the “what” of their job through on-the-job training but also the “why” behind their actions through job-related education. This holistic view of their

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activities and how they fit into a bigger picture leads to increased skill levels and increased productivity.

• Better retention and higher morale A registered apprenticeship program also provides a clearly defined career path for employees. This can result in better retention, decreased turnover, and higher morale, as well as a succession plan for the organization.

• State tax credit In 2007, South Carolina established a state tax credit for registered apprenticeship. Organizations with registered programs can receive $1,000 per apprentice per year for up to four years.

The recent growth of apprenticeship in South Carolina In the past three years, Apprenticeship Carolina™ has made great strides in increasing the awareness and understanding of apprenticeship as an effective workforce development tool. In fact, since 2007, the number of registered apprenticeship programs has grown from 90 to 271 – an increase of 201% for the state. In addition, the number of active apprentices in the state has increased by 236% to a current level of 2613. Apprenticeship Carolina™ averages at least one new employer-sponsored program each week and has been nationally recognized as one of ten innovative workforce development best practices. Since its establishment, Apprenticeship Carolina™ has grown the number of registered programs in advanced manufacturing by 229% from 28 programs to 92 programs. Many of these companies are members of the South Carolina Manufacturers Alliance. What’s more, 33% of all registered apprenticeship programs in the state are in the advanced manufacturing sector, and 30% of the total number of apprentices in South Carolina are apprenticing in careers in advanced manufacturing. South Carolina’s top apprenticed occupations in advanced manufacturing are: Maintenance Technician, Machinist, Electromechanical Technician/Mechatronics, Tool and Die Maker, Machine Operator, Chemical Operator, and CNC Programmer/Operator.

“It’s a Perfect Fit”: The Duer/Carolina Coils’ Apprenticeship Program Duer/Carolina Coil, a world leader in spring technology and manufacturing, announced last Fall the establishment of a federally-recognized apprenticeship program for new DC Coil employees. The occupations being apprenticed include grinder, spring finisher, and bar stock preparer. Each of these programs is

November 2010 •

13


two years in length and consists of over 200 hours of job-related education. According to Rick Eitel, manufacturing manager with DC Coil, “Apprenticeship Carolina™ fits with our overall commitment to training. It allows us to spend more time training, employees get what they need to be successful, and it’s a good fit for our ‘pay for skills’ program. This is an investment in our people and our company. We are working with springs that can weigh up to 1000 pounds and the plant is very hot. We feel that having well trained employees enables us to cross train and meet customers’ needs while maintaining quality and safety.” DC Coil recently received a new contract with OSHKOSH trucks to provide coils for military trucks (MATVs) going to Afghanistan. To meet the new production demands, each new employee will enter the apprenticeship program in one of three two-year programs: Grinder, Spring Finisher, and Bar Stock Preparer. Apprenticeship will provide the company a structured training program with identifiable benchmarks for their apprentices. “It’s a real win-win. If you have a method that you typically use for bringing new people up-to-speed in a given position, then chances are you have the framework for creating an apprenticeship model. The registration process is an easy one and the resulting benefits of the program are numerous,” Eitel added.

The new evolution of apprenticeship Your grandfather may be a little surprised by today’s apprenticeship programs - there are differences. This becomes increasingly apparent as the apprenticed occupations become more varied and the types of industries using apprenticeship grow more

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• Made in SC

diverse. Even so, there are still many similarities. The advantages of this model have remained the same. Organizations large and small see the many benefits a registered apprenticeship program can bring. It truly is the new evolution of apprenticeship.

About Ann Marie Stieritz Ann Marie Stieritz is Vice President of the newly established Division of Economic Development and Workforce Competitiveness at the SC Technical College System. She also was the founding director of Apprenticeship Carolina™. Ann Marie brings international experience in both education and economic development to her work. She holds a B.A. from Xavier University and a Diploma of Studies from the Université de Paris, la Sorbonne. She received both an M.A. and an M. Phil. in Political Science from New York University. Ann Marie was recently recognized as the 2009 Executive of the Year by the Palmetto Chapter of the International Association of Administrative Professionals. She was an inaugural inductee—and remains the youngest inductee— into her alma mater Carroll High School’s Alumni Hall of Fame. She was also named to the Midlands region’s Class of 2009 “20 Under 40” young leaders.

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Defender of Manufacturing Dinner Thursday, January 6, 2011 Four years ago, the SCMA established the Defender of Manufacturing Award to recognize manufacturing professional and legislative leaders whose tireless work made South Carolina a better place for the manufacturing community to do business. Join us as we recognize new and previous winners of this prestigious lifetime achievement award. Honoring: Senator Hugh Leatherman, Senator Glenn McConnell, Roger Chastain, and William McCrary, III Recognizing Previous Award Recipients: Representation Harry Cato, Senator Larry Martin, Senator Harvey Peeler, Speaker Bobby Harrell, and Burnie Maybank. The Westin Poinsett, Greenville, SC•Business Attire 6p.m. – 7p.m. Cocktail Reception · 7p.m. – 9p.m. Dinner & Program Individual Registration: $100 for SCMA Members $140 for non-SCMA members

Corporate Tables: $700 for SCMA Members $800 for non-SCMA members

Register Today by Visiting www.myscma.com Sponsorships Available: Contact Jessica Watts at watts@myscma.com or (803)799-9695 for more information.


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Certified Business Ready for your Project. Learn more about our Certified Business Ready® program at SouthernCarolina.org.

South Carolina’s Certified Business Ready Region SouthernCarolina.org · 803.541.0023 · sca@southerncarolina.org

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©Rendering courtesy of the Bordeaux Group.

Clemson University’s Innovation Center Rendering (Bordeax Group)

An Economic Engine For South Carolina Clemson University Advance Materials Research By Sandra Woodward

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dvanced Materials is one of Clemson University’s primary areas of emphasis within its missions of teaching, research, and public service. Clemson University’s advanced materials enterprise supports industries ranging from optical fibers and photonics to advanced plastics to biomedical materials. Advanced Materials research accounts for nearly 30 percent of the University’s total research funding and also supports several other research areas, such as automotive and transportation technology, biotechnology and biomedical materials, information and communication technology, and sustainable environment. John Ballato is a professor of materials science and engineering and the director of the Center for Optical Materials Science and Engineering Technologies and champions the University’s advanced materials research programs. He says Clemson has extended its reach as South Carolina manufacturing has diversified. For example, biomedical fibers are being tested for artificial arteries, scaffolds for cell or bone growth, and selfhealing fabrics that promote skin reconstruction. Non-traditional fibers are being produced for use in chemical and biologicalsensing platforms, telecommunication systems, and defensesensing and warfare applications. “The diversity of Clemson’s advanced materials research is truly amazing, and we believe our researchers, research facilities, and associated functions are assets to existing companies and those considering South Carolina as a manufacturing location,” he said. Through the South Carolina Centers of Economic Excellence (CoEE) program that provides state funds to match private

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investment in research universities in areas of existing or potential economic growth in the state, Clemson has six CoEEs with research focusing on advanced materials: Advanced Fiber-based Materials, Advanced Tissue Biofabrication (with MUSC/USC), Optical Materials/Photonics, Optoelectronics, Regenerative Medicine (with MUSC), and Tissue Systems Characterization.

Statewide Research Facilities for a Statewide Industry Advanced Materials is a statewide economic cluster, recognized as having exceptional growth potential, and Clemson is supporting the industry with both a wide range of research initiatives and research facilities that put Clemson researchers in contact with industry partners. More than 150 individual researchers are involved in Advanced Materials research at the main campus as well as at the University’s research and economic development campuses located across the state. In Greenville, for example, researchers at the Clemson University International Center for Automotive Research (CU-ICAR) are working with a variety of materials to address issues related to the automotive industry, including the use of composites to reduce weight and the road resistance of tire materials and construction, all designed to improve fuel efficiency. Also in Greenville, Clemson researchers are working with colleagues at Greenville Hospital System’s Patewood campus on a wide array of biomedical materials. In North Charleston, at the Clemson University Restoration Institute, research is under way on conserving maritime historical artifacts and also preserving modern materials from the wear-and-tear of daily use in marine, automotive, and aerospace environments.

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For example, the National Brick Research Center of America provides research, teaching, and services to companies that supply ceramic and structural clay products such as brick, tile, whiteware ceramics (toilets), mineral processors, refractory ceramics, and technical ceramics (spark plugs, etc.) in North America, including five South Carolina companies, while providing work experiences for Clemson University students and assistance to the University in meeting its public service mission. Research areas of the National Brick Research Center include minimization of air emissions in manufacturing, analysis of combustion processes, and adaptation of ceramic technology in waste recycling. The Tile Council of North America is also headquartered in the building adjoining the National Brick Research Center’s 34,000-square-foot laboratory. Ninety percent of the nation’s brick manufacturers are members and contributors to the research in these critical construction materials areas. In partnership with the South Carolina Research Authority, Clemson is completing construction of a 43,000-square-foot facility adjacent to the AMRL specifically to support the state’s growing advanced materials industry. Clemson’s innovation center will be the centerpiece of the University’s already robust incubation system and will occupy approximately 25,000 square feet dedicated to supporting startup companies or “landing parties,” especially in advanced materials. South Carolina manufacturers also receive analytical services for the development and quality control of new materials from Clemson’s Electron Microscopy (EM) Laboratory. Located at the Advanced Materials Center, the EM Lab is considered one of the finest centralized facilities of its kind in the nation. The EM Lab offers remote access to some of its instruments so that clients can view and control images from anywhere in the world using only a PC. This saves clients both time and travel expense and allows them to maintain control of their experiments in real time.

Collaboration for industry growth Clemson researchers work collaboratively with industry partners, conduct research to find solutions for specific industry problems, and sometimes improve upon existing materials to create new products and new markets to extend an industry’s potential. A recent example is a group of fibers that offer exciting potential for use in applications ranging from HEPA (high-efficiency particulate air) filters to oil-spill remediation. Through the generosity of two companies - Eastman Chemical and Proctor and Gamble - technology was donated to Clemson for further exploration of their potential value. Phil Brown, the J. R. Swetenburg Sr. Professsor of Materials Science and Engineering, says the collaboration across disciplines and the open exchange of information between academia and industry have created a wealth of new possibilities. “The Eastman/P&G portfolio seems to hold great potential

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Groundbreaking of Clemson University Innovation Center

in so many areas,” observes Brown. “And through a variety of interdisciplinary efforts, we’re certainly trying to mine that potential.”

Technology Transfer - From the laboratory to the marketplace The Clemson University Research Foundation (CURF) plays a critical role in South Carolina’s economic development value chain by managing the transfer of technology from the University by licensing to entities that can develop the discovery for commercial introduction. A typical license agreement grants rights for a period of years, often limited to a particular field of use and/or region of the world. Clemson currently has more than 190 technologies available for licensing, with more than 70 specifically in advanced materials. “Clemson has a proud tradition of working with the private sector to position expertise and inventions generated from University research and outreach for economic and societal benefit,” said Vincie Albritton, director of technology transfer in the Office of Research and interim director of CURF. “Clemson technology has been the basis for a number of South Carolina startup companies, providing technology-based jobs, increased private capital investment, and industry visibility.” As an example, Albritton noted KIYATEC, a startup company created by Clemson bioengineering graduates based on a Clemson invention -- a biomedical application to improve processes in tissue and cell culture research. KIYATEC recently launched its new product and is working with an existing plastics manufacturer in Anderson for production. “This has a direct impact on South Carolina manufacturing,” she said. “Clemson University faculty and students inventing new materials or new uses for materials in which they engage the manufacturing component of the state’s economy to produce a new product.” “Clemson University has the resources and the desire to be of significant service to manufacturing in the state and beyond,” Ballato said. “Advanced Materials is one area where the University has shown its ability to adapt historically to the changing needs of an economic sector, to provide new materials, new technology, and new markets, through research, technology transfer, and industry collaboration. We look forward to being a part of South Carolina’s economic growth.” +++ For more information: www.clemson.edu/research Advanced Materials research and industry support: John Ballato, 864-656-2424 or jballat@clemson.edu Technology licensing and business incubation: Vincie Albritton, 864-656-5708 or valbrit@clemson.edu /////////////////////////////////////////////////////

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©Photo courtesy of Clemson University.

In addition to these facilities, Clemson has an entire research and economic development campus dedicated to advanced materials research. The Clemson University Advanced Materials Center in Anderson County, just minutes from I-85 and minutes from the Clemson main campus, is a collaborative setting where research faculty and students are surrounded by industry partners focusing on the creation of new materials, novel new uses of materials, and the environmental impact of new materials in a variety of fields, such as ceramics, advanced fibers, and optical materials. The Advanced Materials Center is anchored by state-of-the-art research and support facilities in the Advanced Materials Research Laboratory (AMRL), which houses research initiatives in a variety of materials.


2011 Shingo & Lean Training Principles of Operational Excellence Learn tips for implementing lean techniques that maximize value and minimize waste in your day to day operation. WINTER 2011 Training Details and Date To Be Announced Soon! Check www.myscma.com for more information.


©Image by Will Bryan

By Christopher LoPresti

4 Days to Profit

increasing productivity while decreasing workdays

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ndron Stainless Corporation is a small manufacturer of stainless steel fittings for the food, dairy, beverage, and chemical industries located in Columbia, SC. There are thirty four employees working at Andron and the company has been in business for over seventeen years. The company has capabilities ranging from machining, welding, fabrication, and polishing. The industry in which Andron serves is very demanding, as most companies would say of their own industry. The average lead time tolerated by its industry is less than one week from the initial order being placed and an approval drawing being created to the part shipping out.

switch to a four day work week when we are already working six days a week to meet production demands?

I have been the plant manager of Andron Stainless for the last ten years. As with many managers in manufacturing, I have drowned in the sea of Lean and Six Sigma, always looking for a new way to lower cost and improve productivity. I toyed with the idea for years of shifting production from an eight hour, five day work week to a ten hour, four day work week. I felt this switch could have benefits to the bottom line, as well as, to the production workers on the floor. The greatest obstacle became, how do we

Success!!!

• Made in SC

In the Spring of 2008 I finally made the decision to make the switch. I decided to attempt the conversion by leading with a carrot. I first sat down with the production supervisors and explained the idea to them. Upon everyone reaching an agreement, we sat down with all of the production employees and outlined the plan. We explained to the production employees that if they could finish all orders due in a given week by Thursday, they would be given Fridays off. That idea was the dangling carrot. In today’s society I have found the younger generation would rather have their free time than the extra money from working overtime. Now the question was could they meet the deadline. After just two weeks, the production floor was running on four tens. There were numerous benefits seen from making this switch. Some of these benefits were even surprising to my expectations. The first benefit that we were trying to achieve was cutting overtime in the plant. We were able to achieve this in the first two weeks. Of course there were still occasions where a few people

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were needed, but overall there was approximately an eighty percent decrease in overtime. This also created more questions for me. How were we able to cut overtime and still maintain our production levels in the plant? Answering this question led to the next benefit. The next benefit that was seen was improved productivity on the shop floor. We were hoping to see this benefit but were uncertain how much more people would push themselves for the prospect of another day off. The more productive employees maintained their pace with some improvement but the less productive employees dramatically improved their pace to reach the goal of a longer weekend. This was a win-win situation for both the company and the employees that led to our next benefit, improved morale. Even though the less productive employees had to work harder, they were happier with the fact of having three day weekends. The more productive employees were happier not only to have longer weekends, but they also felt everyone worked equally around the plant. Prior to this, animosity would sometimes be seen between the more productive employees and those they perceived as being less productive. Not only did the more productive employees get the benefit of the longer weekend but they no longer felt like they were carrying the full load.

Another potential downside could be a decrease in morale. A situation we ran into was that we were unable to give the shipping department a four day work week. It was initially attempted but met with poor results so the shipping department was moved back to five days. This lowered the morale in that area and led to some personnel problems. The employee morale did eventually improve but I feel if the attempt was never made to change their shift in the first place, it would have had a significantly lower impact. Growing up, my father always taught me, you should never give something away if you may have to take it back. Overall, the results have been mostly positive. The benefits have far outweighed the downsides. As we recover from the economic downturn, our production demands are increasing. We have been working more overtime recently. Our long term goal, however, is to use the overtime as a gage. Our intentions are to create a second shift. This shift will work three twelve hour days. At that point we will have achieved our long term goal of having production available seven days a week. This will not only eliminate the downside of one business day a week without production, but increase our responsiveness with the ability to run hot rush jobs over the weekend to meet customer demands. This will be the strategy we use to propel ourselves into the twenty-first century as a strong and successful company.

“In today’s society I have found the younger generation would rather have their free time than the extra money from working overtime.”

The last direct benefit we discovered, which was surprising to me, was that the numbers of internal rejects were reduced and overall quality improved. Prior to this experiment, many parts would be rejected at the end of the process for minor touch up work. This touch up work was primarily cosmetic, but the employees understood it took time to rework parts that should already be done. By having to rework the already completed parts, they were unable to start new jobs needing to be completed by their deadline. This would cause a production delay and eliminate their Friday off. I have a motto that I have told the production employees repeatedly.

+++ Christopher LoPresti is the plant manager for Andron Stainless Corp. He can be reached at chrisl@andronstainless.com

Never sacrifice quality for delivery Never be late Therefore get it right the first time, on time

©Shutterstock

Without any pressure on my part, the employees took it upon themselves to live up to the motto, and created more production time on the floor by reducing the reworks. This not only had the benefit of higher productivity, but it also reduced the amount of supplies being consumed by production to rework the parts. There are downsides to be considered when contemplating a shift to a four day work week. The first of these, which can be most painful, is a lack of production one business day a week. We cater to a very fast paced industry and many of our customers will not wait a day if you do not have the product on the shelf. You have to look at potentially increasing your inventory to ensure a lack of outages. For those custom jobs, you may lose due to inability to inventory and a lack of employees on a particular day of the week. You may want to consider splitting the production time off so you have some production employees at your facility on the off day.

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The Southeastern Workforce Prot

Register today! •Previously know

The South Carolina Manufacturers Alliance, the South Carolina Department of Labor Licensing & Regulation, & the South Carolina Chapter of the National Safety Council are coming together to host the

2011 ANNUAL SOUTHEASTERN WORKFORCE PROTECTION CONFERENCE This conference offers timely and specific training opportunities to personnel at all levels – with hallmarks in quality, timeliness, applicability to daily work, low-cost, credits, and convenience.

2 ½ Days of Expert Training 28 Breakout Sessions 3 General Sessions March 1–3, 2011 The Marriott • Columbia • South Carolina Registration is only $245 Register at: www.WorkforceProtection.com Sponsorship and Exhibiting Opportunities are Available: Contact Jessica Watts at (803)799-9695 or watts@myscma.com


tection Conference: March 2011

wn as the “SC OSHA Conference”

Topics Include: Lockout Tagout What Should You Do Before We Come To See You Combustible Dust Arch Flashing, General Electrical 70E Training Requirements-OSHA Standards Beyond the Basics of Recordkeeping Respirator Overview OSHA Panel Don’t Let the New Crane Operations Drop on You PPE – Am I Covered? Annual Bloodborne Pathogens 1910.1030 Boeing OSHA Alliance Health Hazard Awareness in Construction Workers Compensation Case Management Preventative Maintenance and Safety Yes, You Do Need an Emergency Action Plan Work Zone Safety How to Become a Palmetto Star Employee Wellness Programs General Industry Fall Protection OSHA Update – What the Future Holds Give Me Five - Machine Guarding Take Care of the Little Things at your Plant Best Practice Presentations Accident Investigation How to Write and Implement Hazard Communication General Fire Safety Guidelines Catastrophic Event


©Shutterstock

Project Management

Finding The Best Fit

by Brian Gallagher

Choosing Project Delivery Methods for Success full Capital Projects

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or manufacturers, production efficiency, innovation, cost management, and time to market are critical factors for achieving a competitive advantage. As such, manufacturing facilities are a key part of a company’s business strategy, and a strategic approach to delivering capital projects is required. By choosing the right project delivery method for capital construction projects, manufacturing companies can ensure successful project delivery and meet overall business goals associated with the project.

DESIGN-BID-BUILD (DBB)

While there are a variety of project delivery methods available, choosing the appropriate strategic approach to project delivery varies by project. The decision needs to be based on a number of factors, including budget, schedule, cash flow, project complexity, risk mitigation, project team composition, and project goals. Traditionally, manufacturing firms retained sufficient in-house engineering and project management resources on staff. Due to economic and competitive issues, however, many manufacturing companies have reduced their in-house capabilities. This is a key consideration in selecting a project delivery method.

The owner typically starts by retaining an architect to program and develop a scope of work, then develop the project plans and specifications. The selection process for the architect can be competitive on a lump sum basis or the more traditional approach where the architect’s costs are a defined percentage of the total installed cost (TIC). The owner may have already selected manufacturing process equipment at this point. The architect generally prepares a preliminary cost estimate to assist the owner in budget development. These estimates are typically historically or empirically based.

Whether building a new greenfield facility, modernizing, or expanding an existing facility, there are a variety of approaches available for design and construction. Essentially, a project delivery method is a configuration of roles, relationships, responsibilities, and sequences on a project. Here’s a brief overview of some of the typical project delivery methods.

The DBB approach is typically used when the project is not well-defined and there is adequate time for the design and construction phases. DBB projects are typically competitively bid and priced as lump sum. The competitive nature of the bidding process usually results in a competitive cost for the owner, but the quality of the subcontractors is left to the GC. Under this

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DBB is the most common project delivery method in the manufacturing industry. Owners with sufficient in-house staff contract with different entities for each phase of design and construction, and the owners take on the responsibility of orchestrating the various team members. Each step in the execution process follows the other sequentially with minimal overlap. Under the DBB approach, the owner functions as the overall project manager and hires external engineers, consultants, and contractors.

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©Shutterstock

» method, all construction and performance risks are assumed by the contractor. Scope variations resulting in change orders and schedule delays can occur if the owner’s intent for the scope of work is not well-defined by the architect to the contractor. With DBB, the contractor has little influence on the project design, and opportunities for alternative approaches at bid time are minimal. In addition, the nature of DBB projects can contribute to an adversarial relationship among team members. Owners run the risk of expending significant funds and time for detailed design only to find out the final project, as designed, is above the project budget and schedule parameters.

DESIGN-BUILD (DB) The DB project delivery model is suited for manufacturing clients that require fast-track project delivery and want a single point of contact. The contractor and designers are hired by the owner to deliver a complete project. This model has been used extensively in the manufacturing industry for manufacturing, warehouses, and offices. The owner selects a DB firm from prequalified companies that have submitted designs and prices based on the project requirements. The DB firms retain their own architects, engineers, and other consultants. The selection criteria are based on a combination of factors, including design, price, schedule, and team. The DB firm selected by the owner is typically responsible for preparing the estimate and scope, as well as producing all construction drawings, details, and specifications. DB contracts are typically lump sum and based on the design that accurately meets the owner’s requirements. The owner may be given a guaranteed maximum price based on the defined requirements. DB is utilized to reduce the project delivery schedule. DB is typically used for architecturally-driven projects. The DB

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concept typically results in enhanced communication and a higher degree of accountability. While this is a complex delivery method, the compressed schedule and value engineering approach often result in cost savings for the owner. The DB approach is well-suited for larger, less complicated, time-sensitive projects where the owner has a clear project definition and concept prior to soliciting bids and desires a firm price to be confirmed early in the process.

CONSTRUCTION MANAGEMENT (CM) Under the CM method, the owner will retain a firm to act as its construction management representative. There are a number of variations on the CM model. An architect is retained to develop a design package. Either the architect, design engineer, or CM rep will develop a cost estimate. The CM is retained for a fee and is responsible for managing detail, design, and construction while meeting goals in terms of quality, scope, cost, and schedule. The CM rep is also responsible for estimate development, construction, engineering, subcontracts, scheduling, reporting, quality control, and cost controls. Then, architects, engineers, and consultants are retained to develop a program. Specifications and drawings are developed for various parts of the project. Multiple construction packages are developed, and bids are solicited from various trades that then become contractors reporting to the CM. Under the CM method, design and construction activities overlap. The CM representative is essentially an extension of the owner and is typically referred to as “Agency CM” or “CM for Fee.” The CM model is well-suited for owners that lack in-house design and construction expertise or capacity. The method ensures consistent oversight and careful monitoring of costs and schedule; however, this method can result in additional upfront costs and create communication challenges among the team. »

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s r e v i l e D

for South Carolina Manufacturers Since 1974, O’Neal has focused on delivering planning, design, and construction for manufacturers in the state of South Carolina. With our headquarters in Greenville, South Carolina, we understand the needs of manufacturers in our state. O’Neal is an employeeowned company -- we are South Carolina residents serving South Carolina companies. Our success is directly tied to your success.

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»

ENGINEER-PROCURE-CONSTRUCT (EPC) EPC has emerged as a preferred choice of project delivery for many industries and is starting to gain favor in manufacturing. With an EPC contract, the owner has a single point of contact for the project. Under this model, the EPC firm handles the design, procurement of all equipment and construction materials, and construction services for turnkey delivery of the facility, usually at a lump-sum price. The EPC process starts with a preconstruction effort that involves some preliminary planning and engineering to define the scope, schedule, and costs of the project. This can be completed for approximately 1% to 3% of the TIC. The EPC firm has complete responsibility for the project from start to finish. Project scope and estimates are developed by the EPC firm. The project schedule and project budget are known at the start. All scope and budget risks are passed to the contractor. EPC project delivery offers the tightest integration of activities during the construction process through a structured and disciplined approach. In addition, communication among the design, procurement, and construction teams begins immediately.

PRICING CONSIDERATIONS: GUARANTEED MAXIMUM PRICE (GMP) The GMP approach is similar to the lump-sum bid, except the GC, CM rep, EPC team, or design firm submits a guaranteed maximum cost rather than a firm lump-sum bid. The GC or EPC firm is compensated for actual construction costs plus a fixed fee. Design fees can be on a cost-plus or lump-sum basis. For GMP pricing, there needs to be a well-defined scope and time frame. On a schedule-driven project, the owner selects team members based on fees and/or labor pricing prior to developing project details and scopes necessary to procure credible lump-sum bids. Regarding the actual construction phase, a general contractor or EPC firm can participate in a “shared savings” approach that incentivizes them to manage costs and bring the project in under the GMP. If work is completed for less than the GMP, the contractor and owner can opt to share the savings. Additional incentives can be addressed for sharing risk of schedule, safety, and quality. If the actual costs exceed the GMP, the contractor carries that burden. These variations effectively identify project risk areas and initiate important discussions concerning project responsibilities and ultimate accountability among the project team members. Under the GMP approach, the owner is given a “not-to-exceed” cost during the project development phase for the overall project by the GC or EPC firm. The GMP approach allows the owner to establish a firm project cost early. Once the GMP is established, the risk of cost performance is transferred to the GC. GMP arrangements typically involve an open-book approach to costs. The GMP feature can be successfully implemented in most project delivery approaches.

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©Shutterstock

The EPC model helps align team members for optimal project performance. This often results in a collaborative, value-based construction process. EPC delivery is typically used for process or equipment driven projects. The EPC model reduces project risks for the owner, delivers predictable results, and maximizes the effectiveness of capital planning.

ACHIEVING COMPETITIVE ADVANTAGE THROUGH PROJECT DELIVERY Whether manufacturing, R&D, or warehousing, capital projects are becoming more challenging and complex. The right configuration of roles, relationships, responsibilities, and sequences is essential. The owner’s ability to define and develop project requirements and scope, as well as to provide project management, significantly impacts the decision process. Owners need to consider cash flow (initial and overall), opportunities for concurrent processes with other project activities (e.g. process design, long lead-time items) and the owner’s capital approval process. Selecting the right delivery method can be challenging, but the success of any capital project depends on it. Project objectives vary by each project, and there is not a single project delivery method that addresses every situation. While there are trade-offs for each delivery method, quality, cost-effectiveness, and timely project delivery can be achieved. By clearly defining expectations and balancing project goals, costs, schedule, complexity, risks, and the team, manufacturing companies can achieve competitive advantages through project delivery. +++

Brian Gallagher is Director of Marketing for O’Neal, Inc. He can be reached at 864-298-2037 or bgallagher@onealinc.com.

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The Lawyers of Constangy, Brooks & Smith, LLP Invite You to Visit

And, feel free to browse around awhile. www.constangy.com


Health Care

The Times,

They Are A’Changin How Health Care Reform Will Soon Impact Your Company

©Shutterstock

By M. Brian Magargle, Esq.

I

n March of this year, President Obama signed historical legislation reforming how the health care delivery system throughout the entire country operates. The law is called the Patient Protection and Affordable Care Act (PPACA), and it will have an enormous impact on company-sponsored health plans. Although many of the changes are not effective for several years, some important changes took effect as early as September 23, 2010. Companies must be familiar with these changes to be able to work with your insurers and health care providers as well as to understand how they will affect your employees on a day-to-day basis. The specific date on which the changes listed below will affect your company depends on how your health care plan operates. These changes became effective on September 23, 2010, or on the first day of the first plan year after September 23, 2010. For example, if your health plan uses a plan year of July 1 – June 30 to measure benefits and collect records, then the changes would

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not apply until July 1, 2011. However, the majority of employersponsored health plans operate on a calendar-year basis, meaning that the plan year is January 1 – December 31. For those calendaryear plans, the changes are effective on January 1, 2011, which is just a few months away. Regardless of how long your timeline may be, you should be preparing now to understand and implement the new rules.

No Lifetime Limits. One of the most significant changes for the coming year is the elimination of the lifetime limit on the benefits which can be paid out under a group health plan. Under prior law, an insurance company (or self-insured plan) could place a maximum on the amount of claims which an individual could incur over his or her lifetime. These maximum amounts often ranged from $2 million to $5 million. The PPACA eliminated all lifetime limits, meaning that an employee or dependent who experiences a catastrophic injury or illness will have no financial limit on the claims he or she can incur through a group health plan. It is yet

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to be seen how this change will affect annual employee premiums, but they will almost certainly increase as a result. (In addition, effective January 1, 2013, group health plans may not impose any maximum annual limits on benefits paid for an employee or dependent.)

Coverage of Adult Children. Until the enactment of the PPACA, group health plans normally excluded an adult child of an employee unless he or she was enrolled as a full-time student, usually at a college or technical school. Even then, most group health plans prohibited coverage of adult children after a certain age, regardless of full-time student status. Now, all adult children, married or unmarried, must be eligible for coverage until age 26. If, however, the child is eligible for coverage under his or her own employer’s plan, coverage under the parent’s plan is generally not required (although even this exclusion expires on January 1, 2014). The cost of coverage is not considered taxable income to the child or the employee, regardless of whether the child is a dependent for federal income tax purposes. Thus, the number of dependents in most group health plans will likely increase, especially with high unemployment rates preventing so many younger adults from finding their own employment with health benefits.

contact information to obtain assistance with the appeals process. These procedures must also allow a participant to review their file, present evidence and testimony as part of the appeals process, and receive continued coverage pending the outcome of the appeals process. Regulatory guidance is expected soon from the U.S. Department of Health and Human Services, especially as to how language is supposed to be “culturally and linguistically appropriate.” In the meantime, employers must be sensitive to challenges about the fairness of the claims and appeal process in their health plans.

Other New Requirements from the PPACA. In addition to these issues directly relating to employersponsored health plans, the PPACA contains a few interesting provisions which will also affect your workforce. First, the value of health coverage received by employees must be reported on annual W-2 forms beginning in 2011. The value is generally determined by all premiums paid by the employer and the employee.

Your company should make every effort to monitor these new requirements and plan ahead to prevent unanticipated financial and legal consequences from failure to comply.

Pre-Existing Conditions of Children. The Health Insurance Portability and Accountability Act of 1996, known as HIPAA, tightened the rules for group health plans which excluded treatment for pre-existing conditions. (Pre-existing conditions are ones for which an individual received treatment before becoming covered under a group health plan.) Now, almost 15 years later, the PPACA has virtually eliminated all forms of pre-existing condition exclusions. Effective September 23, 2010 (or the next plan year, as explained above), group health plans may not impose any pre-existing condition exclusion for dependent children who are under the age of 19. Then, the rule will be extended to all employees and dependents effective January 1, 2014. The likely effect of these changes will be additional costs to employers and insurers because no treatment for a pre-existing condition can be denied, no matter how long that condition has existed or what coverage an employee or dependent may have had before becoming covered under an employer-sponsored group health plan.

Retroactive Cancellation of Coverage. After an employee or dependent has become covered under a group health plan, PPACA prohibits retroactive cancellation of that coverage, except in cases of clear fraud and intentional misrepresentation and then only with prior written notice. Although additional guidance is expected from the U.S. Department of Health and Human Services, considering the liberal approach to other parts of reform in the PPACA, it is reasonable to expect the standards for showing fraud and intentional misrepresentation will be quite high.

Claims and Appeal Procedures. Plan claims

and appeals procedures must now be explained in a manner that is “culturally and linguistically appropriate” as well as provide

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Second, employers with 50 or more employees must provide a room or private area for breast-feeding mothers to express breast milk for up to one year after the birth of a child. There are specific rules for setting up the room or private area, and mothers are allowed to use it whenever necessary (though the breaks do not have to be compensated). Employers with fewer than 50 employees are exempt as long as they can show an undue hardship with respect to the “size, financial resources, nature, or structure of the employer’s business.” Third, the PPACA contains a strong anti-retaliation provision which prohibits employers from taking any negative action against an employee who attempts to assert any rights under the PPACA. Although most federal employment laws contain an anti-retaliation provision, the one in the PPACA is especially broad and unfavorable to employers, so any issues raised by employees about their health care coverage must be treated very carefully. The changes outlined above are just a few of the wave which are coming over the next four years, many of which will make even more drastic changes in how our health care delivery system functions. Your company should make every effort to monitor these new requirements and plan ahead to prevent unanticipated financial and legal consequences from failure to comply. +++ Constangy, Brooks & Smith, LLP, has represented management in labor and employment matters since 1946 and has more than 20 offices in 13 states. Brian Magargle practices in the Columbia, South Carolina, office in the areas of employee benefits and employment law. He may be reached at 803.256.3200 or bmagargle@constangy.com

November 2010 •

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2010 SCMA Meetings / Events Defender of Manufacturing Dinner Date · January 6 Location · The Westin Poinsett, Greenville, SC

Annual Textile Summit Date · January 24 Location · The Marriott, Columbia, SC

Winter Membership Meeting Date · January 24-25 Location · The Marriott, Columbia, SC

Environmental/Hazardous Waste Generator Training Conference Date · February 1-2 Location · The Marriott, Spartanburg, SC

Southeastern Workforce Protection Conference & Plant Safety Awards Ceremony Date · March 1-3 Location · The Marriott, Columbia, SC

Manufacturing Managers Meeting Date · April 27-29 Location · The Westin, Greenville, SC Sponsorship & Exhibiting Opportunities Available ∙ For more information, visit www.myscma.com

or contact Jessica Watts at (803)799-9695 or watts@myscma.com

NEXT ISSUE

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The next edition of the Made in South Carolina Magazine will highlight the economic development efforts within the manufacturing sector in South Carolina with a focus on what it takes to recruit new manufacturers and help existing operations grow.

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• Made in SC

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Energizing industry. It’s the power you see. At Duke Energy, we’re doing more than providing reliable energy. We’re developing innovative solutions to help our business communities thrive.

What can Duke Energy do for you? Visit us at www.duke-energy.com.


“Since beginning our relationship with Gibson & Associates, SCMA members have saved millions in health care costs. It is worth giving them a few minutes of your time to see what they can do for your company.” - Lewis F. Gossett President & Ceo, south Carolina manufacturers alliance

Providing insurance and benefit plans designed exclusively for your company’s needs

HealtH life Dental Disability supplemental Workers’ ComPensation property/liability

www.gibsoninsurance.net (803) 772-0100 or 1-800-733-3391 ©2010 Gibson & associates


Made in SC - November 2010