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Focus W UTAH

a sa t c h Fr o n t

December 2011

A Publication of The Enterprise - Utah’s Business Journal

W

Manufacturing INSIDE

International Armoring vehicles protect people across the globe. Page 2 Insight into IAC’s manufacturing process. Page 3 Sandy apparel manufacturer SansEgal active in promoting Made in USA, Green Brand clothing. Page 4 Utah manufacturers focus on staying lean, improving efficiencies. Page 5 Advanced Comfort Technologies gradually rebuilding IntelliBed business. Page 6 Green is Lean: Being good for the environment is also good for your business. Page 8 List of top Utah counties based on manufacturing employment. Page 10


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Utah Focus, December 2011

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International Armoring vehicles protect people across the globe

In addition to a new manufacturing plant in Centerville, IAC has manufacturing facilities in the U.K., South Africa, Philippines and Hong Kong. How much is the worth of a human life? It’s a question Mark Burton asks himself often. As founder and CEO of Centervillebased International Armoring Corp. (IAC), Burton takes tremendous pride knowing that vehicles his company secures with its patented, lightweight ballistic armoring materials have saved the lives of nearly 500 people worldwide since the company was founded in 1993. “One of the greatest satisfactions is that we make a difference,” said Burton, a San Antonio native who graduated in accounting at Brigham Young University but who has always had an entrepreneurial spirit for business ventures. Burton moved to Utah 20 years ago and has done a bit of everything in his professional career, from being an area developer for Schlotzsky’s restaurants to doing real estate development, owning hotels, apartment complexes, and a commercial printing company. For the past 18 years he’s invested all of his energy and talent into building the safest armored vehicles on the planet – more than 7,000 to date. “Anybody can do real estate development,” Burton said. “What I do now might be considered ‘sexy,’ but it really makes a difference in people’s lives. It gives me a great deal of satisfaction knowing that we have saved almost 500 lives with the products we’ve developed and manufactured.” Most of IAC’s clients — Burton said 99 percent — live outside the United States in volatile countries such as Mexico, Nigeria, South Africa and the Philippines. They include politically powerful and wealthy individuals, including heads of state, elected country leaders, corporate executives and celebrities — anyone who might be subject to kidnapping, hijacking or other violent activities. One recent client, a businessman and his family, survived an enemy attack in the

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suburb of Bedfordview in South Africa. They were returning from a Sunday outing, pulled into their driveway and were immediately surrounded by armed assailants who had been following them. Two shots were fired point blank directly at the man’s head and struck the windscreen. He reversed out of the driveway and was able to drive to safety. “We are experiencing a marked increase in attacks,” said Grant Anderson, managing director for Armormax, a division of IAC in Johannesburg, South Africa. “This case gives a chilling insight into the minds of hijackers who were prepared to gun down a father in front of his wife and two young children. We are seeing an increasing number of clients who have made the decision that although South Africa is a fantastic country, the reality is that violent crime is an issue, and two crucial areas — their homes and vehicles — need to be able to withstand an attack. We’ve had four attacks on our clients in the past three months. Our vehicles provide total security in an area that was once the most vulnerable.” Incidents like that drive Burton and his staff of 300 employees worldwide to continually refine products to ensure they are able to withstand such violent outbursts. “It makes you want to ensure you’re maintaining a high level of quality control of the systems you’ve put in place; it becomes and even greater responsibility,” said Burton. “That man is home with his wife and daughter. What more can you say about that? He wouldn’t have bought an armored car in the first place if it weren’t for us. Now, his wife won’t go out of the house without being in one of our secured cars.” During his global travels Burton has see ARMORING next page


Utah Focus, December 2011

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ARMORING from previous page

experienced first-hand some of the dangers that are present internationally. He escaped an attempted kidnapping in Europe six years ago and on two occasions in Mexico had a gun held to his head. “It sounds like stuff out of a Tom Clancy novel,” he said. “The fact is, it happens in these countries. People [in the U.S.] don’t realize what goes on out there. Hopefully I’m smarter and don’t get into those positions anymore. I’ve never been shot at, but I know people who are our clients that have been shot and held for ransom abroad.” One famous client is Philippine boxer Manny Pacquiao, who Burton said is a “great man” and universally loved in his country. He has another long-time billionaire client in Mexico who has purchased multiple vehicles for his immediate and extended family members since there is always a threat of a relative being taken hostage. “You can’t put a value on somebody’s life,” said Burton. “My billionaire client in Mexico, does he stop [protecting] his inlaws, nieces, cousins? We were able to design a package that met their cost needs; it makes me want to come up with new ways and approaches to the challenges of the safety and security industry.” Worldwide Production Capabilities IAC started production in November in its newly leased 30,000 square foot facility in Centerville and will shut down its Ogden plant at the end of this year, as soon as it’s done fulfilling contracts. The company also has manufacturing locations in the United Kingdom, South Africa, the Philippines and Hong Kong, and has plans on opening facilities in West Africa and Mexico in the first quarter of 2012. IAC previously had operations in Mexico from 1995 to 2002. These facilities range in size from 20,000 to 40,000 square feet. Burton said the Centerville facility, which employs 50

An armored Mercedes is typical of the types of vehicles produced by IAC. IAC will produce close to 1,000 cars this year at a cost ranging from $40,000 to $100,000 per vehicle.

“It sounds like stuff out of a Tom Clancy novel, The fact is, it happens in these countries. People [in the U.S.] don’t realize what goes on out there. Hopefully I’m smarter and don’t get into those positions anymore. I’ve never been shot at, but I know people who are our clients that have been shot and held for ransom abroad.” of the company’s 300 employees, manufactures all production kits for the other worldwide plants, which helps ensure quality control and consistency, and will produce between 150 and 200 vehicles annually. IAC will produce close to 1,000 cars this year at a cost ranging from $40,000 to $100,000 per vehicle. The most cars ever produced in one calendar year was 1,700 in 2005, during the height of the Iraq War. Burton is optimistic that 2012 will be

a good year. He recently finalized a contract for 750 units and got another order from a foreign government for 160 cars, which he hopes to finalize in December. “We have orders for over 900 cars so it looks like we’ll have that on the books for 2012,” he said. Even though IAC already has many loyal clients who are repeat customers, the firm is aggressively marketing through the Internet and attends as many industry trade shows as possible. The company also makes sales calls when

necessary and benefits from word-ofmouth advertising “We go once a year to [U.S.] embassies and visit consulates in countries that are prone to [terroristic attacks],” Burton said. “Word-of-mouth is huge for us. We’re not sitting back, but if we closed all our foreign facilities we could survive for five years just on our reputation, but that’s not what we’re about. If we’re going to grow and maintain [market share], we have to aggressively go after it.” IAC can armor virtually any kind of vehicle, although it usually modifies higher-end, luxury-type SUV models including the Lexus LX 570, Chevrolet Suburbans and Tahoes, Toyota Land Cruisers and various models from Mercedes Benz and BMW. “We also do some smaller types of cars like a [Chevy] Malibu for security companies, who in these foreign countries are more like police forces,” Burton said. “In foreign countries where the police are inefficient, you would call a security company in the event of an attack.”

Insight into IAC’s manufacturing process International Armoring Corp. goes through an extensive process when it transforms a standard vehicle into one that is secure and virtually bulletproof. Here is a look at the various aspects of the process. • Armormax. Armormax is a lightweight ballistic armoring material that IAC claims is the lightest opaque armor in the industry. It reduces added weight on a vehicle by up to 60 percent over traditional steel armoring material. Armormax is comprised of a combination of  synthetic fibers; its composite technology is reportedly 10 times stronger than ballistic steel, pound for pound. • Transparent Armor (Glass). Referred to as Lightweight Transparent Armor (LTA), it’s the material used for armoring glass in all IAC vehicles. LTA glass provides a superior level of protection against the most volatile security

concerns, including random acts of street violence. LTA consists of composites of glass and polycarbonate substrates laminated with inter-layers.  It absorbs the energy and penetration from various ballistic threats through a process known as “controlled de-lamination.” The  inner layer of polycarbonate is used to prevent spalling (fragment release – bullet, jacket or glass) upon ballistic impact.  • Elitus Overlap System. This concealed molded armoring process provides an added level of ballistic protection in vulnerable (weak) areas in the passenger compartment – particularly door openings and around windows. • Run Flat Tires. Existing tires can be modified with Run Flat tire inserts. It allows a vehicle to travel up to 60 miles at 60 miles per hour (depending on road conditions) on deflated tires.  The insert is composed of a ballistic rubberized

plastic “roller” ring that is designed, molded and installed inside each tire around the rim. Once tires are deflated, the solid rubber ring acts as a backup tire, becoming an airless spare within the tire. • Suspension. The suspension of the vehicle (including shocks, springs and/or sway bars), along with the brakes, should also be modified when a vehicle is armored.  • Bumpers, Dual Ram Bumpers can be added to a client’s armored vehicle and are concealed behind both front and rear bumpers.  This option allows each vehicle to ram its way out of a dangerous situation without causing damage to the vehicle that would render it inoperable. This modification prevents corners of the vehicle from being rammed into the tires. • Fuel Tank and Floor Protection.

IAC protects the floor of the vehicle with a multi-layered ballistic nylon armor that is designed to absorb bomb fragments. The armor is concealed under the carpet and seats of the vehicle, maintaining the original appearance. Armor is also placed around the fuel tank to make it anti-explosive. • Third Hinge Door Support. Third Hinge Door Support is added to level B7 armored vehicles, and whenever possible in others. A complete door  structure is modified to support any weight added by the armor material, including reinforcement of pillar posts and hinges.   • Weld Free. Weld Free is an independently certified method (certified by Maryland-based H.P. White Laboratories) used to mount ballistic steel into vehicles without eliminating the ballistic integrity of the vehicle.  


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Utah Focus, December 2011

Sandy apparel manufacturer SansEgal active in promoting Made in USA, Green Brand clothing Macon Rudick and Tad Hogenson of Sans Egal, a Sandy-based apparel manufacturer, love Diane Sawyer. The veteran ABC news anchor began hosting a program in late February 2011 called “Made in America” that focuses on the state of the manufacturing industry in the U.S. and the proclivity of sellers and buyers to fixate on one issue: bottom-line cost. It even exposed the Smithsonian Institute in Washington, D.C., which had mostly non-U.S.-made products for sale, even though it’s funded by American taxpayers. “God bless ABC National News and Diane Sawyer,” said Rudick, “This message is sorely needed in our industry.” “They embarrassed the hell out of the Smithsonian buyers,” Hogenson mused. “They walked into the gift shop at the Smithsonian and every product on their shelf was made in China, made in Vietnam, made in Bangladesh. This is the nation’s capital, funded by U.S. tax dollars, and they are selling products that they import, that we have to compete against for shelf space. We’re not getting that shelf space because [foreign companies] pay their workers dirt, and we pay respectable wages. And we comply with every government regulation they have thrown at us. We have to compete on a not-level playing field.” The news program is a welcome respite for Rudick and Hogenson and their company which, like all U.S. manufacturers, has been swimming upstream against the flood of inexpensive and cheaplymanufactured goods that for years have been imported into the U.S. marketplace from places such China, Mexico and South America. A short time after Sawyer busted the Smithsonian, Hogenson said “miraculously, we got a phone call from the Smithsonian; they are now buying our American-made shirts. It was very poignant for her to do this. The price between [foreign-made] product and my product is not as much as you think it is. It would create millions of jobs in America if everybody would just change their mindset on buying American.” SansEgal’s owners point to President Bill Clinton’s signing of the North American Free Trade Agreement (NAFTA), which went into effect Jan. 1, 1994, as being catastrophic for all U.S. manufacturers. NAFTA meant the elimination of tariffs on more than one-half of U.S. imports from Mexico and more than one-third of U.S. exports to Mexico, and crippled many American companies that simply couldn’t compete against foreign manufacturers that paid one-tenth the labor costs. “That giant sucking sound Ross Perot talked about actually happened the minute [Clinton] signed that paper,” said Hogenson. “The price on every piece of apparel made in the United States dropped by like twothirds – it crucified the American apparel industry.” “Prices for all garments just imploded,” added Rudick. “Take a typical white t-shirt. We paid $2.50 for that shirt [pre-NAFTA]. It Went from $2.50 to $.69. Now you’re selling it for $2. When we were paying $2.50 for that shirt, we were getting anywhere from $6 to $8, depending on what

A worker embroiders a shirt at the Sans Egal plant in Sandy. The firm’s shirts and other apparel brought in more than $17 million last year. we did to it. That same shirt, you’ve got to sell three or four shirts to make the same dollar amount you made from one shirt. Labor starts to eats you alive, period.” “We were competing against companies that were paying their workers $8 a day, not $8 an hour,” added Hogenson. “The Hondurans, the Mexicans, the Guatemalans, the Chinese, they don’t pay their workers anything close to what we pay. They don’t have government regulations, don’t have health care, they don’t have any of the problems associated with being an American [employer], yet we’re forced to compete with those people.”  Rudick and Hogenson admitted that American-made products cost more money, but not enough to justify the fact that unemployment remains over 9 percent (7.4 percent in Utah as of Sept. 2011). “It is more expensive, no question,” Rudick said about U.S.-made goods. “I can buy a colored Anvil [brand] t-shirt that is made in Honduras for $1.90. That same shirt is $3.08 made in America. The same identical fabric, just sewn here. That’s the difference in cost factor.” Demand Increasing for Green, U.S.made Custom Apparel SansEgal has morphed with the times and stayed on the cutting edge of its industry. Founded in 1978, SansEgal initially did just screenprinting to support a Trolley Square-based retail store called Trolley Tops that was operated by Rudick and Hogenson, The company has expanded significantly over the years to become a leading manufacturer of t-shirts, sweatshirts, hoodies, jackets, hats and other accessories, with annual revenues of more than $17 million in 2010. It has carved out a niche creating unique touristrelated items created by a 12-person team of designers who specialize in apparel customization. It also has invested roughly a half million dollars in two Laser Bridge etching machines and other high-tech equipment. “We have thousands and thousands of designs we have created for our

destination resort clients,” said Charlynn Thoman, marketing director. “We’re able to offer clients suggestions on designs that have sold well in the past; the options are limitless.” SansEgal products are sold at national vacation destination sites, including U.S. national parks and amusement parks and popular attractions like Sea World, Disneyland, LegoLand and Six Flags. SansEgal’s “Green Brand,” which is made of 100 percent recycled material, has become increasingly popular in the past few years, although U.S.-made items seem to be the buzzword right now. “Ten to 12 years ago the national park concessionaires asked for a recycled green product and we delivered,” said Rudick. “They weren’t looking for ‘Made in U.S.A’, which today is the hot commodity, even more than green.” SansEgal buys remnants of ringspun cotton from cutting rooms floors of mainly European clothing manufacturers and ships it to a factory in North Carolina where polyester is added for length and color and made into bulk material.

Everything else is done in SansEgal’s manufacturing facility, including cutting and sewing, screenprinting, laser etching and embroidery. This year has been a challenging one for the firm, with tourism taking a major hit with a combination of a continuing sluggish economy and myriad weatherrelated disasters. Rudick said sales will be down at least $1 million from last year, depending on how the Christmas holiday season shakes out. “This has been the worst year since 2008 for tourism, maybe that I’ve ever seen,” Rudick said. “Record snow, record floods, record drought, record tornadoes and the worst hurricane on the East Coast. Our products are dependent on people having discretionary income, and when income is affected by any of these things it affects our bottom line.” “We have a government that can’t make a decision, the nation’s credit downgrade, banks that won’t loan any money, 9.1 percent unemployment — what else could go wrong?” asks Hogenson. “Fortunately we’ve spent the past two-anda-half years diversifying into other markets instead of relying so much on tourism. Had we not done that, we’d be down way worse.” The two are optimistic that 2012 will be a better year across the board and hope that ABC’s “Made in America” program continues to help educate consumers about the importance of buying American. “In the world we live in as far as business is concerned, people at the top – the bean counters – they love to tell you if you just sold that many and paid this much less, or sold it for this much more, look how much more money you’d make,” Rudick says. “That’s who is running every company today. There are a lot of angry people who understand the message that if every American just spent an average of $3.33 more on everyday purchases for American-made products, how many millions of people we would put back to work.”

Tad Hogenson (left) and Macon Rudick launched SansEgal in 1978, when it did screenprinting for a t-shirt shop the duo operated in Trolley Square.


Utah Focus, December 2011

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Utah manufacturers focus on staying lean, improving efficiencies Despite the continued recession, manufacturing companies in the state of Utah believe the economy is slowly turning around for the better and have an optimistic outlook heading into 2012. “Many of our members continue to grow throughout this recessionary period,” said Tom Bingham, president of the Utah Manufacturers Association (UMA) in Salt Lake City. “Some manufacturers have gone out of business, but many are hanging on, trying to get things going again. We continue to grow in our membership. We’ve discovered there are manufacturers that have money to invest, but they are not investing it yet until they can determine that things are moving up and will continue to move up. It’s a Catch-22. If they were investing, maybe the economy gets better. There are a lot of major [manufacturing] companies with money whose profits have continued, even though production has declined.”

the DEQ, the [Utah State] Labor Commission and other agencies.” “Our main goal is to represent the manufacturing industry and ensure that businesses in the state of Utah can perform in a friendly legislative environment,” added Clark. “We want our members to be apprised of what is going on in legislation, and anything that impacts business.” Bingham said UMA is in the process of finalizing a couple of bills sponsored chiefly by Sen. Margaret Dayton, R-Orem, the Senate Rules Committee chair, that will make the permitting process more efficient. “If you need a permit – whether it’s water, air, hazardous waste – if you can’t get it through the [legal] system and get it either permitted or renewed, you are out of business,” Bingham said. “Time is money with manufacturers; they have to have that permit timely. Our big challenge is to get the legislature to recognize that and not

“We’ve discovered there are manufacturers that have money to invest, but they are not investing it yet until they can determine that things are moving up and will continue to move up. It’s a Catch-22. If they were investing, maybe the economy gets better. There are a lot of major [manufacturing] companies with money whose profits have continued, even though production has declined.” “I think generally speaking the manufacturing segment in Utah is doing better than most of the country; it depends on the economic segment,” said Dean Clark, CEO of Martin Door Manufacturing of Salt Lake City, who was installed as UMA chairman at the association’s 106th annual awards and installation banquet Nov. 5 at in Salt Lake City. “We have some manufacturers, like those who produce medical devices for example, which seem to be recession-proof. Those caught in the downturn, when things started to slide in 2008, have reduced their workforces and focused on improving efficiencies so they can stay in business. The weakness in that scenario is that those who lost jobs will not be rehired as quickly because of the efficiencies that have been gained. Volumes need to pick up significantly before those companies will be hiring more people.” Bingham, Clark and other UMA officers and board members have been gearing up for the 2012 Utah Legislative session and have identified several key issues that affect the local manufacturing industry, including immigration, tax policy, health care reform and, especially, environmental and air quality permitting. “We’ve worked for several months to develop legislation that will help streamline the permitting process at the Department of Environmental Quality,” Bingham said. “We have worked at implementing lean Six Sigma processes which are continuous improvement processes, at

penalize companies for becoming more efficient.” In addition to Clark, other UMA officers for 2012 include first vice chair James Alspaugh, plant manager for Kimberly Clark in Ogden; second vice chair Mark Suchan, plant manager for Malt-O-Meal in Tremonton; secretary/treasurer Mike May of May Foundry & Machine Co. in Salt Lake City and immediate past chair Scott Bruce, director of technical services for Rio Tinto Kennecott. “I’ve seen the association grow to produce many benefits for our members over the years,” said Teresa Thomas, UMA managing director. “We offer cost-saving benefits and networking opportunities. The legislative aspect is vital to help the state stay business-friendly.” Manufacturer of the Year UMA also honored its 2011 Manufacturer of the Year at the banquet, Mity-Lite of Orem. Mity-Lite, a company that manufactures lightweight furniture systems – including tables, chairs, portable dance floors, partitions and carts – was founded in 1987 and purchased in 2007 by a group led by Sorenson Capital and Peterson Partners. CEO Randy Hales said receiving the award was a huge honor and one that validates Mity-Lite’s decision to remain aggressive and introduce new products even during the worst recessionary periods. “Our team has some terrific leader-

ship,” said Hales. “We’ve been working for years to increase efficiencies and make sure we had the right staffing levels to be competitive with Asian supply. This award is recognition for those things.” “One of the reasons they were selected was they chose to be aggressive and dramatically increased production, profitability and wages during this recessionary time,” said Bingham. “They had lost like 40 percent of market share, yet chose to be aggressive and introduced new products and have taken back much of that market share.” Hales said Mity-Lite has worked hard to implement lean manufacturing processes in recent years, while also being innovative with new products. “We really believed we could take back market share even as the market was shrinking,” Hales said, noting that 2011 revenues are projected to be $70 million, up 16 percent from last year. “We wanted to provide better products. We grew by 23 percent last year, and our market contracted by 10 percent, so we outperformed the market by 33 percent. That was attributable to taking market share with new product leadership. We were doing something that hadn’t been done before.” Hales expects revenues to grow in

2012 by 12 percent, as the company will introduce five new products over the next 12 months, including a premium multipurpose table. He said manufacturers need to continue operating as lean as possible considering the economic climate. “There is continued pressure on raw material costs and we’re not in an environment where people accept price increases readily,” said Hales. “We’re trying to maximize efficiencies and buying into some long-term supply contracts to guarantee what our gross margin will be.” In addition to Mity-Lite, other UMA finalists for Utah Manufacturer of the Year included Barnes Aerospace, Ogden; Campbell Scientific, Inc., Logan; Futura Industries, Clearfield; Kaddas Enterprises, Salt Lake City; L3 Communications Systems-West, Salt Lake City; OphirSpiricon LLC, North Logan; Petersen Inc., Ogden; Smead Manufacturing, Cedar City; Syracuse Casting, Tooele; USANA Health Services, Salt Lake City; and Westinghouse Western Zirconium, Ogden. Finalists were chosen on criteria such as operational performance and best practices, workplace safety, community and state involvement, and economic achievement.

Folding chairs are prepared for packaging at Mity-Lite, an Orem-based firm that won the 2011 Manufacturer of the Year award.


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Utah Focus, December 2011

Advanced Comfort Technologies gradually rebuilding IntelliBed business It’s been nearly two years since Salt Lake-based Advanced Comfort Technologies (ACT) settled all issues surrounding a four-a-half-year court battle and gained a permanent injunction against rival companies for the marketing and sale of its patented IntelliGel mattress technology, and the company has made major headway into rebuilding its IntelliBed business. Co-owners Bob Rasmussen and Shawn Clark, who own a combined 90 percent of ACT, founded their company in 1998 and had grown the business to include 30 stores (many were franchises) in six states, until a lawsuit by EdiZONE LLC, Sunshine Manufacturing and MyComfort Stores hindered the business and forced ACT to scale back until the lawsuit was settled. “We weathered the storm and are rebuilding the business,” said Rasmussen, ACT president. “We’re starting to expand and just launched a major Internet effort and new website in August which we think will help us greatly increase sales across the country.” ACT currently operates five Utah stores, with locations in Salt Lake, Riverdale, Draper, Orem and Washington, along with a manufacturing facility in Salt Lake. The company employs 30 people, six of whom work in manufacturing, and is optimistic that sales will dramatically increase in 2012 due to a much more comprehensive and educational website. Rasmussen and Clark project revenues to be around $5 million in 2011, and

developed by EdiZONE, a Utah Countybased research firm, in the 1990s. Rasmussen worked on and off for nine years with the firm, and eventually bought all rights to IntelliGel in 2000. According to Rasmussen, the gel’s primary components are mineral oil and non-toxic thermoplastic rubber that form a moldable material. IntelliGel looks like a 2.5-inch thick waffle with hollow columns and support walls that are formed into a grid. This provides better support under a person’s hips and shoulders. The columns actually collapse, compared to traditional foam mattresses that simply compress. “IntelliBed offers support, comfort and durability,” said Rasmussen. “It will outlast any other bed by two to four times. We have eliminated almost all the foam from our bed, and the foam we use is organic soy foam.” “It truly is a revolutionary product,” A permanent injunction against rival companies is allowing Advanced Comfort to rebuild said Dr. James Edwards, an Austin, Texasits IntelliBed store chain. based chiropractor who has more than 34 expect sales to increase anywhere from in Utah. With the new website, it’s giving years of clinical experience and who con100 percent to 200 percent next year. us access to 230 million people. If we can ducted extensive research on different mat “I think the Internet will have a sig- better educate a potential customer, they’ll tresses four years ago. “You don’t get pressure points, so you don’t toss and turn nificant impact on our business,” said buy our product.” Rasmussen. “We should do between $7 “We’re holding back before expansion because you’re uncomfortable. I don’t into other markets until we can evaluate move all night. This is the go-to sleep sysmillion and $8 million in sales.” “Our goal for next year is to continue how well the Internet works for us,” tem; there is nothing like it.” The original developers of IntelliGel to re-establish our business in the wake of Rasmussen said. “We’re going to be pru- tried to market mattresses and beds with the lawsuit and go forth and establish a dent on expanding our business, but we’re this technology, but were unsuccessful. national distribution again,” added Clark, expecting it to really take off. It has such Rasmussen and Clark knew the technology executive vice president of marketing/ consumer appeal. If we get someone in a was sound and purchased the rights. They sales. “I think we’ll see at least a 150 per- store we can almost always sell them a cent increase in sales. Last year we sold bed.” see INTELLIBED next page IntelliGel is a technology that was primarily through company-owned stores

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Utah Focus, December 2011

INTELLIBED from previous page

grew the business quickly during the first seven years before EdiZONE filed a lawsuit in 2005. “I believed in the technology and we really saw a need for the product,” said Rasmussen. “Our strategy was to live within our means and grow the business slowly.” ACT was able to raise $300,000 of initial capital; Clark was a major investor. Rasmussen and Clark developed a marketing concept that called for having standalone stores, and achieved relatively instant success from the beginning. “We thought IntelliGel would revolutionize the industry,” said Rasmussen. “The company grew 250 percent a year for the first five years and we did $10 million in annual revenues after year four. After we ended up in a lawsuit over the rights to the technology, we had to curtail out-ofstate activities and tried to hang on. We were successful in doing that, but we’re back to being in expansion mode.”

new dealers.” “We’ve had success recently selling [IntelliBeds] online and delivering them to people’s homes within two weeks,” Clarks adds. “We’re the only company with this kind of technology. Every one of the six major manufacturers – Serta, Seely, Simmons, Spring Air, Select Comfort and Tempur-Pedic – use some type of foam. Those six control 95 percent of the U.S. market, so we certainly have a lot of room for market growth.” IntelliBed, Rasmussen said, fits into the higher-end bed market in terms of price. IntelliBeds range from $2,000 to $4,000 for a queen size bed; the average price of standard foam mattress queen size beds is around $1,000. “We compete well against TempurPedic, which is the fastest-growing,” Rasmussen said. “Their prices are $2,000 to $7,000, so we’re actually more affordable. The value is there. It’s the most important investment you can make. The number one contributor to good or poor sleep is the mattress you sleep on. “Our mattresses are designed to last

IntelliGel looks like a 2.5-inch thick waffle with hollow columns and support walls that are formed into a grid. This provides better support. 20 to 30 years,” he continued. “I’ve been sleeping on the same [IntelliBed] for better than 10 years and it looks and feels the same as when I got it. We’ve since devel-

oped some better mattresses than what I have, but I like to tell people there is no reason to change. People wouldn’t even know it’s been slept on.”

“The company grew 250 percent a year for the first five years and we did $10 million in annual revenues after year four. After we ended up in a lawsuit over the rights to the technology, we had to curtail out-of-state activities and tried to hang on. We were successful in doing that, but we’re back to being in expansion mode.” “Our basic strategy is to educate customers who are gathering information,” said Clark. “This is the second generation of our website and this one is based on computer-assisted instruction. We’ve done a good job explaining the research and science in the world of sleeping and in explaining the making of mattresses and the materials mattresses are made of.” Since the new IntelliBed website launched in August, Clark said Internet traffic is up more than three times what it used to be. “We were getting 150 hits per day. Our new site in the past six weeks has already tripled that. We’re doing that on Google key word searches and organically coming up on the first page. When people type in ‘best mattress for back pain’ or ‘best mattress for durability,’ our site comes up first – it’s given us an entrance into many new markets.” Educating potential customers is the key. “Most people don’t realize how important back support and pressure is,” said Rasmussen. “Anybody looking for a highend bed is doing research online. Even though I don’t see the economy getting better, we can achieve the growth we want by expanding distribution and looking for

From all of us here at Industrial Supply, we thank you for the 95 years of support. Since 1916, we’ve been proud to play such an important role in Utah’s rich industrial landscape. Through our 95th Anniversary celebration, we aim to commemorate our growth as a community and look towards our successful future together.

2011

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free: phone: fax: 800 288.3838 801 484.8644 801 487.0469 .......................................................................................... WWW.INDSUPPLY.COM


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Utah Focus, December 2011

Green is Lean: Being good for the environment is also good for your business By Jay Arthur Global warming, oil spills and other environmental disasters seem to be on everyone’s mind. Business magazines write about “green” businesses. Movie stars drive hybrid cars to look “green.” But most companies overlook the single biggest opportunity they have to go green by simplifying, streamlining and optimizing their internal operations. Since most businesses, even profitable ones, spend a third or more of their budget on waste, scrap and rework, isn’t it reasonable to assume that eliminating that waste would reduce various planetary problems? Reducing and eliminating waste is the goal of Lean production. Reduction in waste will reduce consumption, which will reduce the energy required to produce the stuff in the first place. Less energy use means less warming. Less waste means a greener planet. Leaning the Business Most of us grew up learning about Henry Ford and mass production. Mass production led to economies of scale that reduced costs — as long as the company was making a single model with no options. Today, customers demand a customized product, whether it’s a new car or a burger at the local restaurant. Then along came Lean (a.k.a., the Toyota Production System). Lean focuses on eliminating unnecessary delays and

movement. It creates economies of speed that not only reduce costs and boost profits, but also minimize environmental impacts. Where mass production focuses on big batches, Lean focuses on small batches and quick change over. With mass production it’s easy to commit the sin of overproduction that creates inventory that has to be warehoused and managed. Lean only creates a small batch when a customer requests it, resulting in no unnecessary production or inventory. There’s nothing to warehouse. You make it, you ship it. It no longer makes sense to make a thousand units of a product quickly if customers want a product customized to their needs. A business can easily end up with thousands of units that no one wants. All of the energy and materials used to create these products is wasted. And it takes energy and landfills to recycle or dispose of the stuff. And when the economy slides into recession, mass production can keep making more and more inventory that has to be stored and managed. Imagine for a moment the environmental impacts of the shift from mass production to Lean production. If a company only produces enough products or services to meet customer demand, it doesn’t have to inventory, store or manage a lot of raw materials or finished goods. This prevents unnecessary movement of inventory, reduces storage costs and reduc-

Arc Flash Hazard Analysis An arc flash occurs when a fault develops in electrical equipment and there is an explosive plasma discharge. Arc flashes create large amounts of heat that can severely burn skin and set clothing on fire. An Arc Flash Hazard Analysis can help prevent these electrical hazards. To learn more, call 801.975.8844 to schedule a FREE consultation through Hunt Electric’s TEGG® Preventative Maintenance Program.

es overtime. One chemical company had $200 million in finished goods sitting in rail and shipping yards all over the planet. Managing that inventory cost a fortune. One metal fabricator recycled a million pounds of finished, but flawed, product every month. It had to be chopped up and fed back into the furnaces. Saving the energy used to chop and melt the recycled metal could help save the planet. A magazine printer had high-speed presses that could print a million magazines in a day, but the bindery could only handle 200,000. The other 800,000 had to be stored, where they could be gored or toppled by forklifts over the next five days. Simple solution: print 250,000 the first day and 200,000 every day after. This made the production schedule more flexible, which allowed more jobs and less rework and less overtime. Tip: Make the product faster, not your people. Employees only work on the product or service for three minutes out of every hour. Eliminate the other 57 minutes of delay. The Tools of Lean To maximize the value of Lean, reduce delays and unnecessary movement of people or materials. The two main tools are Value Stream Mapping (VSM) and Spaghetti Diagramming. To create either one, use sticky notes and a flipchart. Value

Stream Maps, much like a flowchart, show the workflow from a time perspective. Spaghetti Diagrams show the movement of people and materials through a workspace. On a Value Stream Map, the arrows between steps are where the product or service spends most of its time. Eliminate the delays between steps to increase productivity, reduce errors and maximize profits. On a Spaghetti Diagram, calculate the distance an employee or a work product moves through the space. Often, workspaces are poorly designed leading to lots of unnecessary movement. Watch a value stream mapping case study at www.youtube.com/ watch?v=3mcMwlgUFjU. Watch a spaghetti diagramming case study at: www.youtube.com/ watch?v=UmLrDjT5g8o. Want to see a well-designed Lean production “work cell”? Visit any Subway where you’ll find a small oven for fresh bread (right-sized machines), and small buckets of meats, cheeses and vegetables. Chips and drinks are self-service. Tip: Walking is waste. Have employees wear pedometers for a week and record their movements. In one hospital lab, technicians were walking three to four miles see GREEN next page

What will Hunt Electric do to help your company avoid electrical hazards? ~ Inspect, identify and eliminate electrical problems before they lead to unscheduled outages, OSHA safety concerns, or worse, an arc flash event ~ Provide a comprehensive assessment of risk and non-compliance ~ Provide a detailed plan to bring your facility and equipment up to OSHA 1910, NFPA 70B and 70E, ILHR 16 and 17 and the current National Electrical Code

What will YOU do by requesting an analysis? Protect Your People / Save Money / Reduce Operating Costs Reduce Utility Expenses / Increase Energy Efficiency Improve Equipment Reliability / Reduce Insurance Costs

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Providing powerful solutions for 25 years.


Utah Focus, December 2011

Utah manufacturers boost bottom line by going green By Paul Olsen “It not easy bein’ green”, sang Muppet character Kermit the Frog. Maybe “being green” is such an emotionally or politically charged term that some tend to shy away from being painted with that brush. But Utah manufacturers are finding that being green pays big dividends, especially the cash kind. These companies have realized that it’s smart to be green. First and foremost, it is a sound business practice. Dollars returned to the company’s bottom line can have a significant impact on profitability. Just as material and labor costs are calculated, and efforts are made minimize both, so too can examining costs of energy, water use and disposal, landfill fees, etc., be rich in cost savings. Such measures have a triple bottom line impact — they have a positive effect on profits, on people and on the planet. Eliminating waste of any kind, for whatever motive chosen, impacts these three at the same time. A popular media campaign funded by the Utah Governor’s Conservation team makes two points: (1) Slow the Flow; and (2) We All Live Downstream. While this campaign focuses on water conservation, it helps drive the point that what a single person or entity generates in terms of waste affects the whole community. In manufacturing, as in any business, there are five “waste streams” generated — water, air, solids, toxicity (chemical) and

GREEN

from previous page per week. Redesign cut their travel by almost 60 percent. Earth Impacts Eliminating delays and movement while reducing batch sizes and inventory not only speeds things up, it also reduces the chance for error by 50 percent. Faster production, combined with less rework cuts costs, boosts profits and reduces environmental impacts ranging from overuse of raw materials to energy savings. Use the tools of Lean to reduce delay and movement that will benefit Mother Earth as well. Lean is not just about the bottom line, worker satisfaction, or customer satisfaction; it’s also about the future of the planet and its inhabitants. Haven’t you waited long enough to start using the simple tools of Lean to go Green? The Seven Speed Bumps of Lean Overproduction leading to excess inventory leading to environmental impacts. Too much inventory (Inventory is evil.) Waiting (Delay.) Unnecessary movement of people. Unnecessary movement of materials. Unnecessary or incorrect processing (e.g., inspection.) Jay Arthur is author of Double Your Profits: Plug the Leaks in Your Cash Flow. He has spent the last 20 years helping companies maximize revenue through the “Lean Six Sigma System,” a collection of audio, video, books and software.

energy. These can neatly be summed in the acronym, WASTE. Understanding this concept, tied with “slow the flow [of waste generation]” and “we all live downstream” allows us to identify, to measure, and then to sensibly take action. Here is what some Utah manufacturers have done: • USANA has reduced packaging, saving more than $400,000 annually. Xeriscaping its facility has saved in excess of a million gallons of water. • Harman Signal Processing now recycles more waste than it puts into the landfill. Color-coded waste bins in the office and production areas identify cardboard, co-mingled and non-recycled materials. It’s everyone’s responsibility to participate. • Parvus Corp. replaced much of the non-recyclable polyurethane foam and foam in place packaging with recyclable packaging. Estimated annual savings is $50,000.

• Green Teams at Varian Medical Systems worked on multiple projects that in 2010 saved the company $16 million. New projects identified expect to boost savings by another $4 million. • Liberty Safe has reduced landfill expenses by selling waste materials and reducing frequency of trips to the landfill. These are but a few examples of what being green, or developing a sustainable enterprise means. Kermit ends his song with the words, “I am green and it’ll do fine. It’s beautiful! And I think it’s what I want to be!” We could all use a little Kermit; couldn’t hurt, and will most likely help. Paul Olsen is the public relations manager for the Manufacturing Extension Partnership (MEP) Utah. MEP and Salt Lake Community College teach a Green Enterprise Development course. Questions or comments are welcome. at olsen@mep.org.

SUBSCRIBE TODAY! • $55 per year for print edition only • $65 for online edition only • $75 for online and print edition CALL TODAY (801) 533-0556 ext. 208 or e-mail Sarah at sarah@slenterprise.com

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Utah Focus, December 2011

Utah’s Top Manufacturing Counties Ranked by Number of Manufacturing Employees

County Name

Salt Lake

Utah

Weber

Cache

Davis

Box Elder

Washington

Iron

Tooele

Summit

Wasatch

Number of Manufacturing Employees

54,600

18,200

11,899

10,447

8,893

5,368

2,300

1,728

1,697

619

258

DND= Would Not Disclose

Number of NonFarm Employees

542,370

165,842

83,583

51,029

145,040

17,044

40,774

20,434

16,248

21,992

5,203

Total County Population

1.04 million

531,000

227,000

114,000

307,000

49,000

145,000

46,000

59,000

40,000

23,000

N/A= Not Available

Please note that some firms chose not to respond, or failed to respond in time to our inquiries. All rights reserved. Copyright 2011 by the Enterprise Newspaper Group

Manufacturing Average Wage County Average Wage $4,380 $3,798

$3,698 $2,907

$3,979 $2,883

$3,309 $2,496

$3,825 $3,225

$5,326 $3,355

$2,600 $2,517

$3,177 $2,256

$4,053 $3,632

$5,441 $2,773

$2,873 $2,577

Number of Manufacturing Establishments

Counties Top Companies

1,628

L3 Communications (Communications Equipment) The Sun Products Corporation (Soap & Detergent) Merit Medical Systems (Surgical & Medical Instrument)

618

260

217

297

72

161

75

43

51

44

IM Flash Technologies (Electronic Products) Nestle USA (Food) US Synthetic Corp. (Nonmetallic Mineral Product)

Autoliv (Motor Vehicle Equipment) Fresenius USA Manufacturing Inc. (Medical Instrument) Kimberly Clark Worldwide Inc. (Sanitary Paper Product) Icon (Sports & Athletic Equipment) Schreiber Foods (Cheese) Hyclone Laboratories Inc. (Pharmaceutical)

Lifetime Products (Sports & Athletic Equipment) ATK Space Systems/Alliant (Aerospace) Utility Trailer Manufacturing Co. (Truck Trailer) ATK Launch Systems (Aerospace) Autoliv (Motor Vehicle Equipment) Nucor Steel (Steel Mill)

Viracon (Glass Product) Wilson Electronics (Communications Equipment) RAM Manufacturing (Fabricated Metal Products) GENTAK (Foam Product) American Pacific Corp. (Chemical Manufacturing) Smead Manufacturing (Paper Products)

US Magnesium (Primary Metals Manufacturing) Detroit Diesel Remanufacturing (Machinery) Morton international (Food) Triumph Gear Systems (Aircraft Parts & Equipment) Skullcandy Inc (Electronic Products) Reese Metal Work (Metalworking)

Redmond Minerals (Nonmetallic Mineral Mining) Probar (Food) Mountain Cabinetry Inc. (Cabinetry)


Utah Focus, December 2011

Seems like that is happening a lot lately in Utah. Here’s one more:

The Manufacturing Extension Partnership of Utah (MEP) is the #1 performing MEP Center in the nation, leading all affiliates of the National Institute of Standards and Technology’s Hollings Manufacturing Extension Partnership (MEP) program. Translation: We help our clients save money and improve

their performance better than anyone else in the nation. Simply put, MEP Utah helps manufacturers build the products they make, better. We do this by working to understand each client’s unique needs, and working with its people, products, processes and performance to solve problems.

“We believe that there is no end destination for Futura Industries in the perfecting of our work culture. We are working every single day, every month, and throughout the year to transform ourselves into what—in our minds—a company ought to be...We could not have made anywhere near the progress we have without MEP’s help and guidance. We are very appreciative to the State of Utah for their support of this -Sue Johnson, President, Futura Industries program.”

Let’s get started— what’s holding you back? Let’s talk. Call us today. Programs are available to help companies tackle short-term issues, but can also be built upon to create a long-term strategic plan.

800 West University Parkway Orem, UT 84058 Tel. 801.863.8637 Email: info@mep.org Web: www.mep.org

A Contract Partner with:

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11/29/2011 8:46:34 AM

Focus - Manufacturing, Dec. 5, 2011  

Dec. 5, 2011

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