PLNT01_2011

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Volume 70, No. 01 January/February 2011

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PLANT SALARIES They’re going UP

HIGHLIGHTS Watch out for inside fraud Picking the right palletizer Poka yoke your mistake rate Transforming the power industry

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MECHANICAL DRIVES

SEVERE DUTY CORROSION PROTECTION

the

F-SERIES SNUGGLER®

Parallel Helical Gearmotors SEW-Eurodrive’s F-Series parallel helical gearmotor lives up to its name as the ideal drive for tight space conditions. This compact drive, with its multiple mounting configurations, is a rugged alternative to right angled gearmotors.

SEW-Eurodrive has introduced a new line of aseptic gearmotors to meet the high levels of hygiene crucial to the production of food and beverages, as well as the stringent demands of the chemical and pharmaceutical industries. SEW has solved this challenge with the aseptic design of helical, parallel shaft helical, helical-bevel and helical-worm gearmotors made entirely of smooth stainless steel, cooled by pure convection cooling — eliminating conventional fan and cooling ribs, which prevents the build-up of germs and bacteria on the surface and allows for easy regular cleaning.

CORROSION PROTECTION PRODUCT RANGE Power ratings from 0.34 to 2.0 HP Can be mounted directly onto R, F, K, S-Series gear units in all standard positions

F-SERIES PRODUCT RANGE Power ratings from 0.05 to 336 HP Output speeds from 0.06 to 464 rpm (based on 4 pole motor) Output torques to 159,300 lb-in.

Energy Savings. Cost Savings.

Together at Last.

K-SERIES Helical-Bevel Gearmotors SEW-Eurodrive’s K-Series right angle helicalbevel gearmotors deliver maximum performance and reliability with 95%+ efficiency and high torque density. Durable gearing designed for long service life makes this drive an ideal choice for demanding around-the-clock applications.

K-SERIES PRODUCT RANGE Power ratings from 0.05 to 615 HP Output speeds from 0.05 to 326 rpm (based on 4 pole motor) Output torques to 442,500 lb-in.

S-SERIES Helical-Worm Gearmotors SEW-Eurodrive’s S-Series right angle gearmotors offer helical-before-worm gearing combining durability with power-packed performance in a compact design that requires no motor belts or couplings.

S-SERIES PRODUCT RANGE Power ratings from 0.05 to 46 HP Output speeds from 0.05 to 257 rpm Output torques to 35,400 lb-in.

Introducing DR Series

AC MOTORS and Brakemotors SEW-Eurodrive’s squirrel-cage motors and brakemotors deliver exceptional performance and reliability combined with low maintenance.

Designed for continuous duty under tough service conditions, these low-noise brakemotors are used wherever fast, safe braking is a major application requirement.

The built-in encoder is fully integrated into the motor, reducing the cost and complexity of encoder engineering as well as its footprint.

SEW-Eurodrives’s new DR Series of AC motors have been engineered from the ground up to meet motor demands of the 21st century: like high efficiency performance that complies with international standards; a compact footprint that saves space; a modular design that allows for three different brake sizes to be used with a single motor size; and a simple, integrated encoder that can be easily retrofitted. What’s more, these new motors can be integrated into SEW gearmotors, used as stand-alone motors or in decentralized control architectures.

The DR Series also comes in two energy efficient options: DRE (energy-efficiency) and DRP (premium efficiency).

Driving the world AC MOTORS PRODUCT RANGE Power ratings from 0.25 to 100 HP 2-, 4-, 6-, 8-, 4/8-, 2/6-, 2/8-pole plus others Integral brakes to fit all frames

Toronto (905) 791-1553

Montreal (514) 367-1124

Vancouver (604) 946-5535

www.sew-eurodrive.ca

Editorial

Tax rate cuts, a good thing

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PHOTO: iSTOCKPHOTO

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T

he Harper government’s intention to continue reducing corporate tax rates by 1.5% this year and next has been getting a lot of attention as the pros and cons square off over what could be the trigger to a fourth bi-annual federal election.

These cuts are poor excuse to go to the polls, but if that’s what happens, we have a decision to make. Do we want to be a country that grows its wealth and ensures prosperity for all over the long term; or do we redistribute what wealth we have for the dubious benefits of short-term social and economic engineering?

Business groups, economists, analysts, pundits and politicians are lining up on either side of this issue tossing graphs and pie charts at each other, arguing over whether or not the cuts lead to more business investment, jobs and money in everyone’s pocket.

A senior Statistics Canada analyst says a tax rate cut is but a drop in the bucket of corporate revenues; other factors such as resources, oil prices and currency fluctuations have greater impact on investment decisions.

The Canadian Auto Workers (CAW) union claims the cuts will cost rather than create jobs. Research by CAW economist Jim Stanford, using the federal government’s own figures, shows the impact of the cuts on GDP trails other, more effective measures such as extending EI benefits, infrastructure spending, housing investment and personal income tax cuts.

On the political front, Liberal leader Michael Ignatieff is trotting out unimaginative corporate bogeyman imagery with his positioning of the cuts as a big break for big business that’s also coming at a bad time. He contends the government should be using the $6 billion in would-be tax savings to deal with the deficit (which weighs in at about $56 billion) and – as the NDP also pleads – to help families.

Yet there’s an argument to be made that families will win with rate cuts. Canadian Manufacturers & Exporters (CME) has also analysed numbers from Statistics Canada and other sources that show leaving more money in manufacturers’ hands – most of whom are SMEs, not Ignatieff’s big corporations – is actually a good thing. There’s a 30-year pattern of higher corporate profits coinciding with higher investment, more jobs and, incidentally, the taxman benefits in the end from all the additional commerce.

CME president, CEO and economist Jayson Myers notes businesses have spent about 50% of after-tax cash flow on new facilities, machinery and equipment during that time, and there’s no reason to suspect that pattern is going to change.

A research paper by economist and tax expert Jack Mintz and co-author Duanjie Chen, both with the School of Pubic Policy at the University of Calgary, says taking the federal corporate rate down to 15% from 16.5% next year will add $30.6-billion to the Canada’s capital stock and generate 100,000 jobs.

Mintz said that Canada being seen as a low-tax jurisdiction is also attracting foreign investment, but even with all the tax cuts in place, Canada will only sit in the middle of the world’s leading economies. Rescinding the cuts will set us father down the list as other nations continue their rate cut measures.

Ignatieff is right about one thing; we do need to deal with Canada’s debt. According to The Economist, each Canadian is shouldering a combined federal and provincial debt load of about $34,000. We’ve seen how well governments have managed it. Let’s not impede businesses from such an important task as generating wealth and growing the economy to help alleviate that burden.

Joe Terrett, Editor Comments? E-mail joe.terrett@plant.rogers.com.

Editorial Advisory Board: Robert Hattin, Hattin Holdings • Ron Harper, Cogent Power • Greg MacDonald, Wentworth International Services • Roy Verstraete, Anchor Danly

Vol. 70, No. 01, January/February, 2011 Publisher: Tim Dimopoulos 416-764-1499 tim.dimopoulos@rci.rogers.com Group Editorial Director: Lisa Wichmann 416 764-1491 lisa.wichmann@rci.rogers.com Editor: Joe Terrett 416-764-1546 joe.terrett@plant.rogers.com Contributing Editors: Ron Richardson, Steve Gahbauer Art Director: Kathy Smith 416-764-1542 kathy.smith@rci.rogers.com Junior Web Producer: Jessica Mirabelli 416-764-1316 jessica.mirabelli@rci.rogers.com District Sales Managers: Amanda Bottomley 647-339-1666 Amanda.bottomley@rci.rogers.com Catherine Martineau (Quebec) 647-988-5559 Catherine.martineau@rci.rogers.com Deborah St. Lawrence 416-319-3227 Deborah.stlawrence@rci.rogers.com

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Derek Morrison 905-409-6976 Derek.morrison@rci.rogers.com Ilana Fawcett 416-829-1221 ilana.fawcett@rci.rogers.com Production Manager: Jennifer Reinhardt 416-764-3842 jennifer.reinhardt@rci.rogers.com Circulation Manager: Celia Ramnarine 416-764-1451 deokie.ramnarine@rci.rogers.com ROGERS BUSINESS & PROFESSIONAL PUBLISHING Senior Vice-President: John Milne Vice-President, Financial Publishing, Brand Extensions & Online Services: Paul Williams Director of Audience Development: Keith Fulford 416 764-3878, keith.fulford@rci.rogers.com Executive Publisher, Industrial Group: Tim Dimopoulos CORPORATE SALES General Manager, Corporate Sales: Sandra Parente 416 764-3818, sandra.parente@rci.rogers.com WEB General Manager, Online Operations: David Carmichael 416 764-3820, david.carmichael@rci.rogers.com RESEARCH Senior Director, Rogers Connect Market Research: Tricia Benn 416 764-3856, tricia.benn@rci.rogers.com

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Features

>> MANAGEMENT

10 Salary Benchmark Report Manufacturing owners, executives and managers who responded to a PLANT/EMC survey are seeing their pay rise as business picks up.

12 Occupational Fraud Employee fraud tends to rise when times are tough and SMEs tend to be the hardest hit. Watch for red flags.

>> OPERATIONS

13 Automation Should you go with a conventional palletizing system or one that’s enhanced with robotics? An expert explains how to make the right choice.

14 Think Lean Take a “poka yoke” at reducing defects and mistakes by preventing them. Lean leader Richard Kunst explains how to apply the technique.

15 Green Manufacturing Brett Wills offers some quick savings on kilowatt-hour consumption and peak demand charges.

>> TRENDS

16 Energy Industry What’s next for the power sector? Electricity generation faces some significant infrastructure challenges.

>> INNOVATIONS

18 High-strength steel R&D and fine tuning continues on advanced lighter and stronger grades of steel that will make vehicles safer.

>> TECHNOLOGY

19 IT for Industry Autodesk puts its design elements for plant operations in one basket: the Plant Design Suite 2011.

Departments

4 Industry View 6 Events 8 PLANT Pulse 9 Labour Relations 21 Product Showcase 22 Postscript

EVENTS General Manager, Conferences & Events: Stephen T. Dempsey 416 764-1635, steve.dempsey@mtg.rogers.com Subscription Department: For subscriptions services e-mail: rogers@cstonecanada.com 416-932-5071 Fax 416-932-1620 Outside Toronto 1-866-236-0608 Mail: Canadian PLANT, Circulation Dept. 7th Floor, One Mount Pleasant Road, Toronto ON M4Y 2Y5 Subscriber Services: To subscribe, renew your subscription or to change your address or information, please visit us at www.rogersb2bmedia.com/plnt. Mail Preferences: Occasionally we make our subscriber list available to reputable companies whose products or services may be of interest to you. If you do not want your name to be made available, please contact us at rogers@cstonecanada.com or update your profile at www.rogersb2bmedia.com/plnt.

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Canadian PLANT receives unsolicited materials including letters to the editor, press releases, promotional items and images from time to time. Canadian PLANT, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such unsolicited submissions in whole or in part in any form or medium whatsoever, without compensation of any sort. This statement does not apply to materials/pitches submitted by freelance writers, photographers or illustrators in accordance with known industry practices. Our environmental policy is available at www. rogerspublishing.ca/environment. We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund CPF for our publishing activities.

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ISSN 1922-5261

Canadian PLANT 3

Departments

>> Industry View

>> Feedback In the wind Thanks for the "Wind Energy" article on gearbox and bearing design and maintenance in the November/December 2010 issue of PLANT. It was interesting and informative. But the author appears to draw an unfavourable comparison between Canada and China in the installed capacity of wind turbines.

Sorry to quibble, but I get testy when China is held up as an exemplar of responsible energy generation. China may have 6,000 megawatts of installed capacity, but other renewables, which include wind, account for 0.2% of its energy consumption, while 71% comes from coal (US Energy Information Agency Country Analysis Briefs).

Canada’s other renewables are 1% of consumption.

And thanks for the Postscript

by Todd Hirsch on literacy. This is a huge issue that flies under the radar because there is a tendency to equate literacy and intelligence, which is not the case. I like the way he links it to productivity.

When you know the numbers – 42% of the adult workforce in the bottom two levels of literacy, 50% for numeracy and 67% for problem solving skills – it’s hard not to be appalled. Congratulations on airing this issue.

Jack Patriarche Strategic Marketing Services International Newmarket, Ont. We’d like to hear from you.

Send letters to joe.terrett@ plant.rogers.com with your name, address and phone number. Letters will be edited.

Machinery write-off: extension or distortion OTTAWA: Two noted Canadian economists are on the same side when it comes to the benefits of the federal corporate tax rate cuts to be implemented by the Harper government this year and next, but they disagree on the fate of the two-year tax write-off on machinery and equipment.

Canadian Manufacturers & Exporters (CME) has been lobbying hard to extend the tax measure until at least 2016. But a research paper by economist and tax expert Jack Mintz and co-author Duanjie Chen, both with the School of Pubic Policy at the University of Calgary, calls for a more neutral tax system and supports an end to special preferences, such as the write-off. The authors contend it and other preferential tax measures, federal and provincial, aimed at manufacturing and processing, have worsened inter-industry tax distortions.

CME president, CEO and economist Jayson Myers said Mintz is “wrong-headed” on the write-off, noting it has provided manufacturers with an essential boost to cash flow at a time when they need to invest in new equipment and technologies to take advantage of the economic recovery.

“If the fast write-off ends as scheduled at the end of this year, it will cost manufacturers $2.5 billion in additional taxes over the next five years – at a critical time for investment – when they can least afford it,” said Myers.

CME’s analysis shows the accelerated capital cost allowance measure (initiated in 2007

environmental remediation plan, was funded through cash flow and the company said it intends to remove the remaining portion of the $5.9 million environmental liability from its balance sheet, which president and CEO Ron Bedard said “has long been an item of concern for investors.”

Lakeside manufactures oil country tubular goods for large oil and gas end users, and distributors across North America.

First Solar technician at the company’s Perrysburg, Ohio manufacturing plant handling a photovoltaic solar cell.

PHOTO: FIRST SOLAR

Enbridge adds more solar power CALGARY: Enbridge Inc. is acquiring two solar energy projects in Ontario from First Solar Inc. that will have a combined generating capacity of 20 megawatts.

The Calgary-based energy company is investing approximately $90 million in the Tilbury Solar and Amherstburg II Solar projects.

First Solar, a manufacturer of solar modules based in Tempe, Ariz. (with a facility in Sarnia, Ont.), completed construction of the 5-megawatt Tilbury project in December.

The nearby Amherstburg project, acquired by First Solar from Toronto-based Helios Energy Inc. and immediately sold to Enbridge, is two facilities with a combined 15 megawatts of power. They’re to be completed in the third quarter.

Together, the projects will account for 333,000 solar panels on 58 acres and will have the capacity to provide power to 3,200 homes, while saving the climate from about 10,000 tonnes of CO2 a year.

and extended twice to include investments made before 2012) has helped boost investment in machinery and equipment by more than 11% every year it has been in place, he said.

CME has been in “close negotiations” with the federal finance department, but Myers’ sense is the department does not want to extend the write-off in the upcoming budget.

“We’re really counting on the Prime Minister and the finance minister, who know what it’s like to run a business, to continue this tax measure,” he said.

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4 Canadian PLANT

Lakeside Steel removes Welland PCBs WELLAND, Ont.: Lakeside Steel Inc. has removed polychlorinated biphenyl (PCB) materials at its Welland, Ont. facility left over for the site’s Stelpipe days.

The Lakeside Steel Corp. subsidiary, a manufacturer of tubular steel products, engaged Bennett Environmental in July to remove the approximately 10,500 tonnes of PCB impacted material that was securely stored in tanks on the Welland property.

The project, part of Lakeside’s

Kraft “Bullfrogs” Dad’s Cookies TORONTO: Bullfrog Power is piloting a natural gas project with Kraft Canada that will make its Dad’s Cookies green.

They’ll be made using Bullfrog’s green natural gas and electricity derived from renewable sources such as hydro and wind.

Toronto-based Bullfrog said its generators will inject green natural gas captured from landfills and its renewable electricity into Kraft’s Scarborough and Lakeshore bakeries for use in the baking and packaging processes.

Both facilities have also undertaken energy reduction projects including lighting conservation and oven upgrades.

“Unlike conventional natural gas, green natural gas does not increase the amount of carbon dioxide in the atmosphere and therefore helps prevent climate change,” said the company.

The Dad’s Cookies project will help Kraft lower its energyrelated carbon dioxide emissions, which is part of the food company’s strategy to lower CO2 emissions and energy use by 25%, water consumption by 15%, solid waste by 15%, and eliminate 150 million pounds of packaging material by 2011.

>> PLANT Off-Site No, this isn’t the real Eiffel Tower.

Steve Lock, vice-president of manufacturing and technical services at Zesta Engineering Ltd. in Mississauga, Ont., took this photo after having lunch at the Las Vegas Paris Hotel. He says this half-size replica offers great views of the entire valley.

Appear in PLANT Off-Site and win $50! Have a photo taken of you reading PLANT in a remote, interesting or exotic location.

Send photos with name, title, company, address and phone number to Off-Site, Canadian PLANT, One Mount Pleasant Rd., Toronto, Ont. M4Y 2Y5.

Sorry, we can’t return them.

Digital photos should be 5x7 inches and 300 dpi. Send them to joe.terrett@plant.rogers.com.

January/February 2011

Departments

>> Industry View

>> Careers Silfab Ontario Inc., a manufacturer of photovoltaic products in Mississuaga, Ont., has appointed Paolo Maccario COO and general manager. He comes to Silfab from 6N Silicon Inc., a Canadian manufacturer of high purity solar grade silicon, where he was CEO.

New edmonton plant for large diameter pipe

Paolo Maccario

Robert Wood joins BIOREM Inc. as CFO. He comes to the Guelph, Ont.-based manufacturer of clean technology air emission control systems from Trojan Technologies, a leading global water treatment technology company, where he was CFO. Enerkem Inc., a Montreal-based waste-to-biofuels and chemicals company, has appointed Philippe Burton vice-president of human resources. Previously he was managing director of human resources at AVEOS Fleet Performance.

Seprotech Systems Inc., an Ottawa-based provider of pre-engineered water and wastewater treatment plants, has appointed board chair Jordan Grant CEO. Wilf Stefan has been promoted from vice-president of operations to president and COO.

EDMONTON: An Alberta wholesale distributor of drilling fluids and pipe products for the oil and gas industry is teaming up with a Chinese specialty steel manufacturer to produce large-diameter, seamless steel pipe in Edmonton.

Edmonton-based Bri-Chem Corp. and Wuxi Huayou Special Steel Co. Ltd. from the Peoples Republic of China, are establishing a new operating company, Bri-Steel Manufacturing Inc. to manufacture the pipe.

Bri-Chem CFO Jason Theiss cited long lead times from offshore suppliers as the reason for the jointly owned plant. “This process in North America will cut down on those lead times, while providing the

highest quality control that is common in Northern American operations.”

Bri-Chem will own 70% of the voting common shares with Wuxi holding the other 30%. Wuxi will contribute the equipment, training, installation and engineering at a value of $2.1 million while Bri-Chem will provide working capital of $1 million and staff, run the plant and sell the pipe.

“We have leased a 120,000 square-foot facility for this operation,” he said, adding the plant will employ 30 to 35 people.

Outside diameter of the pipe will range from 14 to 36 inches and will be manufactured from carbon steel using a thermal pipe expansion process that heats the steel tubes while being pushed by a horizontal hydraulic press over a mandrel to expand the pipe.

Bri-Chem said the TPE process has been used in China for several years and Bri-Steel will be the first to introduce it in North America.

Production will begin in April.

>> Events DC Servo Motor Sizing Made Easy Electromate March 29, St. Laurent, Que. March 30, Waterloo, Ont. Dr. Urs Kafader, author of The selection of high-precision microdrives textbook, presents a half-day seminar on how to select the right DC motor for your application.

Visit http://electromate.com.

National Buyer/Seller Forum CME: Alberta Division March 29-31, Edmonton Oil sands executives and supply chain leaders will show manufacturers how to connect with the new oil sands supply chain.

Presented by Canadian Manufacturers & Exporters (CME), Canadian Association of Petroleum Producers, and the Alberta and Canadian governments. Visit www.nationalbuyersellerforum.ca.

Reinventing Maintenance Federated Press April 26-28, Mississauga, Ont. Senior maintenance professionals discuss the hottest topics in maintenance and plant engineering. Visit www.federatedpress.com.

New Flyer Plant Tour Innovation Insights/CME March 8, Winnipeg An Innovations Insights plant tour at New Flyer where you will learn about 5S, point of use inventory and continuous improvement.

Presented by Innovation Insights through Canadian Manufacturers & Exporters (CME). Visit www.tvp-ii.org.

Western Manufacturing Technology Show SME June 14-16, Edmonton The Society of Manufacturing Engineers (SME) presents the Western Manufacturing Technology Show (WMTS), a showcase for manufacturers of products including machine tools, welding equipment, design engineering and plant maintenance to process control and automation. Visit www.wmts.ca.

6 Canadian PLANT January/February 2011

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Departments

>> Economy

Manufacturing poised for expansion

BY PLANT STAFF

ECONOMIC DEVELOPMENTS AND TRENDS SCOTIABANK ALL COMMODITY PRICE INDEX index: 1997=100

MANUFACTURING NOVEMBER 2010 54 52 50 48 46 44 42 40 38 36 34

$ billions

N J 2007

2002 constant dollars Current dollars

2008

J

J

2009

2010

N

Manufacturing sales were down 0.8% in November to $44.9 billion, but gains were reported in computer and electronic products (5.1%); food manufacturing (0.7%); beverage and tobacco products (2.9%); and petroleum/coal products (1%).

SOURCE: STATISTICS CANADA percentage points

AVERAGE WEEKLY EARNINGS NOVEMBER 2009-2010 Educational services Accommodation and food services Manufacturing Professional, scientific and technical services Wholesale trade All industries Construction Retail trade Public administration Health care and social assistance Administrative and support services 0

2

4 per cent

6

percentage points

2002 constant dollars Current dollars

260 240 220 200 180 160 140 120 100 80 60 40

Growth Trends (per cent, annual rate) Last year 17.8 Last 5 years 4.2 Last 10 years 6.2 All items

Inflation adjusted

72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12

Scotiabank’s Commodity Price Index ended 2010 on a strong note, jumping 5.5% month-over-month in December. The All Items Index, which measures price trends for 32 of Canada’s major exports, climbed 17.8% since late 2009 and is now up 43.2% over the April 2009 cyclical low. percentage points

SOURCE: SCOTIABANK

WHOLESALE TRADE NOVEMBER 2010

8

Weekly pay for the year to November 2010 increased by an average of 4.4% to $865.17, or just shy of $45,000 annually. Manufacturing topped the national average with a 5.4% increase to $978.13 or just under $51,000 a year.

Total payroll jobs in manufacturing rose 1.5%. SOURCE: STATISTICS CANADA

8 Canadian PLANT

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52 50 48 46 44 42 40 38 36 34 32

$ billions

N J 2007

Chained (2002) Current dollars 2008

J

2009

J

2010

Wholesale sales rose 1.2% to $45.7 billion in November. The increase was largely the result of higher sales in machinery, equipment and supplies (4.5%); miscellaneous (2.9%); and food, beverage and tobacco subsectors (1.8%).

SOURCE: STATISTICS CANADA percentage points

N

he manufacturing sector is in position to take over driving Canada’s economic growth from “an exhausted consumer and restrained government,” says a CIBC World Markets Inc. forecast.

The bank’s Not yet heaven in twenty eleven report says that although Canada’s economy will start with solid growth – as it did last year – and end the year a little short of forecasts, growth drivers will be fundamentally more sustainable. And there’s positive news about manufacturing: the sector is now in position to start expanding.

CIBC, which has raised its growth projection for the year by a half a point to 2.4%, said a slower build-up of government and private debt will cut into Canada’s GDP growth, which will otherwise see solid and more sustainable growth from a strengthening export market in the US and increased business investment.

One of the key drivers will be investment from Canadian and US companies in machinery and equipment fuelled by ongoing automotive sales, US incentives for business, and 10-year high rates of return on capital, said Avery Shenfeld, CIBC’s chief economist.

Taking a closer look at manufacturing’s 81% capacity utilization rate – a record six points above that of the rest of the economy – suggests the sector is already in a position to start expanding.

“The last time the utilization gap approached this level (1995), manufacturing investment advanced by an average annual rate of more than 10% for the following three years,” he said.

He described the increased investment as a payoff for recent cuts in corporate tax rates and “a spur to much needed productivity improvements.”

Jayson Myers, president and CEO of Canadian Manufacturers & Exporters (CME), says business investment and exports had better be the drivers of economic growth.

“If I’m wrong, and manufacturing [business] investment and exports are not the key growth leaders in the Canadian economy, we’re in for a pretty rocky ride,” he said during CME’s Gateway to Business Success webinar Jan. 12.

He observed Canadian consumers are “pretty much maxed out” with consumer debt at an all-time high in relation to after-tax income; the housing market will be weaker than last year with higher interest rates; and governments across Canada will be tackling deficits so there won’t be a lot of stimulus spending.

The CME expects export volumes this year to rise 10%, and investments in machinery and equipment to grow 16.5%. Production levels will rise 5% and sales will increase 7.5%, but CME expects overall growth of just 1.5% to 2%.

Factors that could boost the country’s economic growth include a faster US recovery that increases demand for Canadian exports and relieve upward pressure on the loonie, and growth in Alberta oil sands and other energy developments that would fuel business investment and demand for manufactured goods.

PLANT’s 2011 Business Outlook survey shows 64% of responding manufacturers are expecting more orders this year, 63% said sales will increase, 43% are counting on higher profits and 31% said their prices will go up.

January/February 2011

Labour Relations << Departments

Foreign control creates economic chaos

By Ken Lewenza

C

anadians undertook a timely debate in the final months of 2010 about foreign control of our major corporations and the potential costs and benefits, which led to the federal government’s decision to block the proposed takeover of Potash Corp.

Foreign control is an issue that’s not going away. Indeed, soon after the Potash decision, two other foreign corporations demonstrated through their actions exactly why Canada needs a very different approach to regulating foreign investment. US Steel (formerly Stelco) locked out its workers in Hamilton, continuing a ruthless drive to suppress compensation and pensions in Canada. And the Brazilian mining giant Vale dealt a body blow to Thomson, Man. by announcing the closure of the former Inco smelter there.

Incoming foreign direct investment in Canada has been growing dramatically, rising from 20% of our GDP in 1994 to 36% today. That’s the highest level of foreign control since World War II. Over the past decade, $300 billion of foreign investment surged into Canada like an economic tsunami, with more than half of it concentrated in our mining, oil and gas, and primary metals sectors. Canada lost corporate icons such as Stelco, Dofasco, Inco, Falconbridge and Alcan, all of them so central to our historical development.

Takeovers reposition productive Canadian assets, reducing “them to mere cogs in a bigger global machine... ” the loss of their livelihoods for refusing to accept corporate extortion. And the humiliating failure of our federal government to enforce the original net benefit deal with US Steel proves backroom arrangements, cooked up between foreign tycoons and Ottawa bureaucrats, are not worth the paper they’re printed on.

Investment Canada regulations must be scrapped and replaced with a law that allows us to put the right conditions,

backed by meaningful sanctions, on foreign investments that genuinely enhance Canada’s economic interests.

If US Steel won’t use its Canadian facilities to produce the steel and jobs we need, those assets should be given to someone who will use them. Newfoundland’s Premier Danny Williams proved, in his showdown with AbitibiBowater (when it shuttered its operations in Grand Falls), that a government has

both the responsibility and the ability to stand up to corporations that shirk their responsibility to the communities where they do business. Canada’s government should do the same with US Steel.

Ken Lewenza is the president of the Canadian Auto Workers Union, which represents 225,000 workers across the country in 17 different sectors of the economy. E-mail cawcomm@caw.ca.

Comments? E-mail joe.terrett@plant. rogers.com.

issue review ogers p e e r F sy of R courte

Shuttering capacity If foreign takeovers actually resulted in new productive capital we would benefit from new equipment, technology and marketing opportunities. But the actions of US Steel and Vale put the lie to that hope. They’ve been shuttering or idling strategic Canadian capacity in many communities – all in the interests of reducing excess capacity, selling assets to pay down debt and intimidating Canadian workers.

Canada also incurs many costs when key productive assets are sold off to foreign giants. There’s long-term liability for the payment of interest and profits to the foreign owner, which drags down our balance of payments (about $40 billion in 2010). We lose head office jobs and sustain visible deindustrialization, since foreign owners are interested only in our resources and bulk commodities.

And takeovers reposition productive Canadian assets, reducing them to mere cogs in a bigger global machine. Key productive jewels such as Stelco or Inco once stood on their own feet. Now they are vulnerable to the bean counting of foreign financial engineers.

Of the many takeovers we’ve allowed in the past decade, the US Steel case may be the most infuriating. It flaunted sombre commitments to preserve Canadian jobs and production before the ink was dry. Workers were threatened – first in Lake Erie, then in Hamilton – with

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Canadian PLANT 9

Management

>> Salary Benchmark Report

Plant pay takes a HIKE SURVEY SAYS MANAGEMENT IS SALARY-SATISFIED AND FEELING BALANCED

BY JOE TERRETT, EDITOR

I

t’s been a rough couple of years for manufacturers but executive and management-level pay in the sector dominated by small and medium-sized enterprises (SMEs) rose almost 4% in 2010 after a dismal 0.8% increase in 2009, according to the results of a new national survey of Canadian companies.

This first salary benchmark survey conducted by the Excellence in Manufacturing Consortium (EMC) and Canadian PLANT magazine, a Rogers Media publication, gathered 605 responses from executives and managers at companies across Canada, 42% of them noting some change in employment status following the economic downturn. Nonetheless, they are satisfied with job security, compensation and work-life balance.

“This is consistent with what we’re hearing from manufacturers,” says Al Diggins, president and general manager

of EMC, a not-for-profit consortium of Canadian manufacturers. “A lot of it speaks to what’s happening inside the buildings where people are saying they’ve had to take on more responsibilities following lay offs and cutbacks.”

Most respondents (72%) had a management role in their companies, while 18% identified themselves as having an ownership stake. Their businesses cover a range of interests from fabricated metals to sophisticated electronics with 14.4% identifying their organizations as large (more than 500 employees) and the rest as SMEs. About 65% of the respondents work in non-union plants, and almost 30% work in plants that are at least partially unionized. The results show managers working in the unionized

AVERAGE MANUFACTURING SALARIES 2010 605 respondents Title Plant manager Administrative management Engineer Director Vice-president Owner/partner CEO/president Purchasing/supply management Technician/technologist Maintenance manager Materials manager QA/Safety manager Production manager/supervisor * General manager* Operations manager* Co-ordinator* Sales* Supervisor* Other * No answer Total

2008 $94,200 $72,600 $79,900 $99,200 $128,900 $139,100 $135,400 $68,800 $74,300 $95,800 $70,200 $63,200 $73,800 $114,100 $64,400 $63,300 $120,000 $53,000 $69,000 na $92,200

* Very small sample, review with caution.

10 Canadian PLANT

AGE OF RESPONDENTS 605 respondents

LEVEL OF EDUCATION 605 respondents

2009 $96,900 $73,100 $81,200 $103,900 $132,800 $137,900 $142,000 $72,100 $73,000 $74,400 $67,900 $63,700 $72,900 $118,700 $63,400 $62,500 $110,000 $53,500 $70,700 na $92,900

2010 $101,000 $75,500 $81,700 $111,500 $136,000 $141,400 $153,700 $75,400 $75,200 $76,600 $69,600 $67,200 $78,200 $116,500 $63,400 $64,800 $150,000 $51,000 $72,800 na $96,600

% responses 21.3% 17.9% 7.1% 6.4% 6.4% 6% 5.1% 4.5% 4.1% 3.8% 3% 2.3% 1.8% 1.3% 0.8% 0.7% 0.3% 0.3% 1% 5.8% 100%

University degree College diploma Trade/technical High school or less

Average salary $102,900 $85,100 $95,100 $97,700

>65 2.8%

% replies 40.7% 25.8% 14% 12.7%

environments make an average of 12.5% more than those in non-unionized plants.

The average salary for all titles is $96,600, which represents a 3.98% increase over 2009 and as of October, it’s ahead of the 2.4% inflation rate in the preceding months.

Top earners Predictably, the big money is going to owners, senior executives and plant managers who all weighed in at more than $100,000 a year. CEOs and presidents are at the top of the salary hierarchy, averaging $153,700.

They’re followed by owners/partners ($141,400), vice-presidents ($136,000), directors ($111,500) and plant managers ($101,000).

Engineers average $81,700, while many of the other categories, including administrative management, purchasing/ supply management, maintenance managers, and technician/technologists earn between $75,000 and $77,000. Materials managers average just under $70,000.

A variety of factors provide an upward

No reply 6%

<35 9.4%

56-65 16.4%

36-55 65.5%

Look for a significant drain of experienced employees within 10 years. Of the 36-55 age group, 38.5% are 46 to 55.

NUMBER OF EMPLOYEES 605 respondents

1,000-4,999 5.5%

>5,000 3.1%

No reply 4.8%

< 50 31.6%

500-999 5.8% >500 14.4%

250-499 11.2%

50-249 38%

Most manufacturing companies are SMEs, with almost 70% employing under 250 people.

BONUSES AND INCENTIVES 605 respondents Average salary % of salary $80,200 0% $68,800 0.1%-0.9% $72,400 1%-2.9% $81,900 3%-5.9% $94,800 6%-10.9% $113,300 11%-19.9% $169,900 20%+ No answer

% replies* 43% 0.7% 5.6% 9.1% 13.1% 9.1% 12.1% 7.4%

influence on salary levels, including company revenue, years of experience, education, and the kind of products made (paper and wood, and chemicals and pharmaceuticals top the list).

Because of the lopsided mix of men and women, the results also show it pays to be a guy: there’s a 31% gap between the sexes. * Very small sample, review with caution.

A bit less than half the respondents report a portion of their pay made up

January/February 2011

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120,000

99.1

Fabricated metal products 87.6

Machinery, equipment

100,000

99.5

Food, beverage, tobacco 95.9

Plastic, rubber 90.0

Automotive

106.8

Paper, wood 91.8

Printing

98.5

Computers, electronic 79.0

Transportation equipment

$101,200

$77,300

80,000 60,000 40,000

100.2

Chemicals, pharmaceuticals

20,000

96.7

Primary metals

98.7

Textiles, footwear, clothing*

0

79.6

Stone, concrete, glass*

Male 77.4 %

100.9

Petroleum* 75.7

Furniture*

Female 19 %

119.3

Electrical*

It pays to be a guy in manufacturing. The wage gap between the sexes is 31%. * Very small sample, review with caution.

75.6

Household/personal care*

100.4

Aerospace* 70

75

80

85

90

95

100

105

110

115

120

average salary * Very small sample, review with caution.

Your industry may have an impact on your salary level. The survey sample indicates higher salaries are paid to those who make paper and wood, and chemical and pharmaceutical products.

SALARY BY COMPANY REVENUE 605 respondents

Aging workforce

83.6

Less than $10M 66.5

Less than $1M

74.4

$1M-$4.9M

98.5

$5M-$9.9M

100.1

$10M-$49.9M

95.7

$10M-$24.9M

113.0

$50M-$249.9M

115.2

$50M-$99.9M

109.4

$100M-$249.9M

108.4

$250M or more 89.4

$250M-$499.9M

116.2

$500M-$999.9M

118.3

$1B or more 0

20

40

60 thousands of dollars

80

100

120

Looking at companies according to revenue shows bigger isn't necessarily better, but from $500 million and up, it does.

SALARY BY EXPERIENCE 605 respondents

120,000

$103,900

$108,400

100,000 80,000

$85,800

$85,900

6-9 years 5.1%

10-19 years 29.1%

$72,000

60,000 40,000 20,000 0 5 years or less 6.3%

20-29 years 29.9%

30+ years 26.4%

No response 3.1%

Age before beauty. The more experience you have, the higher your salary.

feelings about training. He observes most of the respondents (38%) cited productivity or continuous improvement as*an additional work.

Veryarea smallrequiring sample, review with caution.

They were asked what it takes to do their jobs and people skills ranked most

continuous improvement (8%), financial and project management (both 7%) and analysis (6%).

Diggins views the focus on people skills, somewhat taken for granted in the past, as prudent. With ongoing shortages of skilled people and impending retirements among baby boomers, he says companies need to do the best they can with the people they have. There will be much more head hunting going on.

“Keeping the right people will depend on keeping people happy.”

Optimistic about the future

106.8

$25M-$49.9M

average salary

When EMC does a presentation that touches on the aging workforce, the accepted thinking is that for every two people who retire, less than one fills the vacancy, which means greater reliance is placed on new Canadians or making up for the shortfall elsewhere in the economy, says Scott McNeil-Smith, EMC’s director of marketing and development.

The potential impact on salaries?

“Salaries won’t necessarily be in the top range for younger people with less experience moving in to replace the longerterm people,” says McNeil-Smith.

However, he says companies breaking into new markets, especially abroad, will need people with specific skills, such as languages, experience doing business or familiarity with customs in a target market, or abilities on the shop floor related to developing products that meet various international standards.“There’s an opportunity for people to raise their salary levels based on these types of skills.”

Most respondents (86%) are happy with their jobs. Both a competitive salary and a healthy work life balance lead the job priorities list for 94%. Sevety-three per cent are happy with their pay and 78% are feeling balanced. Ninety-one per cent want a healthy benefits package and 76% said they have one. Job security is key for 89% and 84% do feel secure. Vacation time is important for 89% and 78% are satisfied with their time off. Bottom of the list is career development for 80% with 67% declaring themselves satisfied.

The job satisfaction responses caught the eye of Justin Graham, a senior research manager for the Rogers Connect Marketing Research team.

“Given the impact of the recession over the last couple of years, it’s interesting that overall satisfaction with job security (84% satisfied, including 35% very Average salary satisfied) is the highest ranked influencer Stone, concrete, glass* of job satisfaction,” says Graham.

The recession has also influenced their

GENDER GAP 605 respondents

SALARY BY MAJOR PRODUCTS MANUFACTURED 605 respondents

average salary

of bonuses and incentives, with those showing the highest percentage (20% or more) averaging $169,000. Perks or extras include profit sharing for 27%, a vehicle of some kind for 19%, stock options for 6% and club memberships for 5%, but 45% report no extras.

More than a third of the respondents (34%) do not see any changes in manufacturing salary trends, while 18% said more skills and experience are required, but 11% see salaries going up.

The typical respondent’s age is just shy of 48 with 21.8 years of experience in manufacturing. Forty-one percent have a university degree, 41% have a college or trade/technical school diploma and 13% have a high school education or less. They’re a hard-working lot, too. The average workweek is 47.6 hours.

Most respondents (65.5%) are in the 3655 age category, 38.5% of those are 46-55; and 16.4% are 56-63. These results suggest a significant segment of the companies’ experienced people will be leaving the sector over the next decade.

important by a landslide, according to 44% of those surveyed.

“In contrast the second most important skill, industry specific technical skills, is cited by just one-in-ten (10%),” says Graham. Even farther back are productivity/

Many of the companies (45%) said revenues were up from 2009, 16% said they were the same while 18% reported a decrease. And they are optimistic about the future. Over the next five years 64% plan to invest in new production equipment and processes, 58% will be hiring more employees, 33% will be entering new geographic markets and the same percentage will be adding new lines of business.

There are some issues that concern respondents. First for 59% of them is cost control, followed by skills shortages (43%), reorganization (30%), technology upgrades and forecasting (both 29%), supplier relationship management (25%) and capacity shortages (23%).

“Cost containment is a big issue,” says McNeil-Smith. “Turning cost centres into profit centres is one way to keep a lid on things.”

He cites, as an example, the purchasing co-operative EMC established in the London, Ont. area that will pool purchases of several manufacturers for savings that fall directly to the bottom line.

These are all areas EMC has been addressing, says McNeil-Smith. “But one of the most asked questions from members has to do with how to benchmark salaries. The results of this survey will help them access that important information.”

The survey, fielded in late November and early December, has a +/-3.3% margin of error, 18 times out of 20.

Comments? E-mail joe.terrett@plant. rogers.com.

Canadian PLANT 11

Management

>> Occupational Fraud

THEFT from the inside IT'S HARD TO SPOT, WATCH FOR THE RED FLAGS

BY MARK CHOW AND MATHEW LEM

W

hen times are tough, manufacturers should be aware that employee or occupational fraud tends to rise. The Association of Certified Fraud Examiners estimates the average company loses 5% of its revenue to fraud and abuse, but the highest losses occur within organizations of less than 100 employees.

Fraud prevention begins with your company’s code of conduct. Foster an environment of integrity and watch

FRAUD PREVENTION MEASURES 1. Ongoing anti-fraud training for all employees. Cover what constitutes fraud; the costs (lost profits, adverse publicity, job loss, decreased morale and productivity); how to communicate concerns about wrongdoing; where to seek advice; and clearly communicate a zero-tolerance policy.

2. An effective fraud reporting mechanism. Set up an anonymous reporting channel (such as a third-party hotline) and clearly communicate that reports of suspicious activity will be promptly and thoroughly investigated.

3. Make employees aware of the likelihood of detection. Actively seek out possible fraudulent conduct; perform scheduled and surprise fraud audits; and use auditing software.

4. Ensure honesty and integrity at the top. This includes realistic performance goals; fraud prevention goals integrated into manager performance measures; a process for oversight of fraud risks by those charged with governance; and questions in employee surveys asking the extent to which they believe management acts with honesty and integrity.

5. Perform fraud risk assessments. Proactively identify and mitigate the company’s vulnerabilities to internal and external fraud.

PHOTO: iSTOCKPHOTO

for red flags.

Three combined factors drive occupational fraud: opportunity, typically due to weaknesses in an organization’s controls; pressure at home or work from debt issues, divorce, gambling or drugs; and rationalization (“I’ll pay this money back”).

Fraud is also difficult to spot because it comes in many different forms such as:

6. Put strong anti-fraud controls in place. These include proper separation of duties; use of authorizations; physical safeguards; job rotations; and mandatory vacations.

7. Create an internal audit department. Ensure it has adequate resources with the authority to operate effectively without undue influence from senior management.

8. Make fraud prevention part of your hiring policy. Include (where law permits) past employment verification; criminal and civil background checks; credit checks; drug screening; education verification; and a references check.

9. Put employee support programs in place. Assist those who are struggling with addictions, mental/emotional health, family or financial problems.

10. Have an open-door policy. Employees should be able to speak freely about pressures, and management should help alleviate such pressures before they become acute.

11. Conduct anonymous surveys. Use them to assess employee morale.

Adapted from the 2010 Report to the Nations on Occupational Fraud and Abuse, Association of Certified Fraud Examiners.

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• • • •

Stealing (cash, inventory, supplies, equipment, data) Forgery (cheques, signatures on purchase orders) Lapping (diverting cash from customer accounts) Kiting (drawing against balances credited to uncollected cheques) • Cheque tampering • Taking cash receipts intended for deposit • Recording fictitious transactions • Falsifying timesheets for higher pay • Creating fictitious employees and collecting their pay • Collecting pay cheques of employees who no longer work for the company • Creating dummy companies, placing false orders • Fabricating/duplicating/overclaiming expense items • Issuing false receipts and skimming payments from customers’ accounts • Taking bribes or kickbacks from vendors • Falsely billing for products or services • Taking cheques that are payable to suppliers • Falsifying financial statements Typically, the trouble begins with small transactions that become larger and more frequent while the crime is undiscovered. Here are some of those red flags: Employees. Lifestyle improvements (more expensive vehicle, home, clothes); behavioural changes (may be a result of stress or addictions); personal debt troubles; and a refusal to take vacation or sick leave.

Payroll. High overtime claims; unusual increases in hourly rates; missing or duplicate social security numbers; and employees without payroll deductions.

Accounts receivable. Bank deposit and posting discrepancies; slow reconciliation of bank accounts; disproportionate or unsupported cash transactions; high volume of discounts, returns, voids and credit notes issued; the appearance of unauthorized bank accounts or new activity in dormant accounts.

Non-payment notices. Frequent expense items, supplies, reimbursements and account write-offs; and high employee turnover.

Purchasing. Increased purchasing inventory without corresponding sales; atypical inventory shrinkage; invoices unaccompanied by shipping documents; growing volume of complaints about products; large number of purchases from new vendors; payments made to vendors that are not on an approved vendor list; purchases don’t follow regular procedures or have unusual payment terms; vendor address is a post office box or an employee’s address.

Even when no flags are apparent, keep in mind 85% of companies surveyed in a recent global fraud report were affected by at least one incident in the past three years. Implementing proactive fraud prevention measures protects the bottom line.

Mark Chow is a senior vice-president and Matthew Lem, a vice-president of the Financial Recovery Services Group of BDO Canada Ltd. (www.bdo.ca).

E-mail mchow@bdo.ca or mlem@bdo.ca.

Comments? E-mail joe.terrett@plant.rogers.com.

05 Rosta ad (Plant).indd 1 12 Canadian PLANT

04/10/2007 01:02:59 PM

January/February 2011

Palletizers:

Automation << Operations

Conventional or robotic?

Choosing the right technology for your needs

By Pat O’Connor

N

ow that you have settled on purchasing new end-of-line equipment, which palletizing technology best suits your operation? Will the conventional palletizer’s speed or a robotic arm meet your handling needs?

Choosing the right palletizing equipment starts with analyzing the range of products and packaging types running on your line. Take some time to determine how each item should be handled. For example, can the packaging support its own weight during transfer for a pick-andplace solution? How stable is the pallet load? Is there secondary packaging?

Consider these important factors: • size, shape, weight of the product; • stability and construction of the load; • secondary packaging; and • pattern forming capabilities.

Robotic arms are suited for difficultto-handle items, such as pails and bags, that must be precisely placed. Pails stack on a pallet, each one nestling on the lid below, and bags must be gently and squarely placed without disturbing the contents. Robots also work well in confined spaces and dusty environments.

Because conventional palletizers never pick up the product, they’re more tolerant of packaging changes to cases, trays, film bundles or poly sacks. And they’re more flexible than robots when dealing with product packaging and stacking patterns, handling each case individually so pattern changes have little impact on rate.

The throughput capabilities of material handling systems vary greatly depending on the equipment used and the product being palletized. Determine an acceptable range of line speeds (cases per minute) to better evaluate equipment options.

Conventional palletizers are capable of very high speeds, handling more than 200 cases per minute, while inline, continuous-motion palletizers handle 20 layers per minute. Robots are intermittent motion machines that are appropriate for high-SKU, lower-speed operations.

But you can have the best of both worlds. Combining the handling of difficult loads while achieving higher speeds is now possible with new hybrid machines that integrate robotic arms for pattern forming with a conventional palletizer for layer forming in higher-rate applications.

With product mix and throughput requirements decided, consider staffing Continued on page 14

www.plant.ca

Canadian PLANT 13

The Alvey 952 robotic in-line palletizer combines conventional and robotic technologies for higher-rate applications. These robots precisely turn and position the cases.

PHOTO: INTELLIGRATED

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Operations

>> Automation

The right technology Continued from page 13

and maintenance capacity, which are different for robotic palletizers and conventional machines. Some considerations for your staff include: • learning curve for robotic applications versus conventional applications; • operation platform; • inventory of parts; • floor space considerations; and • training time for programming.

Also consider the abilities of employees to perform maintenance on these machines, or how readily available your supplier will be to do so.

You’ll find staff are more familiar with conventional palletizers and consider them to be more accessible. Parts are likely already in inventory and the palletizers operate on the same control platform as hundreds of other pieces of equipment in the plant. Robots, on the other hand, can be intimidating. Some maintenance crews may hesitate when asked to perform routine or emergency maintenance on a robotic arm, especially if it involves the control platform.

A PLC-controlled robotic arm makes the palletizer more accessible, allowing staff to deploy new solutions while main-

taining a standard control platform.

Of course, every application has different handling demands and rate requirements. Thoroughly analyzing the options will ensure new end-of-line palletizing or depalletizing systems handle your company’s needs.

Pat O’Connor is a St. Louis, Mo.-based product manager, palletizing systems, for Intelligrated, a manufacturer of material handling automation systems with Canadian offices in Mississauga and Oshawa, Ont. Call (905) 858-0088 or e-mail info@intelligrated.com. Visit www.intelligrated.com.

Comments? E-mail joe.terrett@plant. rogers.com.

Poka

A simple way

By Richard Kunst

Y

ou can’t predict human error on the production line but you can take steps to prevent it. That’s what a Matsushita manufacturing engineer named Shigeo Shingo had in mind when he came up with poka yoke quality management. Pronounced “poh-kah yohkay,” it comes from two Japanese words – “yokeru” which means, “to avoid,” and “poka,” which means “inadvertent errors.”

One of the many components of Shingo’s Zero Quality Control (ZQC) system to eliminate defective products is the main objective: achieving zero defects in the simplest and lowest-cost manner.

Since poka yoke is more of a concept than a procedure, its implementation is determined by what people think they can do to prevent errors, not by a set of step-by-step instructions.

Simple objects such as fixtures, jigs, gadgets, warning devices and paper systems are used to stop the machine and alert the operator if something is about to go wrong. These devices should be useable by all workers, simple to install, effective without continuous attention from the operator, low-cost and provide instantaneous feedback, prevention or correction. Many of Shingo’s devices cost less than $50!

Poka yoke is at its best when it prevents mistakes, not when it merely catches them. Since human errors usually stem from people who are distracted, tired, confused or de-motivated, a good poke yoke solution is one that requires no attention from the operator.

Examples include: • A jig that prevents a part from being

>> TECH TIP

Motor efficiency Most electric motors are designed to run at 50% to 100% of rated load, with maximum efficiency near 75%, but efficiency tends to decrease dramatically below 55% load.

To calculate true motor efficiency: • Use power, amperage or slip measurements to identify the load.

• Obtain a motor part-load efficiency value consistent with the approximated load from the manufacturer. If direct-read power measurements are available, derive a revised load estimate using both the power measurement at the motor terminals and the part-load efficiency.

Bill Livoti, fluid power and power industry engineer, Baldor Electric Co.

14 Canadian PLANT January/February 2011

Think Lean << Operations

yoke

>> Green Manufacturing Quick energy wins

By Brett Wills

to avoid mistakes disoriented during loading.

• Non-symmetrical screw-hole locations that prevent a plate from being screwed down incorrectly.

• Electrical plugs that inset only into the correct outlets.

• Notches on boards that only allow correct insertion into edge connectors.

• A flip-type cover over a button that prevents the button from being accidentally pressed.

There are three levels of poka yoke: elimination of spills, leaks, losses at the source or prevention of a mistake; detection of a loss or mistake as it occurs, allowing correction before it becomes a problem; and the least effective, detection of a loss or mistake after it has occurred, just in time before it blows up into a major issue.

Keeping count Poka-yoke systems consist of three primary methods.

The contact method detects whether or not a sensing device makes contact with a part or object, such as limit switches that are pressed when cylinders are driven into a piston that holds the part in place. If a cylinder is missing, the part is not released to the next process.

The counting method is used when a fixed number of operations are required within a process, or when a product has a fixed number of parts attached to it.

For example, a sensor counts the number of times a part is used or a process is completed and releases the part only when the right count is reached.

Another approach is to count the number of parts or components required to complete an operation in advance. If an operator finds parts left over, something has been omitted from the process.

Motion sequence uses sensors to determine if a motion or step in a process has occurred. If the step has not occurred or has occurred out of sequence, the sensor signals a timer or other device to stop the machine and signal the operator.

Common mistake-proofing devices include guide pins, blinking lights and alarms, limit switches, proximity switches, counters and checklists.

Anybody can and should practice poka yoke in the workplace. All it takes is common sense and the appropriate poka yoke device.

Of course, error proofing can be achieved by extensive automation and computerization, although expensive and complicated, and it may be an impractical solution for small operations.

Besides, it defeats the original purpose of poka yoke, which is to reduce defects

www.plant.ca

Canadian PLANT 15

and mistakes in the simplest and lowestcost manner possible.

Richard Kunst is president and CEO of Kunst Solutions Corp., which publishes the “Lean Thoughts” e-newsletter. Email rkunst@kunstartofsolutions.com.

W

hen you use less energy, the savings will come from reduced kWh consumption and peak demand charges. Here are some wins for reducing peak electricity demand that can be achieved today, quickly, and with little or no investment.

1. Put equipment such as forklift chargers and curing ovens on timers to run afterhours.

2. Stagger equipment start-ups. Larger motors and electronic equipment tend

to consume a lot of energy when they’re switched on.

3. Run pieces of equipment at different times throughout the day so they’re not all used simultaneously.

4. If it’s not in use, turn it off.

Of course, there’s plenty of other low-hanging fruit unique to each company. Front-line employees will identify them if asked.

Brett Wills is the director of the Green Enterprise Movement and a senior consultant with High Performance Solutions in Cambridge, Ont. E-mail bwills@hpsinc.ca.

Trends

>> Energy Industry

?

What’s next for the

power sector

Electricity generation faces Exterior view of Hydro Quebec’s Beauharnois facility.

PHOTO: HYDRO QUEBEC

infrastructure challenges

By Erika Beauchesne, Staff Writer

W

alking through Hydro Québec’s Beauharnois generation station is like stepping back in time to 1929 – the year construction started on one of the world’s largest hydroelectric plants.

Located about an hour’s drive outside of Montreal, Beauharnois stretches nearly a kilometre and handles up to 8,200 cubic metres of water per second.

The facility has kept its original art-deco brick walls, tall factory windows and dated tea green paint on most of the fixtures.

“We still have machines from 75 years ago,” says Guy Lavoie, tour guide and communications advisor with Hydro Quebec.

That means ongoing repairs at the 325-employee plant, including one of the facility’s 38 generating units, which was refurbished last year.

A recent report from the consulting firm Deloitte pegs repair work at $150 billion if Canadian generating stations, transmission and distribution lines are going to meet growing demand.

“Canada has a lot of energy plants that are aging. Over the coming years, that’s going to require investments to extend the plants’ lives or replace them completely,” says Jane Allen, a partner at Deloitte’s Toronto office.

She says on top of this, facilities have to act “in an environment of volatility,” rapidly changing technology, energy pricing and no long-term government policies on greenhouse gas emissions.

“The biggest issue for the energy sector – and I don’t see it changing for a while – is going to be what role government decides to take and how heavy-handed that role could be,” Allen says.

However, she notes things are changing more rapidly in some parts of the country.

“We’ve seen in Ontario, the Green Energy Act has given rise to both small and large renewable energy projects that are just now going ahead.”

At least one power generation facility in Ontario has recognized that cleaner production will provide an upper hand in the changing industry.

“Energy efficiency is a real challenge and combustion turbine electricity production is a very competitive market,” says Curtis Mahoney, general manager at the Portlands Energy Centre, a 550-megwatt natural gas plant in Toronto.

To keep pace, the plant upgraded its combustion control software to General Electric’s Opflex startup and turndown, a computer system that improves efficiency at lower outputs.

Improving worker safety An invention to improve worker health and safety recently earned Hydro Québec the American Edison Electric Institute’s 2010 Edison Award for leadership and innovation.

Hydro Québec developed a robotic device at its Varennes research facility that inspects high-voltage transmission lines across long passages that workers would otherwise have to scale themselves. British Columbia Transmissions Corp. tested the LineScout, which uses cameras to find and repair irregularities, and now the robot is being used in Quebec and BC while garnering interest in several countries.

Worker recruitment and retention is another challenge outlined in the Deloitte report.

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Hydro Québec’s LineScout inspects high-voltage transmission lines.

PHOTO: HYDRO QUEBEC

operators...more people with understanding of new technologies emerging in areas [such as] carbon capture and storage and especially smart grids,” Allen says.

The Portlands Energy Centre, is already seeing a shortage of skilled labour, particularly tradespeople, with more qualified people retiring amid declining employment.

“There is a double loss of skilled personnel, first as the person exits the work force and secondly, the people to whom skills have not been transferred,” says Mahoney.

The report points to several strategies to cope with the talent shortage, such as “re-skilling” and cross-training existing workers, investing in training and development programs and building alliances with academic institutions to attract new students.

It also recommends plant managers use economic and demographic data on external talent markets to analyse labour supply and demand, while thinking about how workforce needs will change in the years ahead and what kinds of people they’ll need.

But even if facilities overcome the talent shortage and improve productivity with sustainable practices and technological innovations, it may not be enough to place Canada at the leading edge of energy production.

Inventions such as the LineScout are turning heads and Hydro Québec claims there has been a $3 return for every dollar invested at its Varennes research centre, but Canada will have to up its game to keep pace with other regions.

“Innovation in Canada’s electricity sector is quite good, but countries such as Japan, other parts of Asia and Europe are investing more while our networks are aging,” says Gaétan Lantagne, scientific director at the research institute.

The report says there’s plenty of opportunity for Canada’s energy sector in areas such as manufacturing and renewable energy production, but it will require greater investment in skills and technology. Allen says Canada needs to create an attractive investment climate and that’s going to require more R&D. “When you go to places like the World Energy Congress and hear what Korea, India and China are doing, where government is collaborating with industry, it does seem like Canada is not doing as much as it could be.”

Erika Beauchesne is a section editor for Canadian Manufacturing.com. E-mail Erika.beauchesne@rci. rogers.com.

Comments? E-mail joe.terrett@plant.rogers.com.

16 Canadian PLANT

January/February 2011

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Innovations

>> High-strength Steel

By Keith Pilkey

T

he overall objective seems rather simple – build lighter vehicles by using thinner, stronger grades of steel sheet and tubes for structural components. But the path from research and development to production is quite a bit more complicated. Higher strength is usually obtained at the expense of ductility. Thinner material gauges mean reduced formability for a manufacturer of stamped or hydroformed parts and the objective must be met without compromising the vehicle’s structural integrity and “crash-worthiness,” or by adding significant cost.

Current and near-future generations of advanced high-strength steel (AHSS) grades represent the steel industry’s response to this achievable, albeit challenging, objective. Specific AHSS grades, such as dual phase (DP), transformationinduced plasticity (TRIP) and twinninginduced plasticity (TWIP), reflect key microstructural features and/or deformation mechanisms that provide superior strength while maintaining ductility.

Lighter steel, safer

vehicles R&D and fine tuning continues on advanced grades

of the sheet or tube wall. This automatic strengthening effect counteracts excessive thinning in TRIP steels.

During a vehicle crash, key structural members in the crumple zone are required to undergo a lot of deformation. TRIP steels slow the advance of microscopic cracks that cause premature failure in critical components.

Vehicles produced in Europe and Asia are already using the current generation while the use of these steels in North American automobiles is imminent, having been delayed by incompatibilities between current steel chemistries and the need to produce zinc coated (galvanized) products. Research in this area is ongoing.

Strength and ductility

TWIP, the third AHSS grade of interest, which has the potential to produce a combination of strength and ductility that’s significantly better than DP and TRIP grades. TWIP steels rely on the addition of high levels of alloying element to produce a fundamentally different mechanism of plastic deformation, called twinning, that inherently suppresses the material failure mechanisms observed in Using novel materials steels and other metal alloys. However, Today’s vehicles already contain some alloying elements used in the current AHSS components, but there’s still room generation of TWIP steels are expensive for improvement through the use of and required in large quantities, maknovel material processing techniques ing the material prohibitively expensive and innovative manufacturing. An for automotive applications. As a result, ongoing research project between US researchers are trying to produce the Steel Canada and the AUTO21 Network During a crash, key structural members “deform” in the crumple zone. TRIP steel slows the advance of microdesired effect using low-cost alloying of Centres of Excellence has brought scopic cracks that cause premature failure.

PHOTO: GM/JOHN MARTIN elements. together at team of leading metallurgists Given the continuing trend towards and metal forming experts to address lighter, safer vehicles coupled with the proven and either in place of or in addition to the ferrite. These specific issues with each of these AHSS grades. promising properties of AHSS grades, this class of steels grades are seeing more use in automobiles worldwide.

As the name would suggest, DP steels are comprised will become the most prevalent new material in next TRIP grades are similar to DP steels, with one added of a population of hard reinforcing particles (martengeneration automobiles. feature. The hard, reinforcing marteniste particles site) surrounded by a ductile matrix (ferrite). Accordactually form while the material is being deformed ingly, this steel behaves much like a composite mateso, in essence, the material automatically strengthens Keith Pilkey is a professor at Queen’s University and rial, exhibiting a combination of strength and ductility itself in the regions undergoing the greatest amount of a project leader for the AUTO21 Network of Centres of that is tailored to an application by altering the volume deformation. This unique property is highly beneficial Excellence. Visit www.auto21.ca. fraction, size and spatial distribution of the martensite for the manufacture of structural components. Material particles. Recent developments with DP steels have failure typically occurs as a result of excessive thinning Comments? E-mail joe.terrett@plant.rogers.com. focused on the formation of alternative matrix phases,

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January/February 2011

IT for Industry << Technology

Suite plant designs

Aerial view of a process plant using AutoCAD Plant 3D, AutoCAD P&ID and Navisworks. Designed with Navisworks and 3ds Max. PHOTO: AUTODESK

Autodesk brings all the elements together in one package

By Noelle Dickey

E

ngineers and industrial designers that use CAD software to design plant operations often need to employ additional programs for extra elements, but a lot of the software isn’t compatible, hence the inspiration for Autodesk’s launch of the Plant Design Suite 2011. It combines AutoCAD, AutoCAD P&ID, AutoCAD Plant 3D and Autodesk Navisworks.

“We have products from across many different technologies and many different industries that belong together or are often used together,” says Robert Shear, director of plant industry marketing for Autodesk, the global design software developer.

The plant solutions group was launched about five years ago and one year in the group released AutoCAD P&ID, a 2D schematic application that creates, modifies and manages piping and instrumentation diagrams.

The San Rafael, Calif.-based company also acquired Navisworks, a powerful application for plant space modelling that offers comprehensive project reviews for analysis, simulation and communication of project info.

Two years ago Plant 3D was launched as a stand-alone product, leading to the next step – bringing all of [the programs] together under one suite.

AutoCAD P&ID and Plant 3D form the foundation of the suite because they are both specialized applications for plants.

Virtual tour Unless you’re a designer or engineer, looking at a 2D CAD drawing doesn’t always provide a clear visual. You would probably get a basic idea of what you’re looking at by where stairs, posts and walls are noted, but this doesn’t help in identifying trouble spots in the design.

With the Plant 3D application, you get a 3D virtual tour of the design.

“And the value of adding Navisworks [to the suite] is that it allows for a light weight, intuitive model viewing, reviewing and redlining,” says Shear.

With this program on everyone’s desks, it creates a clearer communication of what’s happening in the design. Multidisciplinary design data combines in a single integrated project model for interference management and clash detection within the design.

“Navisworks enables seamless viewing from AutoCAD to Navisworks,” explains Shear. “For example, you can be in Navisworks navigating through the design and get to an area where you want to do some work or make some changes.

You can switch right to AutoCAD in the exact same view, except now you’re in an editing window.”

AutoCAD P&ID is build directly on top of AutoCAD, while AutoCAD Plant 3D

www.plant.ca

Canadian PLANT 19

shares the same code base as P&ID. And Navisworks not only supports AutoCAD DWG file format, it now has new features that enable seamless plant design-to-review workflow.

Another big benefit is one license and one install, making it easier to update and deploy across an entire company.

What makes it an even sweeter deal is price. The premium suite is $9,500 and

the advanced suite is $12,500. That’s a significant cost savings considering Plant 3D as a standalone application is a $9,000 product, and you get a better view of your projects.

Noelle Dickey is a Toronto-based business writer and editor.

Comments? E-mail joe.terrett@plant. rogers.com.

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SMALL BUSINESS— BIG PLANS TAPPING INTO YOUR COMPANY’S POTENTIAL FOR GROWTH

O

wners of small and medium-sized businesses (SMBs) are known for their entrepreneurial spirit and their ability to spot opportunities others miss. They’re usually incredibly driven, taking a hands-on approach to just about every facet of their business.

Such attentiveness is what makes these companies successful in the first place. The challenge, though, is having enough time to craft a plan to take your enterprise to the next level.

Many small business owners aim to grow their customer base, while balancing cash flow and inventory levels. Others strive to enter new markets. Though the end goal might be different, there’s one key commonality: each business requires its own unique plan, developed through research, networking and a clear vision of the company’s ideal trajectory.

On that note, David Wilton, director of small business banking with Scotiabank, sees immense value in careful planning.

Scotiabank’s advisors across the country work with small enterprises from all callings—manufacturing to retail to services—and have noticed the all-toocommon hitches faced by small companies.

“With growth often comes cash flow challenges,” Wilton says. “That’s why it’s important to have a strong business plan that you use as a roadmap to deal with challenges and opportunities as they become evident.”

One company keeping an eye out for those opportunities is GRI Simulations Inc. Although it was founded only seven years ago, this developer of software

and computer modeling technology for underwater operations has found its niche.

flow would I need to increase inventory and receivables 50 per cent?”

“There isn’t another company in the world doing what we’re doing,” reflects Russ Pelley, co-owner and president of the Mount Pearl, Nfld. based company.

“That in itself was a challenge—trying to project what our income would be.”

With receivables, you could review policies, payment terms and methods—cheque, Visa or a number of other mechanisms— that might allow remittances to grow at a slower rate than revenue growth, thereby protecting cash flow.

“With growth often comes cash flow challenges. That’s why it’s important to have a strong business plan that you use as a roadmap to deal with challenges and opportunities as they become evident.”

Cash flow was another pressing issue, in part because growth in international markets required the company to be present at trade shows in the U.S., Europe, Central and South America.

To help forge a game plan, Pelley brought in Scotiabank. “My philosophy is let your bank know pretty much everything you’re doing,” he says.

In fact, regular communication with a trusted advisor underpins any successful expansion plan, adds Wilton. Growth is typically more complex than it first appears, so getting the right advice, and making use of tools such as business plan writers and forecasting guides are key steps.

“These tools allow you to investigate the natural outcomes of various levels of growth. They include a financial projection tool that let’s you play ‘what-if?’ So, for instance, it lets you model questions, such as ‘if my revenue were to increase 50 per cent, how much incremental cash

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“You can also determine if you have the right level of owner equity invested in the business, if you should arrange for a higher credit limit, or potentially bring in partners that might invest. These are all things you can investigate once you understand the implications and financial impact of different strategies,” Wilton said.

Through his day-to-day conversations with SMB owners—getting to know their companies, goals and challenges—he notes the most successful ones have built themselves a trusted network of advisors, comprised of accountants, lawyers, financial planners and small business bankers.

With the right advice, tools and partners in place, small business owners realize being pressed for time doesn’t mean putting growth on hold. A solid plan and regular check-ups will keep your company on course—through the commotion, busy days and overall juggling act that comes with owning a business. Get growing!

Product Showcase << Departments

Lifting & conveying products

>> Plantware

Sustainable order picking

Tablet PCs improve outside viewing

Raymond Corp. has engineered the first hydrogen fuel cell-compatible orderpicker with a specially built 21-in. battery box.

The Model 5500 has allowed United Natural Foods Inc. (UNFI), an independent national distributor of natural, organic and specialty foods in the US and Canada, to transform its lift truck fleet at a Florida distribution facility to hydrogen fuel cell-powered trucks.

These trucks not only eliminate battery changes, Raymond’s first hydrogen fuel cell-compatthey also contribute to sustainability goals at the ible orderpicker, part of the new fuel cell325,000 sq.-ft. Sarasota operation. powered fleet at a UNFI distribution centre.

Lisa Madsen, director of sustainability and social responsibility at UNFI says hydrogen fuel cells will reduce carbon emissions by about 132 tonnes annually, “an amount equivalent to the annual emissions of 35 automobiles.” www.raymondcorp.com

DAP Technologies has added to its line-up two new Windows CE 6.0-based rugged tablet computers that improve viewing in bright sunlight.

The Tempe. Ariz. tablet manufacturer’s 7-in. M8930 and 6.2-in. M8940 feature optically enhanced touch screens that harness ambient light to enhance viewing in all light conditions. They’re also built to handle direct M8930 tablet PC. impacts, scratches and chemical spills, they perform in extreme temperatures and they're engineered to withstand multiple 4-ft. drops.

Windows CE version 6.0 runs on a Marvell PXA-300 624MHz processor with 128 MB SDRAM and ample memory for storing data locally, including 512 MB SSD (Solid State Drive) and an expansion slot supporting up to 16 GB. Power comes from dual lithium ion batteries; one internal and a second that can be hot-swapped as needed.

DAP Technologies has offices in Quebec City. www.daptech.com

Safely enclosed lift Pentalift’s customized Triple Scissor Lift Table provides a safer lift with a four-sided, gated 72-in. safety mesh enclosure.

The lift in the photo was designed for a recreation facility where the application required a platform width of 84 in., a length of 108 in. and a 4,000-lb. capacity.

A remote 3 hp power unit drives the lift speed and gate assemblies Mesh guardrails protect the are interlocked raised enclosure’s occupant. to the power unit control circuit, so both gates must be completely enclosed and locked before the enclosure can be raised or lowered.

Pentalift’s makes the lifts at its 120,000 sq.-ft. manufacturing facility in Guelph, Ont. www.pentalift.com

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Holding steady during installations Workers who assemble products while positioned on elevated platforms will get a safer lift from Herkules Equipment Corp.’s double-stacked pneumatic scissor lift table and riser.

The 60 to 120psi lift system has a 4,000-lb. capacity, a raised height of 94 in. and has a travel speed of less than 10 seconds in both directions.

Captured roller wheels ensure better performance and added Raising sunroofs to install- safety. Controls ers eliminates climbing up to raise and lower the lift are mountand down the platform. ed on a pedestal and can be located on either level.

The Walled Lake, Mich. manufacturer’s pneumatic lifts are virtually maintenancefree with no fluids or cylinders to replace. www.enkonsystems.com

www.plant.ca

Canadian PLANT 21

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Departments

>> Postsript

Debt march cripples “wealthy” economies

W

hich country is the world’s wealthiest? Economists generally refer to gross domestic product per capita. By this measure, the International Monetary Fund (IMF) says the top eight for 2010 are Luxemburg, Norway, Qatar, Switzerland, Denmark, Australia, Sweden and United Arab Emirates. The US ranks ninth, the Netherlands 10th and Canada 11th.

But does GDP per capita really measure the wealth of a country? Think about it in personal terms: What if your income ranked among the top tier in

of GDP, the average public debt of developed countries “isAt50%70%higher than just three years ago... ” the country, but your debt also ranked among the highest? Would you be wealthy? Not if your debt were so large that, even with your high income, you have no hope of ever paying it off.

With the help of The Economist magazine’s website, let’s take another look at the balance sheets of those 11 countries based on public debt per capita.

Americans bear a public debt burden

of US$31,000 per person while citizens of the Netherlands, Switzerland, and Denmark bear about $25,000; residents of Luxemburg, Sweden and Canada carry about $17,000 (Canadians’ share more than doubles if provincial debt is included) and Australians bear only $11,400.

On the other hand, the citizens’ share of the public balance sheet in three of the 11 countries is positive. Norway has

a gross debt of $186 billion, but it has a sovereign wealth fund (SWF) valued at $512 billion, for a net worth of $326 billion, or $66,500 per capita. Qatar’s public debt is $13 billion, but SWF is valued at $85-billion, for a net worth of $72-billion or $42,500 per capita.

The UAE, nominally considered one country, is a loose federation of seven emirates that are independent states.

Some are quite poor and one, the ostentatious Emirate of Dubai, is heavily indebted. Then there’s oil-rich Abu Dhabi, which has almost no debt and the world’s biggest SWF, the $627 billion Abu Dhabi Investment Authority.

But there is much more to the sovereign wealth story. Consider: • China’s four big SWFs are valued at $831 billion, nearly offsetting the country’s national debt of $996 billion. The US national debt is $10 trillion, with no SWF. • Singapore’s two SWFs are worth $381-billion, almost twice its public debt.

• Saudi Arabia’s SWF is worth $444 billion, seven times its public debt.

• Hong Kong’s SWF is $259 billion, six times its public debt.

• Kuwait’s SWF is worth $203 billion, 20 times its public debt.

• Russia’s SWF of $142 billion almost equals its public debt.

$41-trillion debt The Economist’s debt clock currently shows global public debt topping $41 trillion, up more than $10-trillion from 2008. Almost all of that is owed by the developed world, with an increasing portion owed to the developing world. At 70% of GDP, the average public debt of developed countries is 50% higher than just three years ago. Calculations by the Institute of International Finance show that the US Treasury needs to raise a staggering $4 trillion in 2011, while European governments need to find buyers for $3 trillion in new debt securities and Japan needs $5 trillion.

Sovereign bond markets were volatile in 2010, but this year promises to be even more nerve-wracking. Expect sovereign bond yields to keep climbing, so indebted economies will need to borrow even more to pay the interest. An analysis by the Bank of International Settlements estimated the debt-to-GDP ratios of the US and Britain would more than quadruple by 2040, while that of Japan, Germany and France would triple.

Halting the debt-to-death march will require painful spending cutbacks that will profoundly impact social programs but continuing the march will result in even more pain, because chronic debtors lose the right to make choices.

Gwyn Morgan is the retired founding CEO of EnCana Corp. This column is distributed by Calgary-based Troy Media.

Comments? E-mail joe.terrett@plant. rogers.com

22 Canadian PLANT January/February 2011

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