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GOODS

THE

NOVEMBER 2015

Looking Ahead to the Future of Manufacturing

KENTUCKY ASSOCIATION OF MANUFACTURERS


TABLE OF CONTENTS | The Goods | Sept 2015

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CONTENTS Welcome New KAM Team Member!

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Data Breaches

Pg 16

Manufacturing Month Recap

Pg 18

Sawyer is Here!

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MakeTime: Capacity Close By

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Dialing In Wet Processing Parameters

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Closing the Skills Gap Once and for All

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DEPARTMENTS

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November 2015 | The Goods | KAM.US.COM

From the President’s Desk

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BIPAC: Election Landscape

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Advocacy Corner

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Healthcare

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Education Matters

Pg 14

Energy Focus

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Tax Focus

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Health & Wellness

Pg 31

Employment Law

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MEP

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EDITOR

From the

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s we turn the calendar ever closer to the end of another year, it’s a good time to reflect on the events and accomplishments of the past months. Inside this issue, we’ll review Manufacturing Month, the general election, and the year ahead, which includes a Legislative session and Governor-elect Matt Bevin’s first biennial budget. We’ll be gearing up for weekly KAM Conversations, the conference calls with President & CEO Greg Higdon and members of our advocacy team where you can ask the questions that are on your mind

regarding the upcoming Legislative session and even some federal legislation/regulation that is likely to affect Kentucky manufacturers. You’ll also want to stay tuned to our website, and particularly our P2 site, for information on the upcoming Presidential election. Every election is important, and an informed electorate is our best strategy for good leadership and continued economic prosperity! We introduce our newest team member, Ben Haydon, and we continue to welcome new members to the KAM family. There is plenty of good information

throughout this issue, so you won’t want to miss a single article or ad, and we hope you’ll share with your colleagues and friends. As the year winds down, we are grateful for the opportunity to serve Kentucky’s manufacturing sector, and we thank the many members, sponsors, partners and participants who helped us have such a successful year. However you celebrate the holidays, we wish you and your families the best, both now and in the coming year! -KE

Karen Ellis, Editor, The Goods k.ellis@kam.us.com

KENTUCKY ASSOCIATION OF MANUFACTURERS

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President’s Desk FROM THE

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November 2015 | The Goods | KAM.US.COM


DEPARTMENT | President’s Desk

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ongratulations to Governor-elect Matt Bevin and all of the other statewide candidates who were successful on Election Day. Now that the election is over and the new administration is preparing to take over, a new era has begun. Activities in Frankfort will pick up substantially in the next few months. The Inauguration will take place on December 8 and the new administration will take control of state government. The General Assembly will convene in regular session January 5th and the new governor will present his budget for the Commonwealth during the third week in January.

Our advocacy team has worked throughout the interim on issues of concern to KAM’s members. We have monitored the pension discussions with the various interim committees and task forces that have been reviewing. Both state employee and teacher pension plans have major funding problems that, depending on what recommendations are made, will impact state revenue and policy for years to come. There are no easy solutions and any solution is going to be costly. The funds for any solution will have to come from existing programs, revenue bonds or increasing revenue. I think it is safe The transition has already begun as Governor- to say the latter is not likely this session. elect Bevin has named his team with a chair The pension crisis will impact the biennial designated for each Cabinet. The Chairs will budget. The current administration will head a committee for their Cabinet to begin leave a draft budget. It is likely the new reviewing current and future personnel, governor will have different priorities and will including suggestions on specific cabinet want to make changes. That could involve a secretaries. shift of funds from one program to another. Each transition is different and at this time, We have some programs, like education and little is known about how each of the Cabinet workforce development that we want to transition committees will proceed. In the protect and even expand in some cases. Our past, transition committees - in addition to advocacy team will be working with both the reviewing personnel - also reviewed pending new governor and legislative leaders to make decisions like administrative regulations, certain our views are heard. agency budgets and proposed legislation. Workforce Development remains a high The agency budgets and proposed legislation priority for KAM. We continue to support were due to be submitted to the current our KY FAME projects across the state. We Governor’s office by mid-November. anticipate further discussions on capital I and my advocacy team will be taking every opportunity possible to have input with the new administration in these coming weeks of the transition. As was said many times during the campaign, this was an important election and there are many important issues facing the Commonwealth. The 2016 legislative session will be equally as important as the transition. How Governorelect Bevin and his team and the House and Senate will be able to work together will set the stage for the next couple of years. There are many important issues that will be discussed and, we hope, acted upon this session, many of which involve increased or reallocated funding. The fix for the underfunded pension system, funding for education and workforce development, and funding for the state budget as a whole are just a few of those very important issues.

projects at KCTCS schools across the Commonwealth to house employee training and advanced manufacturing initiatives. More on this in another issue.

Another area that received a lot of attention during the election is health care reform, specifically the health care exchange (kynect), and Medicaid expansion. Funding is the issue here as well as to what extent the state should be involved and participating in Medicaid expansion. Both are related, but are different issues and are often confused. Kynect is the online marketplace run by the state to purchase health care plans for those individuals who are not covered under the Medicaid expansion. There is a comparable federal exchange in which many states participate and there has been some discussion by the incoming administration about transitioning those individuals covered KENTUCKY ASSOCIATION OF MANUFACTURERS

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DEPARTMENT | President’s Desk

under kynect to the federal exchange. I’m to fund the rebuilding of the bridge. It is a sure there will be a lot more discussion about major link between the North and South and this before a final decision is reached. our members rely heavily on it for delivery of Medicaid expansion is being covered by the parts for their manufacturing processes and federal government until 2017 when the shipment of the products they produce. P3s state will have to start kicking in five percent can be a tool to accomplish that project. of the cost. That will represent a significant amount of money, but there is an argument to be made that the economic impact to the state will balance some of that cost.

We also anticipate the normal amount of energy efficiency, workers compensation and legislative battles over Right to Work and minimum wage, but more on those after the All of the funding issues impact KAM as transition and the new governor takes office. our members participate in funding state We will begin our KAM Conversations again government through their corporate this legislative session, every Monday at 1:00 income taxes and the income taxes of their PM EST. This year, however, we plan to do employees. them weekly, to better keep our members up Other issues we will be involved with this to date on what is going on in the Legislature session are infrastructure funding and that may affect them and give them the utilizing innovative funding mechanisms like opportunity to contact their legislators on public-private partnerships or P3s as they issues of major concern. Call-in information are known. Kentucky’s road fund is based will be posted on the website every Monday on a gas tax that is partially tied to the during the Legislative Session (except for Veto average wholesale price of gasoline. As prices Session, when no business is conducted), dropped in the latter part of 2014 and early so plan to call in to listen or add your voice 2015, the tax dropped costing the road fund to our advocacy efforts on behalf of our $130 million a year in much-needed revenue manufacturing constituents. -GH for roads and bridges.

P3s are a funding mechanism for large infrastructure projects like the Brent Spence Bridge in Northern Kentucky. The Northern Kentucky community has been the block to a P3 bill because of the possibility it may bring tolls to the Brent Spence. Whether it brings tolls or not, there has to be some way

Greg Higdon President & CEO, KAM

WELCOME TO OUR NEWEST MEMBERS! Ronald R. Van Stockum, Jr., Attorney at Law

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November 2015 | The Goods | KAM.US.COM


EXECUTIVE COMMITTEE Mike Baumgardner, Chair McCoy & McCoy Laboratories, Inc., Madisonville Richard N. Whitaker, Immediate Past Chair Sumitomo Electric Wiring Systems, Inc., Bowling Green David Hall, Secretary/Treasurer CSX Transportation, Louisville Greg Higdon, President & CEO Kentucky Association of Manufacturers, Frankfort Jerrod Etienne Central Motor Wheel of America, Paris John Malloy LG&E-KU, Louisville Warren Markwell Emerson Industrial Automation (Retired), Maysville Jerry Morton Regal Beloit America, Inc., Florence Diane Snow Paducah

DIRECTORS Bluegrass Dan Antis, VP Manufacturing, Toyota Motor Mfg., Ky., Georgetown Rusty Ashcraft, Manager, Government Affairs & Environmental Policy, Alliance Coal, LLC Joe Blackburn, Plant Manager, Schneider Electric USA, Inc., Lexington Chris Driver, Filtration Program Leader, Harshaw Trane, Lexington Jerrod Etienne, Sales/Product Engineer Manager, Central Motor Wheel of America, Paris Greg Higdon, President & CEO, Kentucky Association of Manufacturers, Frankfort Mike Peffer, Xerox, Lexington Rejeana Thompson, Aichi Forge USA, Inc., Georgetown South Central Carroll Knicely, Jr., Director & General Manager, ACK Controls, Inc., Glasgow Jackie Hogan, General Manager, Toyotetsu America, Inc. Somerset Richard Whitaker, Vice President, Sumitomo Electric Wiring Systems, Bowling Green Eastern Duane Danis, Director, Services Division, Boneal, Inc., Means Greg Pauley, President & COO, Kentucky Power Company, Ashland Dan Schlaeppi, Manager - Engineering, Marathon Petroleum Company, Catlettsburg Louisville Alex Alvarez, SVP Chief Production Officer, Brown-Forman Corporation Lawrence Ford, Director, Government Relations, Anthem Blue Cross-Blue Shield Pete Gritton, President, Gritton & Associates, Louisville David Hall, Resident Vice President, CSX Transportation Earl Jones, Senior Counsel, GE Appliances Gregory Kosse, General Counsel, Kentucky Farm Bureau Mutual Insurance Jerome L. Lentz, Chief Financial Officer, Challenger Lifts, Inc. Brian Long, Plant Manager, Dupont Louisville Works John Malloy, VP, Customer Services, LG&E-KU John Rainey, Director of Governmental Affairs, Altria Corporate Services John Savona, Director of Manufacturing, Ford Motor Company Douglas P. Wichmann, Dishwasher Plant Manager, GE Consumer & Industrial Products Northern Douglas Irvin, VP of Environmental Affairs, Griffin Industries, Cold Spring Warren Markwell, Immediate Past Chair KAM, Maysville Jerry Morton, VP Global Operations, Regal Beloit America, Inc., Florence Carl H. Wicklund, Plant Manager, Wagstaff, Inc., Hebron Western Robert J. Baker, President, Campbell Tobacco Rehandling, Mayfield Mike Baumgardner, Vice President, McCoy & McCoy Laboratories, Inc., Madisonville Mary Beth Hudson, VP, Site Manager, Wacker Polymers, Calvert City Steve Loyal, VP Government Affairs, Atmos Energy Company, Owensboro Diane Snow, Paducah

KAM TEAM MEMBERS James W. “Jitter” Allen, Legislative Agent Rachel Bayens, Legislative Agent Carl W. Breeding, General Counsel Mary Breeding, Advancement Consultant Donna Brown, Legislative Agent Lloyd “Rusty” Cress, Executive Director, KAM Chemical Industry Council Karen Ellis, Operations & Communications Director Matt Ellis, Director, Web Development & Creative Design Sherry Harrod, Executive Assistant Prentice Harvey, Legislative Agent Ben Haydon, Director of Business & Membership Development Mike Helton, Advocacy Team Leader Greg Higdon, President & CEO Bert May, Legislative Agent Dustin Miller, Legislative Agent Kelly Shasky, Legislative Agent Mike Shea, Legislative Agent George Troutman, Certified Public Accountant Molly Sutherland, Branding Consultant

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e are pleased to announce that Ben Haydon has joined KAM as the new Director of Business and Member Development. Most recently Ben served as the Business Services Coordinator in the Education and Workforce Development Cabinet where he helped coordinate the collaborative business services initiatives between the Kentucky Career Centers, Local Workforce Innovation Areas, Cabinet for Economic Development, Labor Cabinet, and KCTCS. As business services coordinator, he was also responsible for providing business and workforce development, client development, labor market information, and various other workforce resources to business and industry. In his new position with KAM, Ben hopes to expand the reach of KAM through strengthening relationships within the organization, providing new opportunities for education and outreach to members, and offering new and creative ways for members to get involved.

“I’m excited to join the team at KAM and looking forward to getting to know all the current members and looking forward to developing relationships with new members. Starting this position at the beginning of Manufacturing Month in October was a whirlwind. It forced me to hit the ground running, and I was able to jump right in and learn about all the valuable resources KAM has to offer. Having a background in workforce development, I have a passion for the manufacturing industry in Kentucky and all that it has to offer. I understand the opportunities and challenges we are facing, and I’m looking forward to working with all the manufacturers across the state!” Originally from Springfield, KY, Ben currently resides in Lexington. He is a proud UK Alumni where he received his bachelor’s degree in Community Communications and Leadership Development. In his free time, he enjoys attending UK football and basketball games, horse racing, volunteering for various charities and organizations, and hanging out with his family. For more information on the many benefits of KAM membership, or to find out how to get more involved with KAM and its manufacturing initiatives, contact Ben at 502-352-2485 or via email at b.haydon@KAM.us.com.


DEPARTMENT | BIPAC

ELECTION LANDSCAPE One-Year Out

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fter finishing a tough batch of statewide elections, Kentucky’s political focus now shifts to federal elections that are only a year away. A lot will happen in that time, but here is where the races to control the House, Senate and White House stand currently. The race for President dominates the headlines and the campaigns have moved into the final push to attract voters before the first ballots are cast in Iowa, New Hampshire and South Carolina in early February. On the Democratic side, Hillary Clinton seems to be consolidating her lead over Bernie Sanders after his surprising run over the summer and early fall. The Republican race is as chaotic as ever as Donald Trump’s support has begun to slip since he surged to the lead in June. Another political outsider, Ben Carson, is his top challenger but Marco Rubio and Ted Cruz are both climbing in the national polls as the rest of the candidates 8

are bunched around 5% support apiece. Expect several candidates to leave the race between now and February. As supporters of those candidates choose amongst those remaining, anything can happen. So, prepare for a wild ride throughout the Presidential primary season. The Republicans’ 54-46 majority in the US Senate is also in jeopardy. Democrats need to win four or five seats to take control, depending on which party wins the White House, since the Vice President becomes the tie-breaker and determines majority control if seats are split 50-50. The Democrats see the best opportunity for those pick-ups in IL, WI, OH, FL, NH, and PA. Democrats have one seat they will be fighting to defend as well – Harry Reid’s open seat in Nevada. Of those seven competitive races, Democrats will need to win almost all of them to retake control of the Senate, but that is certainly

November 2015 | The Goods | KAM.US.COM

more of a possibility if have a winning campaign for the White House which drives most turnout. In the House, Republicans enjoy the biggest majority they have had in over 60 years with 247 seats to 188 for Democrats. Democrats will need to win 30 seats to take back the majority. There are perhaps 30 races that are considered competitive at this point around the country. Democrats would need to win every single one of those races to retake the majority and, even in a Presidential year, that sort of a wave election doesn’t seem likely at this time. Among the hottest races to watch is NH-1 where Republican Frank Guinta has swapped the seat back and forth with Democrat Carol Shea Porter each of the last three elections. Shea Porter is running again (their fourth rematch) and Guinta is facing the fallout of a fundraising scandal and an aggressive primary as well. In IA-1, Republican Rod Blum scored a surprise win


The Kentucky Prosperity Project is a non-partisan, joint effort between Kentucky employers and the Kentucky Association of Manufacturers to encourage more active and informed participation in the government process. For interactive tools and information, visit kentuckyprosperity.org. in 2014 in the most heavily Democratic district in the state. He has aligned himself with the Tea-Party oriented Freedom Caucus which is comprised mostly of members from very conservative, safe Republican seats. A large field of Democrats has emerged to take him on and the winner of that primary will have a shot

at one of the most competitive races of the cycle. With only 30 or so competitive races, that means that 400 races are reliably Republican or Democratic and all of the action there will be in the primary. That is the case in Kentucky where Republican Ed Whitfield is retiring after 11 terms. The seat

is safely Republican in the general election, so the primary will almost certainly determine who the next Congressman will be. Kentuckians know the importance of primary participation after this year’s tough gubernatorial primary where Matt Bevin won by less than 100 votes out of over 200,000 votes cast. -JG

Former U.S. Congressman Jim Gerlach (R-PA) serves as the president and chief executive officer of the Business-Industry Political Action Committee (BIPAC). For a full bio and/or to read more about BIPAC, visit www.bipac.net.

KENTUCKY ASSOCIATION OF MANUFACTURERS

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ADVOCACY O R N E R The Results Are In...

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very four years in odd-numbered years, Kentuckians go to the ballot box to elect their constitutional officers: Auditor, Secretary of State, Attorney General, Agriculture Commissioner, Treasurer, and most importantly, Governor and Lt. Governor. 2015 was one of those years and roughly 30% of registered voters went to the polls on November 3 to determine Kentucky’s constitutional officers for the next four years. Republicans won four of the six races and came within 25,000 votes of sweeping all six offices. At the top of the ballot was Louisville businessman Matt Bevin defeating outgoing Attorney General Jack Conway to become just the second Republican Governor in the last 40 years. Here is a quick rundown of the election results with some basic analysis. Tune in at the end for a more indepth discussion of how the election results may impact issues of interest to KAM. Note winners are in bold italics.

GOVERNOR Matt Bevin (R) - 52.5% Jack Conway (D) - 43.8% Drew Curtis (I) - 3.7%

Most public polling leading up to Election Day showed Conway leading the race, so the final result caught many political observers off guard. Bevin ran an unconventional campaign, but tapped into a changing sentiment in the Kentucky electorate that is trending more conservatively in statewide offices. 10 November 2015 | The Goods | KAM.US.COM

ATTORNEY GENERAL Andy Beshear (D) - 50.1%

Whitney Westerfield (R) - 49.9% In what was the closest of the races on election night, Andy Beshear, outgoing Governor Steve Beshear’s son, defeated State Senator Whitney Westerfield by roughly 2200 votes. Westerfield’s campaign was buoyed by significant advertising investment from the Republican Attorney General’s Association and his stance as a social conservative. However, Beshear’s name identification and significant fundraising advantage gave him the edge.

SECRETARY OF STATE Alison Lundergan Grimes (D) - 51.2% Stephen Knipper (R) - 48.8%

One of only two incumbents on the ballot, Secretary of State Grimes benefitted from not only being a current office holder, but also from the name identification she built in her 2014 campaign in a losing effort against US Senate Majority Leader Mitch McConnell. Even with those advantages, the relatively unknown candidate, Stephen Knipper, came within 22,000 votes.

TREASURER Allison Ball (R) - 60.6% Rick Nelson (D) - 39.4%

This was an open seat to replace outgoing Treasurer Todd Hollenbach. Republican attorney from Prestonsburg Allison Ball defeated State Representative Rick Nelson


DEPARTMENT | Advocacy

(D-Middleboro). This race was not a highprofile race, but may have been telling about the sentiment of voters as it was perceived that Nelson had support from persistent voting blocks of unions and teachers, but those were not enough on Election Day as Ball ended up being the top vote getter in all races.

AGRICULTURE COMMISSIONER Ryan Quarles (R) - 60.1%

Jean-Marie Lawson Spann (D) - 39.9% State Representative Ryan Quarles billed himself as a new generation of agriculture and that message resonated with voters on Election Day.

AUDITOR Mike Harmon (R) - 51.9%

Adam Edelen (D) Incumbent - 48.1% In what was likely the biggest upset of the 2015 Election, State Representative Mike Harmon defeated incumbent Auditor Adam Edelen. The upset doesn’t speak poorly of Harmon, but rather the reputation Edelen had as the next generation of the Democrat Party and maybe their best retail campaigner. Harmon benefitted from his socially conservative positions and the general mood of the electorate.

Impact for KAM: Speaking particularly to the Governor’s Race and how the administration of Governor-elect Bevin may impact KAM members, it is too early to tell exactly what those impacts might be. However, Governor-elect Bevin spoke to KAM members at two of our biggest events, the Energy Conference in May and the 21st Century Manufacturing Collabrium in October. At those events, Bevin highlighted his background in owning and running manufacturing businesses and outlined several issues of interest to him that are also of interest to KAM members: creating a better trained workforce, pushing for right-to-work legislation, modernizing Kentucky’s tax code, and fighting Federal government regulations that hamper Kentucky businesses. Not all of this will happen overnight and given Bevin’s lack of experience in state government, it may take some time for these initiatives to come to fruition. A final note on timing: With any new administration, there is a transition from the old administration; however this one will be unique in that it will be only the second transition from an eight-year term. Because of this, there are people in positions that have been there for some time, and they likely have policies and procedures in place that could change along with personnel. With the change in party in the Governor’s office, it is safe to say there will be some major changes in personnel, policies and procedures throughout state government. KAM has enjoyed the working relationships we have had with the Beshear administration and its various agency heads and regulators. In many cases, some of our members won’t relish the change that a new administration brings, but KAM and its government affairs team stand ready to build relationships with the Bevin administration on behalf of our members.

KENTUCKY ASSOCIATION OF MANUFACTURERS 11


YOU PLANTED THE SEEDS

LET US HELP BUSINESS

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Colette Ridge

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859-866-9996 Larry Smith

lsmith@expensereduction.com

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CHAPTER LOCATIONS Chapters under consideration

KYFAME.COM

BLUEGRASS CHAPTER // CONTACT: TERRY McMICHAEL - timcmichael@mmm.com 3M • Catalent • CMWA • Commonwealth Tool & Machine • Dana Corporation • Denyo Manufacturing Corporation • E.D. Bullard • Florida Tile • GR Spring & Stamping • Hayashi Telempu • Heartland Automotive • Hitachi • Hobart Corporation • Intelligrated • Lectrodryer • Link Belt • Lincoln Manufacturing • Montaplast • SealingLife • Tarter Farm & Ranch Equipment • Topy • Toyota • Trane • TransNav, Inc • Wausau Paper • Webasto

CUMBERLANDS CHAPTER // CONTACT: DONNIE SLAGLE - dslagle@ttna.com American Woodmark • Aisin Automotive Casting • Belden, Inc • Highlands Diversified • Superior Battery • Toyotetsu America • UGN, Inc

GREATER LOUISVILLE CHAPTER // CONTACT: TOM HUDSON - tom.hudson@nthworks.com Atlas Machine & Supply • Caldwell Tanks • Clariant Corporation • Ford Motor Company • GE Appliances • nth/works • Paradise Tomato Kitchen • Universal Woods • Westport Axle Corporation • Zoeller Company

GREATER OWENSBORO CHAPTER // CONTACT: WILL MOUNTS - wkmounts@omicoplastics.com Big Rivers Electric • Castlen Steel • Domtar Paper • Kimberly-Clark • Metalsa • OMICO Plastics, Inc. • Speciality Food Products • Sun Windows • Toyotetsu Mid-America • Trifecta • Unifirst

LINCOLN TRAIL CHAPTER // CONTACT: KURT KRUG - kkrug@inoac.com AGC Automotive• Akebono Brake • Alltech • Altec Industries • Barton Brands • Enprotech • Flowers Food • Fischbach • Flex Films • INOAC • Metalsa • Mid-Park • Mitsuba • MTD Products • Mouser Custom Cabinetry • Murakami • Orbis • Plastixon • TB America • Toyoda Gosei • Tower International • Wilbeart Plastics

NORTHERN KY CHAPTER // CONTACT: MIKE HIRSCH - mike.hirsch@zf-lenksysteme.com Diversified Composits • Grief • Hahn Automation • Krauss-Maffei • Linamar • Linkology USA • L’Oreal • Mubea • Nucor • Robert Bosch Automotive Steering LLC • Safran/Messier-Bugatti-Dowty • Skilcraft • Steinert US • Steinkamp Molding • Stober • Wagstaff • Zotefoams

SOUTHCENTRAL CHAPTER // CONTACT: GREGORY HEAD - greg.head@davert.org Bilstein Cold Rolled Steel • Bowling Green Metalforming • Champion Pet Foods • Davert North America • Delta Faucet • Franklin Precision Industries • J. M. Smucker Co. • Kobe Aluminum Automotive Products • Logan Aluminum • Meritor Inc. • Quad Graphics • Real Alloy • Sumitomo Electrical Wiring • SUN Products Systems

WEST KY CHAPTER // CONTACT: RYAN SENTER - rsenter@hibbsinc.com ACE Compressor, Inc. • Air Relief • Baptist Health Madisonville • Briggs & Stratton • Centrifugal Technologies • GE Aviation • Hibbs Electromechanical • Integrated Metal Solutions • International Automotive Components • MRCOOL, Inc. • MVP Group • Progress Rail • T.RAD North America • Vanderbilt Chemical • Wacker Chemical

KY FAME is part of the Kentucky Skills Network, a comprehensive workforce development system that helps companies find, prepare and train their employees. For general information contact Josh Benton at the Kentucky Cabinet for Economic Development. Joshua.Benton@ky.gov • 502.564.7140


DEPARTMENT | Healthcare

BB&T BENEFITS BEAT Oh, Deer! Drivers Beware, It’s Deer Season

While the leaves are changing across much of the country, it’s also that time of year when drivers are more likely to encounter deer – especially during their morning and evening commutes. Read more...

Knowing is Half the Battle

Construction worksites, by nature, are generally hectic, busy, and more slimly staffed due to work-saving technology and the raw reality of today’s economy—which favors lean staffing. Read more...

Risk Management: Failing to Plan Can Lead to Disaster Develop a preparedness program to prevent additional chaos It takes a lot of effort to grow and sustain a business. There are things that can be controlled and many that cannot. Read more...

Reducing the Risk Employee Identity Theft

Employees – they’re an organization’s greatest asset and, sometimes they’re also the greatest liability. Employers have an obligation to keep their employees’ best interests top of mind, but they also need to keep a watchful eye on them. This can be particularly true when it comes to identity theft. Read more...

Workplace Violence: Using Behavioral-Based Interviewing to Predict Risk

At 6:45 a.m. on August 24, 2015, one of the most horrific and outrageous acts of violence in the history of the American workplace occurred. That morning, 24-year-old WDBJ7-TV news reporter Alison Parker, and 27-year-old videographer Adam Ward, were at their particular work location in a tranquil setting near Bridgewater Plaza in Moneta, Virginia. Read more...

Cyber Crime: The Gift That Keeps on Giving Cyber security has become a top priority for many businesses. The threats lurk both inside and outside of every company. A recent Juniper Research study found that data breaches could cost over $2 trillion on a global scale by 2019. Read more...

KENTUCKY ASSOCIATION OF MANUFACTURERS 13


DEPARTMENT | Education Matters

Employer-Education Partnerships Move Kentucky Forward

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ctober 2, 2015 marked National Manufacturing Day established by the National Association of Manufacturers. In Kentucky, for the second year, we expanded the celebration beyond one day to encompass Manufacturing Month during October. Momentum established in 2014 continued to expand in 2015. Employers hosted educational tours within their facilities; colleges and employers partnered to host open houses describing the merits of manufacturing education and career pathway opportunities; students enjoyed field trips to see manufacturing operations; and KAM hosted multiple conferences engaging specific nontraditional talent pools within veteran and women talent pools. Celebrating manufacturing includes recognizing the deep partnership forged in 2015 toward growing and developing globally-competitive talent, locally across Kentucky, in the form of partnership growth between the Kentucky Federation for Advanced Manufacturing Education (KYFAME) and the Kentucky Community & Technical College System (KCTCS). Beginning in 2010 with one college and one employer in central Kentucky, today the KYFAMEKCTCS partnership consists of 100-plus employers statewide sponsoring 147 students in Fall 2015 within six KCTCS

colleges: Bluegrass in Central Kentucky, Elizabethtown in the Lincoln Trail area, Gateway in Northern Kentucky, Jefferson in the Greater Louisville area, Owensboro in Greater Owensboro, and Somerset in the Cumberlands area. Looking forward, partnership growth in 2016 includes west Kentucky FAME partnering with Madisonville, Hopkinsville, and West Kentucky KCTCS colleges; southcentral Kentucky FAME partnering with the Southcentral KCTCS college; and additional partnership conversations in the northeast and far eastern parts of Kentucky. The fact the Manufacturing Sector drives economic vitality within our Commonwealth reflects common knowledge. Conversations regarding deficient talent pools, technical skills gaps, coupled with open unfilled positions remain constant. Consistent manufacturing technical skills apply whether the manufactured product is bourbon, aviation components, automotive components, candy, or chemicals. The KYFAME-KCTCS partnership developed a continuousimprovement model based upon five Manufacturing Core Exercises, six specific Personal Behaviors, and the technical maintenance curriculum, simulated on campus in the open manufacturing environment. Coupling engaged employers providing real-

14 November 2015 | The Goods | KAM.US.COM

KENTUCKY COMMUNITY and TECHNICAL COLLEGE SYSTEM


2015 - 16 | C ATA LO G

time manufacturing experience connected into the classroom demonstrates the power of the partnership: employers, and educators engaged in the common goal of moving Kentucky’s economy forward by developing successful students launched into lucrative, long-term manufacturing career pathways. Using the Manufacturing Core Exercises and Personal Behaviors, the model can be readily applied to other industry sectors simply by exchanging the technical competencies within the program curriculum for other industry competencies. For example, information technology, or healthcare, or finance pathways can be created to develop globally-competitive employees grounded within those industry-specific fundamental skills. During 2015, we demonstrated the beginnings of partnership power between KYFAME and KCTCS, initiating the processes toward developing workplace-educational infrastructure necessary to begin closing the technical talent skills and manufacturing capacity gaps. Much work remains with respect to educating families, teachers, and communities regarding the opportunities, as well as continuously improving the partnership model. Based upon the foundation supporting program expansion in 2016, and beyond, looking forward opens the door further to reap the benefits and return on partnership investment providing globally-competitive employees locally. -DL

Dianne Leveridge, PhD Director of Technical Programs KCTCS

KENTUCKY ASSOCIATION OF MANUFACTURERS 15


FEATURE | Legal Focus

a hes t a D ac e Is Your Attitude about Data Security r B Putting You and Your Company at Risk? W

bookshelf. Every password should change on a 90-day cycle.

The threats are daunting because we have for too long relied on others to make our online experiences safe. At home we might not see the need to install anti-virus software, use encryption, or set-up a secure WiFi network. At work, we assume these are just issues for the information technology department.

Business owners need to gain an understanding of their legal obligations to protect company information—identify what you have, know where it is kept, and determine who has access. Document your security strategy, train your employees so they understand their roles, and develop a breach response plan identifying your first responders—those you will call on when a laptop is lost, a virus shuts down your servers, a terminated employee walks out the door with a gigabyte of data, or a cybercriminal hacks your system.

What we fail to recognize is that the most significant threat is people making bad decisions because they have little knowledge about data security. Our collective reliance on someone else plus a defeatist attitude predicts failure. If we don’t think about security at home, then the burden of security protections seems unnecessary at work.

Our advice—be proactive. Educate yourself and your employees about what steps each person can take to secure data. Start small like discussing proper passwords and identifying suspicious emails. Work with your employees expecting that a breach will occur and practice your plan on a regular basis making it more than just words on a page. -IR/SCC

We all need to do a self-assessment. Start with your passwords. Don’t use the same password or variations for multiple accounts. For mobile devices, choose six character passwords. For laptops or desktops, use a pass-phrase, which is akin to a complete sentence. The trick is to think of a quote from a movie, a line from a song, or pick random sentences from a book that you carry, or keep in your desk or on your

For questions or more information, contact Ian Ramsey at 502-681-0438 or via email at iramsey@stites.com, and Sarah Cronen Spurlock at 502-681-0461 or via email at sspurlock@stites.com.

ith all of the recent data breaches, the nervous jitters among those who have spent time ordering new credit cards or signing up for credit monitoring are no surprise. The possibilities of what might happen seem overwhelming and with no easy cure, action perhaps seems too daunting.

16 November 2015 | The Goods | KAM.US.COM


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Recap O

ctober was a busy time for KAM as we presented several events under the banner of Manufacturing Month in Kentucky. We opened with a Launch Reception to thank our members, sponsors, partners and others and prepare for a month of celebrating manufacturing. The scene for this launch reception was the famous Rathskeller in the Seelbach Hilton in Louisville, and we had a great time networking with everyone who attended. That was followed by our 15th Annual Manufacturer and Employee of the Year Awards event, also at the Seelbach. With a record number of nominations this year, our Selection Committee had their work cut out for them, but they were up for the task! We were proud to present awards to: • Employee of the Year: Danette Wilder, President & CEO, SealingLife, Inc. • Small Manufacturer of the Year: Hahn Automation, Hebron, KY • Mid-Sized Manufacturer of the Year: Holley Performance Products, Bowling Green, KY • Large Manufacturer of the Year: GE Appliances, Louisville, KY Our next event was a KAM Awareness Seminar, hosted by Big Ass Solutions in Lexington, Kentucky. A packed room of manufacturers learned about everything from how Big Ass Solutions became the innovative company they are to reporting requirements for the Affordable Care Act and more. (SNEAK PREVIEW: We will be doing more of these in the coming year, but have rebranded them as Business Briefings and under the capable direction of our Director of Business and Member Development, Ben Haydon, will offer a variety of informative speakers/sessions in 2016.) 18 November 2015 | The Goods | KAM.US.COM


FEATURE | Mfg Month Recap

Next, we traveled to Bowling Green, Kentucky, where we partnered with the Employer Support for Guard and Reserve and talked to manufacturers about the work-ready workforce that exists in returning veterans and active duty guard and reserve members. (If you’re interested in finding some of these work-ready employees, contact us at KAM and we’ll put you in touch with the right people to get things going!) The third week in October saw our first-ever 21st Century Manufacturing Collabrium, held at the FirstBuild facility on the University of Louisville Campus. This unique and innovative space saw a good crowd of manufacturers, educators and students come together to learn more about bringing innovation to manufacturers all over Kentucky and also offered then-gubernatorial candidate Matt Bevin an opportunity to speak to manufacturers and those who support them about his priorities for Kentucky and his interest and knowledge of manufacturing processes and innovation. Finally, we closed out the month with our second Workforce Solutions for Women conference, where we enjoyed hearing from two students involved in the KY FAME initiative. Their excitement was contagious and set the tone for the day. Luncheon keynote Heather French Henry, Commissioner of the Kentucky Department of Veterans Affairs, was inspirational and closing speaker Beth Brinly, Deputy Secretary of the Kentucky Education and Workforce Development Cabinet closed the day on a high note. All of our speakers at all of our events were amazing, and we count ourselves fortunate to have been able to secure their services for a fantastic month of celebration! As we look ahead to next year, we’ll be putting together workgroups for our signature events, and if you want to be involved, contact KAM and let us know what you’d like to do. We want to be sure that the events and information we present are current, accurate and relevant to the manufacturing sector in Kentucky—you can help us with that! For more information on these events or initiatives, contact Karen Ellis at 502-352-2485 or via email at k.ellis@kam.us.com.

KENTUCKY ASSOCIATION OF MANUFACTURERS 19


Meet Sawyer! Rethink Robotics today announced that its Sawyer robot, the company’s second smart, collaborative robot designed for a wide range of factory environments, is available for purchase and is being deployed by manufacturers across the globe. Air Hydro Power, Inc is the local distributor available today to answer any questions. Announced in March, Sawyer is a single-arm, highperformance robot created to handle machine tending, circuit board testing and other precise tasks that have been difficult to automate with existing robots. Weighing only 19 kilograms (42 pounds), Sawyer features a 4kg (8.8 lb) payload, with seven degrees of freedom and a 1260mm reach that can maneuver into the tight spaces and varied alignments of work cells designed for humans. Its high resolution force sensing, embedded at each joint, enables Rethink Robotics’ compliant motion control, which allows the robot to “feel” its way into fixtures or machines, even when parts or positions vary. This characteristic enables a repeatability that is unique to the robotics industry, and allows Sawyer to work effectively in semi-structured environments on tasks requiring 0.1mm of tolerance. Sawyer offers a unique combination of features that distinguish it from other conventional and collaborative robots, including compliant motion control, embedded vision with a built-in Cognex camera and Rethink’s Robot Positioning System, a component of the proprietary and industry-leading Intera software platform. Powering both Sawyer and Rethink’s first collaborative robot, the Intera system | The Goods | KAM.US.COM 20 November 2015 Baxter,


FEATURE | Sawyer the Robot

makes deploying the robots far easier than typical industrial robots. While traditional robots typically take an average of 200 hours to program and deploy, Sawyer can be deployed in under two hours and can easily be trained by typical factory technicians – not roboticists. Sawyer is purpose-designed for enterpriselevel deployments, with a useful life of 35,000 hours of operation. The robot is IP54-rated, making it ideal for harsh factory environments. Since its introduction, Sawyer has been field tested extensively at leading manufacturers’ sites around the world, and is currently being deployed on production lines in many of those facilities. General Electric (NYSE: GE) has been testing Sawyer over the past month and will deploy their first robot in a GE Lighting plant in Hendersonville, North Carolina. A prime example of true human-robot collaboration, Sawyer will be on a production line positioning parts into a light fixture as a GE employee completes the assembly. The process improves the efficiency of the product line while allowing GE’s employees to handle the more dexterous and cognitive work needed to complete the task.

“The ability to deploy a smart, collaborative robot like Sawyer provides a significant flexibility advantage to our production team, while still meeting our world class quality, precision and speed standards,” said Kelley Brooks, global advanced manufacturing & engineering leader at GE Lighting. “Utilizing this technology is an integral part of our Brilliant Factory initiative to connect all parts of the supply chain from product design, to engineering, to the factory floor and beyond in order to deliver customized LED solutions for our customers.”

in manufacturing environments with liquids and particle hazards present.

“Having already deployed several Baxter robots successfully, we’ve seen the value that collaborative robots bring to the factory floor,” said Edward Vander Bilt, leader of innovation at Steelcase. “These robots are the game-changers of modern manufacturing, and Rethink Robotics is leading the evolving relationship between humans and machines that allow each to do what they do best.” Sawyer is a significant addition to the company’s smart, collaborative robot family, which also includes the groundbreaking Baxter robot that defined the category of safe, interactive, affordable automation. Sawyer is available for purchase in manufacturing environments throughout North America, Europe and Asia-Pacific. It is on display this week at the RoboBusiness Conference in San Jose, Calif., and will be featured at Pack Expo International next week in Las Vegas, Nev.

“After announcing Sawyer in March, the worldwide demand we have seen for the robot has been overwhelming,” said Rethink Robotics President and Chief Executive Officer Scott Eckert. “Manufacturers around the globe understand that Sawyer opens the door for a wealth of new applications and opportunities to improve their business, and they are eager to get it onto their production floors.” For more info, visit rethinkrobotics.com.

About Air Hydro Power: Air Hydro Power is your local Rethink Robotics distributor. Air Hydro Power is an industrial distributor of robotics, hydraulics, pneumatics, hose and fittings and electrical automation products and services. Headquartered in Louisville, Air Hydro Power has nine locations throughout Sawyer is also set to be deployed in Kentucky, Southern Indiana, and Alabama. Steelcase Inc.’s (NYSE: SCS) Grand Rapids AHP is a forward thinking company providing factory, where it will work in tandem with the company’s welding machine. Sawyer will work an experienced engineering staff and product to pick and place parts in pairs of two, enabling specialists to support a wide range of customer base. www.airhydropower.com a completely autonomous welding process. The robot’s small footprint, long reach and For more information about Rethink Robotics, higher payload capacity make it ideal for contact Dan McFarland, e-mail the Steelcase team. In addition to handling danm@airhdyropower.com, call 502.292.4283, changes in parts and lines seamlessly, or visit www.rethinkrobotics.com. Sawyer’s IP54 rating allows the robot to work KENTUCKY ASSOCIATION OF MANUFACTURERS 21


Advantages of Solid State Lighting (LED) 22 November 2015 | The Goods | KAM.US.COM


DEPARTMENT | Energy Focus

T

oday, Solid State Lighting, also known as LED lighting, is the talk of the town! The market is growing at a rapid pace and with good reason. The innovative era of LED lighting comes with many benefits including big savings in energy efficiency, longer life, better light quality, better color rendering index and a huge reduction in operating costs over traditional lighting technologies. Lighting in industrial and manufacturing facilities poses many challenges. These facilities are among some of the most complex to light because of its harsh environmental conditions, hard to reach areas, oversize machinery, high ceilings and a lighting design that must comply with fire and safety codes, just to name a few. For these reasons, LED lighting may be a great solution and investment as this lighting solution operates at two to three times less energy and can reduce up to 90 percent in maintenance, comparing to traditional high intensity discharge (HID), which many are still operating. Some more, powerful benefits of LED facts to keep in mind include:

BENEFITS OF LED • Energy efficiency. • Improved light quality • Better photometric controllability • Longer useful life of 60,000 - 100,000 hours with little to no maintenance; ideal for areas that are hard to reach, dangerous and difficult to maintain • Less susceptible to vibration • NO UV emittance CONSIDERATIONS OF LED • Very specific temperature range requirements • Almost always requires a new layout and design • Lead times for manufacturing the new LED fixtures can be long • Very few fixtures today are designed to be field serviceable

While most lighting projects are driven by reducing annual energy spend, there are other important factors that bring value to business that should be considered. Having the proper lighting, both indoors and in parking areas, increases safety for

employees and visitors. In addition, having a properly lit facility can create a more engaged workforce and, in turn, more quality work. “Understanding the right lighting temperature and how it correlates to the work being done in a particular area is important, said Slater Medley, Lighting Solutions Leader with Harshaw Trane. “Through customer feedback we have seen a direct correlation between proper light and occupant satisfaction, no matter the environment.” LED advancement and expansion has given buyers many choices; however, there are still a few missteps when it comes to selecting the best LED products. Not all LEDs are equal. Buyers must do their diligence when considering LED lighting as an upgrade selection in order to receive the benefits that LEDs promise and, more importantly, to know when those promises aren’t real. Some considerations to look into or ask a lighting professional are: • How is the LED binning selected? • What kind of testing performance was done and what kind of hours were used? LM79-LM80 – TM81, does the fixture have an LED Facts label registered with the DOE? • At what temperature was the product tested? Then compare to the temperature in your facility and asked for a revised test result on life. • What is the color rendering index? Good color rendering will render to truer color and good contrast. An LED solution is a long-term investment and researching before signing the dotted line will lead to a more satisfying results. What if you’re not a lighting expert? Who can you turn to? It’s best to seek out experienced individuals in the market that have obtained industry recognized lighting certifications and have a portfolio of successful projects and customer references. -MN For questions or more info, contact Minh Nguyen at 502-499-7000 or via email at minh.nguyen@trane.com. KENTUCKY ASSOCIATION OF MANUFACTURERS 23


DEPARTMENT | Tax Focus

IRS Hot Buttons Defending Your Business Against Tax Audits

Everyone has at least one pet peeve; the IRS has many. Here are some items that the tax agency may target on a manufacturer’s tax return — and ways to help safeguard against an IRS audit. 1. OWNERS COMPENSATION A privately held C corporation may try to over compensate its owners in lieu of paying dividends to avoid double taxation. Conversely, an S corporation that is not subject to corporate-level taxes might try to underpay its owners to minimize payroll taxes and, instead, make higher distributions. The IRS is on the lookout for these ploys and may compare the owner’s compensation to that of other manufacturers or distributors in your area or of similar size. How much should an owner be paid? There is no right answer; every company will have its own facts and circumstances. Therefore, it depends on what unrelated third parties with the same responsibilities, schooling and experience receive for performing the same functions. Outside sources, such as placement companies and compensation surveys, are good tools used to substantiate the owners’ compensation expenses. 2. TRAVEL EXPENSES Private business owners sometimes push the envelope when it comes to combining business and personal travel expenses. However, the IRS has strict rules on what qualifies as deductible business travel expenses. 24 November 2015 | The Goods | KAM.US.COM

For instance, you attended the International Manufacturing Technology Show in Chicago last September. You visited the conference for two days but extended your stay an extra week to visit family in the Chicago area — and your wife and kids tagged along. How much of the trip can you deduct as a legitimate business expense? In order to deduct travel expenses, the primary reason for the trip must be business, rather than personal pleasure. To validate the business purpose of a trip, the IRS usually will consider whether your business travel days (including travel days to and from the destination, working days and standby days) exceed your personal travel days. When this happens, you can usually deduct all your transportation costs, such as airfare, rental car fees and hotel costs, but not those incurred by the rest of your family. If the threshold is not met, you cannot deduct any travel costs, even if you conduct substantial business during your trip. 3. MEALS AND ENTERTAINMENT Likewise, excessive meals and entertainment expenditures are likely to catch the IRS’s attention. You generally can deduct up to 50% of business-related meals and entertainment expenses incurred


DEPARTMENT | Tax Focus

year it is incurred, but also when a refund is claimed for an earlier (or later) year. Proper record retention is essential with NOLs and the IRS instructions recommend saving records until NOLs no longer have an effect, plus seven years.

for entertaining a client, customer or employee. Maintaining detailed records is the key to protecting your meals and entertainment deductions. Your company’s expense reimbursement forms should require the following information: • Amount of the expense, • Time and place, • Business purpose, and • Name and business relationship of any person entertained. Hold onto records supporting the items claimed until the statute of limitations runs out. (The statute of limitations usually runs out three years from the due date or the filing date, whichever is later.) However, the IRS can go back more than three years if it suspects a substantial omission of income or a tax fraud.

INDUSTRY SPECIFIC ADVISORS There is a small percentage of tax returns that the IRS audits. Sometimes a business is selected randomly, however, in many cases, high-risk or excessive deductions trigger an audit. The IRS keeps “norms” on how much manufacturers under each industrial classification code typically deduct for each line item; unfortunately, it doesn’t publish industry norms to the general public. An advisor who specializes in the manufacturing niche can evaluate your deductions line-by-line and possibly help minimize your audit risks. - BL

4. NET OPERATING LOSSES When expenses exceed revenues, a business may incur a net operating loss (NOL). Businesses may elect to carry back (or forward) NOLs to offset income in other years. The IRS may ask your company to substantiate the loss, not only in the

If you have questions or need more information, you can contact Byron at 502-882-4328 or via email at byron.largen@mcmcpa.com.

Best and Brightest As a regional CPA firm, MCM’s Manufacturing & Distribution Services Team offers you access to some of the brightest, most technically proficient minds in our profession. Our bluegrass roots drive our passion for intensely personal tax, assurance and advisory services, while our international network helps us equip your company to compete at a world-class level.

Contact us at 502.749.1900.

www.mcmcpa.com | Kentucky | Indiana | Ohio

Expert guidance, beyond the bottom line. KENTUCKY ASSOCIATION OF MANUFACTURERS 25


FEATURE | MakeTime

THE CAPACITY CLOSE BY MakeTime offers a model for connecting OEMs’ manufacturing needs with the capacity shops have available. Drura Parrish shares an anecdote that made an impression on him, because the inefficiency it illustrates highlights the value that he hopes OEMs and machine shops will see in his recently founded business. During a recent shutdown of a West Coast port, he says, the Midwestern U.S. plant of a foreignowned automaker was cut off from its source for various machined parts, including many simple, non-critical components. These inexpensive parts were sent by air freight to keep the plant producing, even though there were probably 100 machine shops within a short drive of the plant that could have made these parts instead. Why? Of course, there are several reasons why it was impractical for the automaker to turn to local shops, as near as they might have been. Even if the company could identify which of the local shops had the right kind of capacity, the OEM still would have no way to quickly determine which of those shops do quality work and which were effective at delivering within tight schedules. And of all the shops meeting those requirements, some would no doubt be too busy to take on the automaker’s work. Thus, even though there might be a large number of prospective suppliers nearby, finding the right shops out of those prospects would require so much searching, vetting and quotation that air freight was arguably the better choice.

However, what if these sorts of questions about prospective suppliers could be answered in advance? What if available capacity in nearby shops could be seen and spoken for as it was needed? 26 November 2015 | The Goods | KAM.US.COM

Mr. Parrish’s firm is MakeTime (maketime. io), an online “distributed manufacturing” marketplace that launched last year. Different from an RFQ site, MakeTime’s model involves bidding on available machine capacity rather than bidding on parts. That means it is a service only for knowledgeable buyers who understand a job’s manufacturing needs well enough to be able to guess the type and amount of machine capacity required. Further, MakeTime’s marketplace includes only those shops that MakeTime itself has interviewed and evaluated, and is willing to stand behind with a guarantee to the buyer. Founder and CEO Mr. Parrish grew up around machining. His grandfather and father worked for a family tool and die business in Kentucky. When he set out on his own career, he left this work behind—or so he thought. While serving as a vice president for a West Coast company specializing in design and prototyping, he routinely engaged with small machine shops, and he recognized the value of the capacity in these shops that was going unused. Visiting a mold shop one day that he held in high regard, he asked, “Can I buy an entire month on one of your machines at a cost-plus rate?” His idea was that he would sell this capacity to OEMs he knew or sought out. It worked. Other shops joined him. Some would call him with capacity to sell because business was slow during a given month. Mr. Parrish says the group got big enough that there were certain moments when his network of resold capacity had more machine tools running at one time than one of the larger job shops in southern California. Yet the part of the model that he couldn’t scale was his own effort in finding and selling to OEMs. An investment


FEATURE | MakeTime

banker looking dryly at what he was doing asked, “Have you ever heard of the Internet?” The new company, MakeTime, represents something like this capacity-based model coming to the Internet. The Kentucky-based startup manages an online marketplace in which machine shops see buyers’ requests for specific capabilities and machine time. For example, a request might take the form of “20 hours of milling and drilling stainless steel parts 15 inches long.” A shop can submit a bid with the price it would charge for this work. Messaging between buyer and seller then further defines the details of the job once a bid has been tentatively accepted, and serves as a record of the agreement. Despite the direct interaction, however, Mr. Parrish still has an extensive hands-on role. He personally interviews every supplier seeking to join the marketplace. This is part of an evaluation process for suppliers that also includes a tour of the shop by a member of the MakeTime staff—every potential supplier gets this visit. “We also interview references, look at ISO certification and learn about recall and bringback rates,” Mr. Parrish says. Out of that list of indicators, he says rework is one of the most telling clues about the way a shop performs. The information is significant because MakeTime attracts buyers to the network by guaranteeing machine shops’ work. If the parts delivered are not satisfactory to the buyer and the shop can’t fix the problem, then MakeTime has a stable of suppliers on standby that it will call upon to run the job. This is an extreme and costly contingency that the company seeks to avoid simply by

letting in only shops that are very good. But a large portion of shops fit that description, he says, because shops in recent years have had to be very good. Market conditions of the past decade have weeded out poor performers, so the shops that have come through this period tend to be highcaliber. Thus, part of his message to OEMs is this: There is good capacity out there. Currently, MakeTime has about 4 million hours of available capacity in its marketplace, and it could have even more, except the company targets a particular buyer-to-seller ratio (1:3) and limits supplier growth to maintain this. Among OEM companies, the trend in recent years seems to have been toward insourcing. Mr. Parrish has seen this. I have, too. Companies have brought more of their manufacturing into their own facilities. The step is warranted in many cases, as the OEM recognizes the value of taking better control of the timing and quality of its production, not to mention the value of keeping manufacturing and product development close. Still, are there often cases in which insourcing is an unnecessary expense? Mr. Parrish believes so. Unknown to the OEM contemplating this move, there might be a variety of shops nearby that are not only ready to do this customer’s work, but also capable of doing it even to exacting timing and quality needs. -PZ

For questions or more information, contact Peter Zelinski via Twitter at @Z_Axis_MMS or via email at pz@peterzelinski.com. KENTUCKY ASSOCIATION OF MANUFACTURERS 27


FEATURE | Dialing In

‘Dialing-In’ Wet Processing Parameters

Companies using microfabrication can gain important benefits by using wet processing equipment designed to handle a variety of application parameters.

C

ompanies using microfabrication can gain important benefits by using wet processing equipment designed to handle a variety of application parameters. Now that a burgeoning range of microelectronic devices have adopted the microfabrication techniques of semiconductors, increased attention is being paid to the design and selection of processing equipment that can make a significant difference in product quality and throughput. Those potential gains exist for the profuse array of applications that require microfabrication processes, including in the MEMS, biotech, photovoltaic, LED panel, sensor and other micro- and nanotechnology industries. The products from all of these sectors are dependent on silicon as well as compound

28 November 2015 | The Goods | KAM.US.COM

semiconductor materials that undergo a variety of processes requiring specialized equipment, accessories, and software. The performance of that equipment and software (e.g., precision, throughput, flexibility) can be significantly improved though various types of optimization. Such is the case with the wet processing equipment used to etch silicon and other semiconductor materials used in microfabrication. A wide variety of equipment designs is available (both manual and automated) to accommodate the many different wet process requirements, which may vary in materials, throughput, size of products being processed, and type of chemicals. Essentially, manual processing equipment consists mainly of benches that are used for low-throughput applications in laboratories


FEATURE | Dialing In

and production facilities that have low volume bases, deionized requirement. water rinse and drying. Mechanical, Conversely, automated equipment is Ultrasonic or typically used for high-throughput, highMegasonic agitation volume cleanroom applications, and is and other processes normally found within mass production may also be microfabrication environments. Usually incorporated, if having far greater complexities in terms desired. Another of tooling and also utilizing software, the consideration is automated wet processing equipment offers safety and there are the highest potential benefits from some type many mandated of optimization. requirements for items such DIALING-IN EQUIPMENT DESIGN as ventilation, Fully automated process equipment for high- fire suppression, speed production often includes multiple chemical handling stations or modules as well as robotics, and explosion sophisticated control, data logging and prevention. monitoring systems. Application-wise, Since the design of many wet processing systems designs systems is proprietary, specifications are may vary widely. In operation, there is quite a protected by the equipment manufacturer difference in the etching of silicone rods and and user alike. Therefore, considering all the crystals used in nuclear sensors. One of of the possible design variables, it may be the major differences may be the chemistry advisable for users in the market for an involved, its concentration and temperature. automated wet processing system to visit Chemical compatibility with the materials of an equipment manufacturer with design construction is a must. Most solvents require capabilities and an application laboratory. stainless steel tanks and in other cases plastic tanks and baths may suffice. One of the prominent designers and builders of wet processing equipment, JST DIALING-IN PARAMETERS Manufacturing (Boise ID), has an on-site To facilitate the economical design and applications laboratory where end users building of a wet processing equipment can develop their process with various solution, many users insist on a standardized chemistries and do tests on real equipment approach with customizable features that will ranging from immersion and spray tools to best handle their applications parameters. dryers. The laboratory includes sophisticated metrology equipment including a scanning For example, JST utilizes standard products electron microscope and a Tencor particle and standard methodologies to design and counter. manufacture equipment. Using SOLIDWORKS 3D-modeling software, the company can By visiting applications labs such as JST’s, end make minor changes and customizations to users can “dial-in” on the optimization of their meet the needs of each application. Also, the processes, and can minimize the amount of equipment is modular by design, allowing for chemicals required and/or determine the tool easy changing and reconfiguration should features they need for their applications. This process or product requirements change. can save the customer money by eliminating features they do not need. Another powerful feature: each unit is designed with software that is capable of Typical examples of automated systems performing all tool functions, including those include process modules for solvents, acid, that are not required. With this, end users KENTUCKY ASSOCIATION OF MANUFACTURERS 29


FEATURE | Dialing In

can create their own process, or recipes, with all sub-routines at their disposal. “We like to give customers added flexibility by programming their equipment to do everything that the equipment is capable of doing,” explains Louise Bertagnolli, JST president. “This enables them to dial in applications, such as chemical concentrations. They can also turn various features on or off, depending on your process requirements. Even though they may not need some of the features today, they may want to turn them on in the future, which can be both economical and powerful.” OPTIMIZING MANUAL APPLICATIONS Specifying the design parameters for many manual benches may not be as involved as those of automated systems. However, soliciting the opinion of equipment manufacturers regarding equipment design may be highly beneficial. “Sometimes we will visit a user’s facility and help define the production parameters and specifications of their manual wet processing equipment,” says Louise Bertagnolli. “Even though they had a good idea how they wanted to handle the wet processing end of it, after we had a chance to review the project, we recommended that they consider doing it in a somewhat modified manner. Sometimes we’ll suggest a design variation that will perform the cleaning or etching work in the manner required, but will also save money or reduce the floor space requirement, or simplify maintenance, or provide other benefits.”

nanoelectronics, nanophotonics and nanobiotechnology. The LNF is an open use facility with hundreds of users from various UM departments, as well as many other universities and businesses. Schweiger states, “Since we essentially rent lab space and equipment to our diverse users, it is important that we provide them with benches that suit their purposes well, from those who are processing wafers to those who may be doing very advanced research or testing on non-wafer components.” Schweiger explains that the original equipment design for the new lab areas wet processing benches was very specific, and determined by the LNF staff. “We had looked at it in terms of process flow, from start to finish, not really taking into account the variety, and variation, of process samples that our user community might be working with, how we’d accommodate nonstandard sample sizes, or what the impact might be in total cost of ownership with respect to chemical usage,” he says. Schweiger adds that the some of the new benches had their decks reconfigured once the tools were installed. Several of the earlier benches, some of which were purchased over 20 years ago, were also modified to allow for more flexibility in meeting the process needs of the user community. “In retrospect, our initial plan for the deck space, and processing capability of the benches, wasn’t adaptable/flexible enough, and we worked with JST to implement modifications so that the bench decks were simpler, and could provide more working space,” Schweiger concluded.

Dennis M. Schweiger, Senior Director of Infrastructure at the University of Michigan’s Lurie Nanofabrication Facility (LNF), feels that the right combination of user requirements and assistance from the equipment fabricator For information contact: JST Manufacturing can make a significant difference in the Inc., 219 E. 50th S., Boise, ID 83714; Phone: design, layout, and operation of a wet 800-872-0391, 208-377-1120; Fax: 208-377processing station. 3645; E-mail: info@jstmfg.com; or visit the web site jstmfg.com The LNF is a world-class facility in all areas of semiconductor device and circuit fabrication, integrated microsystems and Ed Sullivan is a technical writer MEMS technologies, nanotechnology, based in Los Angeles, California. 30 November 2015 | The Goods | KAM.US.COM


DEPARTMENT | Health & Wellness

Emotional Health | Depression

Understanding Depression Depression is a common condition that affects 1 in 10 Americans each year.1 It can affect a person of any age, race or social standing. People misunderstand depression to be sadness, or a down mood that you can just snap out of. This isn’t the case. Job loss, divorce or the death of a loved one can cause grief and sadness that lifts over time. Depression is a medical condition with both physical and emotional symptoms that can occur even when things are going well. If it isn’t treated, it can last for months or even years.

Am I suffering from depression?

How can I help someone I know?

The symptoms of depression are different for everybody. Talk to your doctor if you’re experiencing any of these signs for long periods:2

A depressed person often feels overwhelmed, hopeless and apathetic. These feelings can make it difficult for them to get help. Tell your loved one to speak with a doctor about what they are feeling.

A sad, anxious or empty mood

Feelings of hopelessness, pessimism, guilt, worthlessness or helplessness

Loss of interest in activities you used to like, including sex

Fatigue, low energy or being slowed down

Trouble remembering or making decisions

Difficulty sleeping, like insomnia, waking up too early or oversleeping

Overeating and weight gain

Loss of appetite and weight loss

A depressed person needs your support. Be kind but firm, and offer understanding, patience and encouragement. Listen carefully when you talk with your loved one, and try to get them to spend time with other people. Don’t push too hard, but suggest activities they used to like. If they express negative feelings, point out what’s positive and offer hope. If they speak of suicide, report this to their therapist or doctor.

Thoughts of death or suicide; suicide attempts

Restlessness or irritability

Physical problems that don’t respond to treatment, like headaches, stomach aches and chronic pain

What if I’m suffering from depression? If you think you are depressed, ask for help. Call your doctor, or talk with a trusted friend or family member so they can get you the help you deserve. Most people don’t just “snap out” of a depression. It’s important to get professional help and follow your doctor’s advice.

1 National Center for Chronic Disease Prevention and Health Promotion, Health-Related Quality of Life; Behavioral Risk Factor Surveillance System (2008): cdc.gov 2 National Institute of Mental Health, Depression (September 23, 2009): nimh.nih.gov 3 WebMD, Depression Guide (May 4, 2008): webmd.com 4 Depression and Bipolar Support Alliance, Depression Across the Lifespan (August 25, 2006): dbsalliance.org This information is intended for educational purposes only, and should not be interpreted as medical advice. Please consult your physician for advice about changes that may affect your health.

Anthem Blue Cross and Blue Shield is the trade name of: In Colorado and Nevada: Rocky Mountain Hospital and Medical Service, Inc. In Connecticut: Anthem Health Plans, Inc. In Georgia: Blue Cross and Blue Shield of Georgia, Inc. In Indiana: Anthem Insurance Companies, Inc. In Kentucky: Anthem Health Plans of Kentucky, Inc. In Maine: Anthem Health Plans of Maine, Inc. In Missouri (excluding 30 counties in the Kansas City area): RightCHOICE® Managed Care, Inc. (RIT), Healthy Alliance® Life Insurance Company (HALIC), and HMO Missouri, Inc. RIT and certain affiliates administer non-HMO benefits underwritten by HALIC and HMO benefits underwritten by HMO Missouri, Inc. RIT and certain affiliates only provide administrative services for self-funded plans and do not underwrite benefits. In New Hampshire: Anthem Health Plans of New Hampshire, Inc. In Ohio: Community Insurance Company. In Virginia: Anthem Health Plans of Virginia, Inc. trades as Anthem Blue Cross and Blue Shield in Virginia, and its service area is all of Virginia except for the City of Fairfax, the Town of Vienna, and the area east of State Route 123. In Wisconsin: Blue Cross Blue Shield of Wisconsin (“BCBSWi”), which underwrites or administers the PPO and indemnity policies; Compcare Health Services Insurance Corporation (“Compcare”), which underwrites or administers the HMO policies; and Compcare and BCBSWi collectively, which underwrite or administer the POS policies. Independent licensees of the Blue Cross and Blue Shield Association. ® ANTHEM is a registered trademark of Anthem Insurance Companies, Inc. The Blue Cross and Blue Shield names and symbols are registered marks of the Blue Cross and Blue Shield Association. 28907ANMENABS 12/12 F0030022

KENTUCKY ASSOCIATION OF MANUFACTURERS 31


DEPARTMENT | Employment Law

The Long & Narrow Road to Tax Exemption Supplies and Industrial Tools

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ales and use taxes are significant sources of revenue for the Commonwealth, generating over three billion dollars each fiscal year. However, recognizing the importance of manufacturing to the state, the General Assembly enacted several exemptions from the taxes to encourage manufacturers to locate and remain in Kentucky. Two of the most important are the exemption for materials, supplies, and industrial tools and the exemption for machinery for new and expanded industry. Because, thankfully, there seems to be little dispute about what constitutes a raw material, this article focuses upon the exemption for supplies and industrial tools. In the next issue of Goods, we will address the exemption for machinery for new and expanded industry. THE EXEMPTION FOR SUPPLIES AND INDUSTRIAL TOOLS IN KRS § 139.470(10) The exemption for supplies and industrial tools is based upon the theory that sales tax should only be collected once–when the final product is sold to its end user. Therefore, supplies and industrial tools “used up” during the manufacturing process should not be taxed. While this is a great “theory”, manufacturers know the Kentucky Department of Revenue (“KDOR” or “Department”) is really stingy when it comes to allowing exempt purchases of supplies and industrial tools. Instead, the KDOR treats 32 November 2015 | The Goods | KAM.US.COM

the majority of these purchases as taxable repair or replacement parts. A recent case described below illustrates the problems that may be encountered when claiming an exemption from tax for the purchase of industrial tools. Before turning to the case, however, some definitions and background are necessary. In order to qualify for the exemption, the supplies and industrial tools must be “directly used in manufacturing or industrial processing” and must have a useful life of less than one year. “Supplies” include “lubricating and compounding oils, grease, machine waste, abrasives, chemicals, solvents, fluxes, anodes, filtering materials, fire brick, catalysts, dyes, refrigerants, explosives, etc.” “Industrial tools” include “hand tools such as jigs, dies, drills, cutters, rolls, reamers, chucks, saws, spray guns, etc., and . . . tools attached to a machine such as molds, grinding balls, grinding wheels, dies, bits, cutting blades, etc.” Unlike supplies, industrial tools normally must come into direct contact with the product being manufactured to qualify for the exemption.


THE DEPARTMENT OF REVENUE’S NARROW INTERPRETATION OF THE EXEMPTION Although it has the potential to result in significant cost savings for manufacturers, as the title of this article suggests, the KDOR has taken an increasingly narrow interpretation of the exemption for supplies and industrial tools. With respect to industrial tools, for example, the Department has strictly interpreted the requirement that such tools come into “direct contact” with the product being manufactured. The Department has construed this requirement to mean the industrial tools must act upon the product to change its size, shape, or character. Additionally, as stated above, the Department finds a vast majority of purchases to be taxable because they are deemed to be purchases of “repair, replacement, or spare parts”, which are not exempt from tax. The statute states that “[r]epair, replacement, or spare parts shall not be considered to be materials, supplies, or industrial tools directly used

in manufacturing or industrial processing.” “Repair, replacement, or spare parts” are defined as “any tangible personal property used to maintain, restore, mend, or repair machinery or equipment” and do not include “machine oils, grease or industrial tools”. For instance, the Department has taken the position that chemicals used to maintain machinery and equipment do not qualify for the exemption because they are by definition repair and replacement parts. The tension between the requirement that industrial tools have a useful life of less than one year and the exclusion of repair, replacement, and spare parts from the exemption is illustrated in the recent case of Progress Metal Reclamation Company v. Department of Revenue, currently pending before the Kentucky Supreme Court. PROGRESS METAL RECLAMATION COMPANY V. DEPARTMENT OF REVENUE The taxpayer, Progress Metal Reclamation Company, operates a metal processing business in Ashland, Kentucky. Part of its business involves the cutting of metal so that it can be placed in a furnace and melted. For this process, Progress Metal uses torches consisting of a mixture of acetylene and liquid oxygen to create temperatures hot enough to cut the metal and hammers that fall onto large pieces of metal to break up the metal into smaller pieces. Pins are used KENTUCKY ASSOCIATION OF MANUFACTURERS 33


DEPARTMENT | Employment Law

to hold the hammers in place. The hammer pins have a useful life of between two weeks and one month. During a sales tax audit, the KDOR treated both liquid oxygen and hammer pins as taxable. Progress Metal protested the audit assessment. The company argued the hammer pins were exempt as industrial tools because they functioned as “chucks” or “tool holders”, which are expressly listed in the statute as exempt, and the hammer pins had a useful life of less than one year. The Department argued the hammer pins were not industrial tools, but were repair or replacement parts. In addition, Progress Metal maintained the liquid oxygen was exempt as an industrial supply and the Department previously had exempted liquid oxygen from tax from 1965 to 2004. Progress Metal argued the Department’s change of position violated a legal doctrine known as “contemporaneous construction”, which provides that an agency’s longstanding interpretation of a statute may not be unilaterally revoked by the agency. The Department asserted the liquid oxygen was an energy producing fuel and not an industrial supply. On March 13, 2015, the Court of Appeals issued an opinion affirming the decisions of the lower court and Kentucky Board of Tax Appeals. The court first addressed the Department’s treatment of liquid oxygen and found the doctrine of contemporaneous construction prohibited the Department from abandoning its “four-decade long pattern” of exempting liquid oxygen from tax as an industrial supply. With respect to Progress Metal’s use of hammer pins, the court held the hammer pins were not “industrial tools” but instead were “replacement parts” not exempt from taxation. The court noted that, at best, the hammer pins came into only incidental contact with the metal the mechanical hammer was destroying, and the hammer pins simply “wore out” and were not intended to be “used up” in the manufacturing process. Progress Metal has asked the Kentucky 34 November 2015 | The Goods | KAM.US.COM

Supreme Court to review the case. CONCLUSION The holding of the Court of Appeals results in a very narrow interpretation of the exemption that thwarts the legislature’s goal of encouraging manufacturing in the Commonwealth. Hopefully, the Kentucky Supreme Court will weigh in on this issue and hold that the industrial tools exemption must be construed more broadly, in accordance with the General Assembly’s intent. In any event, Progress Metal is a decision to watch that could have major implications for the manufacturing industry for years to come. For questions or more information, contact Erica Horn at 859-231-3037 or via email at erica.horn@skofirm.com; or Maddie Schueler at 859-231-3967 or via email at madonna.schueler@skofirm.com.


FEATURE | Closing the Skills Gap

Closing the Skills Gap Once and for All 1. Re-evaluate organizational recruiting practices. Companies can shift their recruiting strategies to “hire for attitude, train for skill” as a first step to close the skills gap. This approach prioritizes A: This is a common question hiring talent who align closely that employers have, with a company’s culture, vision particularly throughout Iowa. and attitude above finding the The unfortunate reality is that elusive hires with the “perfect in many cases organizational hiring practices over the past 20 set” of pre-existing skills. years have contributed to the 2. Create a comprehensive current skills gap – specifically onboarding program to set new - seeking skills perfection, hires up for success. non-existent or ineffective Hiring managers need to accept onboarding, and elimination of that most new hires won’t have ongoing training programs. the hard skills required for a job on day one and therefore need But don’t fear, the answer to make the time investment in lies in developing a clear and effective onboarding training. realistic understanding of the According to a 2014 study by available talent pool for your BambooHR, 31% of people organization and adjusting have quit a job within their first your talent acquisition strategy six months, noting a lack of accordingly. onboarding preparation as the reason why. Here’s what you can do now: Q: I realize there is a skills shortage but what can my hiring managers do to find the talent they need for their open positions?

3. Providing ongoing training is the key to retention. Skills are depreciating at three times the rate they were a decade ago because of technological advancements and therefore ongoing training is not only the key to keeping your staff current, the investment plays a key role in retention as well. By correcting these three key behaviors, understanding available talent pools, and making talent acquisition more strategic, your organization will experience faster hiring at lower cost and enjoy cost savings from greater employee retention.

Karen Miller, Manpower, Inc.

KENTUCKY ASSOCIATION OF MANUFACTURERS 35


DEPARTMENT | MEP

PUTTING THE PUZZLE PIECES TOGETHER Investigation and documentation to create a clear picture of what you need to know...

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e have all seen the stereotypical detective portrayed in movies and television shows, asking what sometimes seems like irrelevant questions and writing the answers on their notepad. Every show starts off the same; the detective is tasked with having to solve a seemingly unsolvable mystery. What comes next is the detective identifying the clues, interviewing suspects and witnesses, and more often than not, going down many dead ends, but always capturing the facts on their notepads or with their cameras. Often we see them back at the station scratching their heads, going through their notes and trying to create a story board of sorts on the wall by pinning note cards with pieces of relevant facts written on them. The suspense builds until they start to see how the pieces come together and the story becomes clear and obvious. Whether you are a crime-fighting detective, a scientist, or someone who is trying to grow their business, we all have mysteries to solve and use a similar process to make the unknown, known. The scientist uses the “Scientific Method” and those of us in business who are familiar with Lean processes, or the Advantage Kentucky Alliance’s “Growth Management System” will know the Demming cycle of “Plan, Do, Check, Act.” The most critical part of all of these processes is documenting and reviewing every single fact you uncover until the picture comes together. Without this, pieces get lost and it is nearly impossible to for us to start to see relevance in all of the individual pieces until we start to put them all together. Without documenting everything along the way, we are doomed to waste

36 November 2015 | The Goods | KAM.US.COM

valuable time, following every dead end until we give up or worse, our competitors beat us to the punch. I think that any of us in business today would agree there are always mysteries to solve and opportunities to uncover and take advantage of. There are also countless things that require our attention in our daily working lives. What is in very short supply is time. This is where the use of an outside research expert can be a valuable resource to you. If you have a specific opportunity you want to pursue or mystery to solve, utilizing an outside resource such as Advantage Kentucky Alliance (AKA) will deliver documented and validated results, while saving you valuable time and resources. Here are some examples of Research Services offered by the AKA to fulfill a specific need or opportunity you may have: • “Tech Scouting” - This is when you know what you what to achieve or what new product or service you want to offer but there is a critical piece missing that will make it all work. Often this may be a technology, a patent, a process, expertise, or a combination of all of these. • “Technology Driven Market Intelligence” - This is the flip side of Tech Scouting. This is for when you have technology, patent, or process but you need to find a market or company that needs your technology to buy or license to make their puzzle complete. • “Voice of the Customer” - This is when you are in need of insights of what your customers really need, and are willing


DEPARTMENT | MEP

to pay for. It is not enough to simply ask them as oftentimes they do not know themselves or are not able to conceptualize and communicate what they desire. Through methods of observing and documenting behaviors, reactions, and trends as well as primary and secondary customer interviews, these valuable insights can be found. • “Focus Groups” - This is when you have a product or service but you want to be certain how it will be received by your target audience before you invest any more valuable time or resources. Focus Groups are best utilized when a new offering is just in the conceptual stage. This is when we can incorporate valuable feedback from the customers to whom you wish to sell and modify and improve our new offering while it is still easy and inexpensive to do. • “Supplier Scouting” - This is when you are in need of a supplier but have not found one or you have one but would like to find others who may better fit your supply chain needs. The fact is, if all of the answers were easy to find and you had no other matters to deal with and time was not an issue, you would simply do this yourselves. The research

experts at the Advantage Kentucky Alliance will save you critical time and money because this is their only focus. AKA utilizes proven research methodologies and documentation tools such as Mind Mapping that capture not only every area explored, but also the timelines and thought processes that lead us to the most relevant and valuable conclusions. All of AKA’s Research Services are conducted in two phases. The first is broad in scope which is then presented and discussed with the client so they can direct the researcher in the most valuable areas where they would like the focused, deep-dive research to be conducted in phase two. Weekly progress reports are also provided to ensure that no efforts are wasted in finding the answers and insights you need. The Advantage Kentucky Alliance is the largest resource for the manufacturers of our great state. For more information about the Advantage Kentucky Alliance, Our Validated Research Services, Partner affiliations, Supplier opportunities, or to schedule a manufacturer’s assessment, contact Scott Wells, Project Manager for the Northern Kentucky region at 513-356-9828, or email wellss7@nku.edu, or Scott Broughton, Center Director at 814-5053786, or email scott.broughton@wku.edu or visit www.AdvantageKY.org.

MANUFACTURING INNOVATION 2015 KENTUCKY IS #1 AUTOMOTIVE Kentucky has just been awarded the Governor’s Cup from Site Selection magazine. In 2014, Kentucky led all other states in the number of new and expanded facilities per capita.

WORKFORCE Partnerships such as KY FAME and others allow Kentucky to create a pipeline of highly-skilled talent to meet the needs of manufacturing employers in the Commonwealth.

ENERGY Kentucky enjoys some of the most affordable energy in the nation. In large part, the low price results from producing more than 90 percent of our electricity from coal.

Kentucky is #3 in the nation for automotive production. 80 counties have an employer engaged with the industry and 10 different car and truck models are made in KY.

AEROSPACE Aerospace exports topped $7.6 billion (over 20%) in 2014, ranking Kentucky behind only Washington and California among all US states and providing thousands of jobs.

LOCATION Strategically located, Kentucky’s borders are within 600 miles of over 60% of the nation’s population, personal income, and manufacturing business establishments.

KENTUCKY ASSOCIATION OF MANUFACTURERS

KAM.US.COM

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LEGISLATURE

ECONOMY

GROWTH STRATEGIES WAGE & HOUR

EMPLOYMENT

MANUFACTURING IN KY: 2016 Preview Thursday, December 3 1:15 PM - 4:15 PM Hilton Cincinnati Airport 7373 Turfway Road Florence, KY 41042

Presented by

Join Kentucky Business and Legislative Leaders from around the state to preview and discuss manufacturing challenges and changes for 2016. From Wage & Hour to Advanced Manufacturing, get insight and updates from the Kentucky Association of Manufacturers and hear from a panel of KY FAME, NKY FAME and Tri-Ed. Networking social hour to immediately follow program.

38 November 2015 | The Goods | KAM.US.COM


Enterprise Performance Improvement

Why EPI?

What is EPI?

Organizational performance improvement initiatives in most companies are done piecemeal in silos. At its best, these initiatives lead to improvements in certain areas, but generally fall well short of total enterprise potential. Enterprise Performance Improvement (EPI) challenges the status quo to achieve breakthrough performance across the enterprise. ILS made this possible by partnering with world class organizations in different areas of EPI expertise, recognizing that any one service provider cannot excel in all areas of an enterprise. Our team has developed a process that delivers an integrated solution for total Enterprise Performance Improvement.

EPI is about enhancing value of the enterprise. Value is defined as worth/cost. Value is enhanced by reducing cost in the areas of labor, safety, energy, direct and indirect material, warranty, capital and general operating expenses. Value is also enhanced by increasing worth via hiring, retaining and developing people, enhancing management systems, developing better products, reducing time to market, improving quality and creating a unified, customer-focused organizational culture, all of which results in increasing brand value. The EPI process actively engages clients to create and sustain a competitive advantage by enhancing value of the products and services of their enterprise.

Supply Chain and Assembled Solutions Partner

Human Capital Management Partner

Energy Solutions Partner

EPI Systems Integrator and Operational Strategy Partner

Tax and Financial Management Partner


Profile for Kentucky Association of Manufacturers

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