Reviving Small and Mid-Sized Manufacturing Technology Learning Best Practices Around the Globe
Wednesday, September 14, 2011
U.S. manufacturing is in trouble, having lost one-third of its jobs in the last decade. Robust jobs recovery will be difficult without a manufacturing renewal. But renewal will not be possible if the nation's 245,000 small and mid-sized manufacturers (SMEs) collectively do not become more productive, innovative and competitive. Other nations fully recognize the key role of their SME manufacturers and that's why many have rolled out well funded and smartly designed programs to help them.
In this event, ITIF releases a new report that analyzes the SME manufacturing and technology support programs and policies of 12 leading nations, including Japan, Germany and the UK. The report assesses what these nations are doing and what the lessons are for the federal, state and local governments in America seeking to bolster their SME manufacturers' competitiveness. The event also features presentations from key officials in U.S. and foreign governments crafting SME manufacturing policy in their countries.
Jason Charron, Executive Director, Canada National Research Council-Industrial Research Assistance Program - Presenter
Stephen Ezell, Senior Analyst, Information Technology and Innovation Foundation - Presenter
Drew Greenblatt, President, Marlin Steel Wire Products - Presenter
Roger D. Kilmer, Director, Manufacturing Extension Partnership - Presenter
Robert D. Atkinson, President, Information Technology and Innovation Foundation - Moderator
Introduction: Drew Greenblatt is the President of Marlin Steel Wire Products, so
we actually have a real manufacturer here. This is not just ethereal policy wonks
speculating about the world. Well, that is it too, but we have somebody to bring us
back to reality. Under his leadership, Marlin Steel has seen 4 years of
record revenue and profit growth, which, if you think about the times that we're in
is an amazing accomplishment. He has grown to export to 35 countries including China,
Taiwan, Japan, Singapore, Australia and New Zealand. Prior to his position at Marlin,
Drew was president of Diamond Properties.
Thank you very much my name is Drew Greenblatt I'm the owner of Marlin Steel.
We were established in 1968, I bought the company in 1998 when you started Rob, you mentioned the fact that manufacturing matters a book you read,
it is the real deal.
The average manufacturing employee makes $73,000 a year.
That does not include benefits.
Benefits are in addition to that.
In my company,
we have Blue Cross Blue Shield,
holiday vacation,
we pay 100% if they go back to college,
get a Associates degree or get a Masters degree. They have
to get a good grade,
they can't take basket weaving or anything like that.
But these are the kinds of benefits that are pretty common place and
of course a 401k plan,
that are pretty common place in manufacturing.
So these are really good jobs and
you don't necessarily have to be a high school graduate or you don't
necessarily have to be a PhD to get one of these jobs.
So these are the kinds of jobs that our country needs and
these are the kinds of jobs that create a middle class.
and this is why this topic is so very important.
A couple topics, most of the companies,
When people think factories,
they think huge smoke stacked 5,000 employees.
That's not really the average American factory.
The average American factory is a peanut;
15 employees, 20 employees, they're not big, they're tiny.
That's where the MEP really helps because it's focused in on the little guy,
The little guy, there's a lot of us.
If each one of us were to hire a handful of employees,
2-3 employees, the recession could be over.
So that's why this topic is so very important.
We make everything in the USA, in Baltimore city in the rough section in town.
We export to thirty five countries.
We're most proud that we export to China and
Taiwan, but we also export to Singapore,
New Zealand and
my salesmen were up late last night negotiating a big deal with Australia.
Exports are critical and it's very important.
President Obama came out with a initiative a year ago that he wants to double
exports in the next five years.
Connecting the dots for a little company with 15 employees,
20 employees that's a great place for an MEP to help,
because an MEP can explain the value of exporting and
making President Obama's vision a reality.
We've got to remember that 95% of the worlds consumers are outside our shores,
only 5% are Americans.
So it's a huge market we have to pursue.
Most American factories don't export or they may export to one country maybe
two, they don't export to many.
I thought Steven did a wonderful job with the support.
On page 16, there's a really neat slide describing value added for employees.
That's really important for factories, for the little guy,
we've got 120-150 grand in value added per employee.
That's a very important number.
That's the juice that lets us reinvest okay whether its robot or quality system
marketing campaign, adding blue cross blue shield rather than a
lesser quality plan, that's where the rubber meets the road.
If we can boost that number up, then we'll have more funds, we can be more resilient and
we can be more aggressive and hiring people.
In my case when I bought the company we sold bagel baskets.
In 1998 and it was a good business for thirty years,
the company thrived doing that and it was a tremendous blow to me and
my company when two things occurred.
China figured out how to commoditize bagel baskets,
which is a very bad place to be because they were bringing bagel baskets into
Manhattan for cheaper than I can buy steel.
That makes for a very bad market proposition we were getting killed by the Chinese.
The second thing that happened I don't know if you recall this time,
there was a fad diet called the Atkins diet.
That's the last place you want to position your business to be in if you are the
world's biggest bagel basket manufacturer.
So we were devastated and we had to transform.
I think this is a little bit what again back to Stevens report, when we were in
the Low end commodity portion of the world, we
ranked the four different levels of technology we were in the very bottom bracket there,
and making bagel baskets by hand welding one at a time.
The day I bought the company everybody was minimum wage,
the health insurance plan was you go to the emergency room and
there was no retirement.
Nobody owned a car except me.
So now were a very different company.
The average employee is making 60-70 grand a year,
they all have health insurance, they have 401k etc.
How do you get more companies to make that transformation up?
MEPs could be a catalyst, could be a way to enlighten
these 15-20-30 person companies to get to that next level.
Again, when you look at this report you see some fascinating things.
Our factory area, manufacturing space is much bigger
than Germany. We're bigger than Japan but on page 4 it shows that our MEP program
has a mere 1300 employees.
However, in Germany,
with a couple of their different groups together they're 18,000.
They have a smaller manufacturing economy than we do.
They have more than 12, 14 times the number of boots on the ground than we
do meeting with the SMEs.
Japan by the way is 6,000, they also have a smaller manufacturing economy.
That was an important thing that struck me.
I think that migration is a good idea.
In the past, a lot of MEPs focused on lean manufacturing, continuous
improvement these are good things,
these are helpful things these make a factory more competitive,
which is what we need.
But I think the aspiration to migrate towards more of an innovation approach,
more new product development
finding new clients, finding new markets, that approach is very helpful because
when you're a 15 person company,
a 20 person company your running around full steam trying to make
payroll, ordering steel,
in my case ordering steel,
making sure the phone system works,
working with suppliers and clients,
there's are lot going on.
So slowing down figuring out,
hey we have to innovate,
slowing down, we have to create a product so we can differentiate ourselves.
I think it's intrinsic.
This is again, where MEPS can help.
I thought the study was good because it brought,
it pinpointed,
highlighted, several really innovative techniques that other countries are doing that
I think we should consider.
I'll go through a couple of them.
Page 22, in Germany the Steinbeis Center.
They have a neat program where they transfer the existing know how in the education
world and in other industries to the little guys.
I thought that was slick.
Take my city, Baltimore City.
We have the world's best, many can argue,
the world's best medical program; we have Hopkins.
It's a tremendous asset to my city.
Unfortunately I think a lot of these Hopkins doctors come up with these really
innovative ideas, they get a patent and
then it's made over in China or made in Mexico.
That's crazy.
If we can make in Baltimore city we can hire a lot of unemployed
steel workers.
so I think this kind of migration,
of really smart ideas coming out of our Universities,
they can be funneled through our own factories,
I think that would be good for our economy.
It sounds like Germany is on to something with that.
I thought that was a nice highlight.
A couple others, the
Branburg Progam on page 25 where they place PhD's
with various factories for two years and
recover 50%, that was a wonderful program.
The innovation voucher, on page 31,
where they talk about the cooperative project with RMD technology.
Over in Canada the design industry advisory,
another good program.
The bottom line is I think we have to focus on that middle shot,
what's going on in Germany where 80% of their production is exported.
It's a million workers in Germany that middle portion of their factory base,
80% of their production is exported because they're so competitive, so innovative.
We have to do more of that.
I think my favorite quote in your document is by Dr. Jokal on page 43,
where he talks about where we have to go in the future of MEPs and
helping out SME's.
So in summary I think manufacturing extension services are vital for our nation and
for SMEs and
I think the main thing in this report is that other countries are getting serious and
were behind the game and
have to do the same in the future.
Let me point out that I actually recommended Drew to come and participate today,
knowing that he's got a very good perspective of where manufacturers aught
to be, but also understand, he's at the extreme end of the continuum of
what our typical small manufacturers are like. He knows what's going on.
He's taken advantage of technologies. He's looked at exports. Our real challenge
is getting the rest of the SME population in the U.S. to think and act like he does.
I know it's a double-edged sword when I sit at a meeting with you. I try to
explain the challenges that we've got and then you're having already made many
of those changes.
Why is in our interest, nationally, to have Drew go from
making bagel baskets to making much more complex wire forms?
Who cares? Let the market work that out, somebody else will
figure out what to do. It's like, thank you for doing that, but
why do we care? I think the answer to that, fundamentally, why we care
is, yeah, the market will figure that out. Somebody else will end up
doing that, it just won't be in America. Our interest is the global
economy, where we're all out to maximize everybody else, then we
shouldn't be doing this. But if our interest is to say that we think
that a healthy American manufacturing-base is important, then it does matter.
We can't be indifferent to the transition that Drew went through. It's in
our national interest to have Drew replicated 338,000 more times. Not too
hard to do that - right?
Question: Moving into a world where you have to reach out and learn to work with
others, I think, is a very key piece of this and I don't see schools doing it.
Drew: We have been aggressively hiring mechanical engineers a third of
my employees are mechanical engineers.
We're hiring recent graduates out of the University of Maryland.
One thing I'm stunned about is how collaborative they like to work.
They like to work in teams.
This is something new that the University Maryland is doing.
I don't know if this is nationwide but this is certainly something going on there.
Regarding our employee culture, one thing we do is we have,
lead manufacturing cells around different robots.
The crew has to make a certain number of baskets or sheet metal fabrications per week and
if they do they get a check.
So they work very collaboratively because they all get a check if they hit their bogey and
if they don't, they don't. They get no money.
So they self police themselves regarding coffee breaks,
bathroom breaks, we don't care if you take a smoke break,
it's on you. Just hit your numbers at the end of the week.
We work very collaboratively.
Question: I'm interested in the work force.
How are you developing and maintaining a skilled workforce
through apprenticeship and on-site training to keep up with
high-tech innovation?
Drew:
We sent people to school for the technologies we buy.
So for example, we bought a sheet metal punch for our sheet metal fabrication and
a sheet metal press break all within the last year and
we sent people, I think it's a total of 8 people to Connecticut
for over a week to learn to train.
We will be getting a laser in October and
we're going to be sending 4 people to Connecticut a week for that.
So we constantly have,
any particular month, people out of state training.
Internally,
we rent out a room in Catonsville Community College in Baltimore City and
we bring in the leading manufacturing gurus or teachers.
So that's the kind of stuff we do internally.
We have a big skills matrix in our factory where every single employee is a column and
every single skill is a row and
every single employee is.
Complex robots get 4 points, easy ones get 1.
Then we tabulate it and if you learn a new skill you get more money.
So everybody has skin in the game and
they really want to learn more it's a lot of cross training.
You know so it shows people what we're looking for and what skills were gunning for.
