Why You Should Take A Shrewd Look At Advanced Manufacturing As The Key For Economic Development
In spite of the country’s economic discontent, advanced manufacturing gives strong evidence or being upbeat.
Steve R. Rodgers
Make no mistake, as a nation we’re in trouble.
Even today, five years later, we’re still trying to crawl out of the Great Recession of 2009. From 2010 to 2013, our average GDP was only 2.25%.
That compares, for example, to the GDP during the second half of the 1990’s of around 4.5%.2
If that were the only downside, maybe it wouldn’t be all that bad. It wouldn’t be except for…you know what:
Even today, five years later, we’re still trying to crawl out of the Great Recession of 2009. From 2010 to 2013, our average GDP was only 2.25%.
That compares, for example, to the GDP during the second half of the 1990’s of around 4.5%.2
If that were the only downside, maybe it wouldn’t be all that bad. It wouldn’t be except for…you know what:
Growth in Composite Materials
As a nation we are $17 trillion in debt with no end in sight. Especially when 45 million Americans are now living off food stamps, along with an alarming unemployment rate of 6.7%.3 If we throw in folks who are underemployed or no longer receiving unemployment, the figure
could be higher than 11%!
“We’ve got an economy that’s just not growing fast enough. It’s not creating the jobs we need. We need about 250,000 to 300,000 jobs a month.” So states Stephen Moore, former Senior Economist of the U. S. Congress Joint Economic Committee and a frequent contributor to The
Wall Street Journa Cl,NN, CNBC and Fox News.
Big question is, of course, how do you as a state or county help the nation reach that goal? Specifically, how do you create, let’s say, 5,000 to 15,000 of those jobs in your own back yard? And not just any jobs, but high paying ones—and, even more critical, ones that last?
And, what’s more, do it in spite of current economic challenges?
Consider the advanced manufacturing industries.
What do we mean when we say, “advanced
manufacturing”? I define it this way:
consistently demonstrate a high level of skill in delivering the product they make.
In other words, we’re talking about an advanced manufacturing base that
compensates folk according to the high value they provide.
For example, let’s take a look at the Advanced Composites industry.
could be higher than 11%!
“We’ve got an economy that’s just not growing fast enough. It’s not creating the jobs we need. We need about 250,000 to 300,000 jobs a month.” So states Stephen Moore, former Senior Economist of the U. S. Congress Joint Economic Committee and a frequent contributor to The
Wall Street Journa Cl,NN, CNBC and Fox News.
Big question is, of course, how do you as a state or county help the nation reach that goal? Specifically, how do you create, let’s say, 5,000 to 15,000 of those jobs in your own back yard? And not just any jobs, but high paying ones—and, even more critical, ones that last?
And, what’s more, do it in spite of current economic challenges?
Consider the advanced manufacturing industries.
What do we mean when we say, “advanced
manufacturing”? I define it this way:
- The manufacturing of high-valueproducts
- Creating jobs that demand a high level of requisite skill
- Creating a workforce that commands a premium in pay because they must
consistently demonstrate a high level of skill in delivering the product they make.
In other words, we’re talking about an advanced manufacturing base that
compensates folk according to the high value they provide.
For example, let’s take a look at the Advanced Composites industry.
Case Study : The Industry With Double -Digit Growth
In 2011, the global composite materials market represented $19.6 billion. By 2017, the market will reach an estimated $29 billion. That’s an annual compound growth rate of 7%. Advanced composites industry is expected to grow at double-digit rates through 2017.4
To date, there are nine major applications for composites:
1. Civil Infrastructure, including rapid repair and installation
2. High Pressure Ga Storage Tanks, for superior strength-to-weight ratios
3. Power Transmission, for less bulky structures and zero thermal expansion
4. Oil & Gas, for corrosion-resistant offshore structural components
5. Vehicle Technologies, for significant weight and mass reduction
6. Aerospace, for significant weight savings, superior strength and design innovations
7. Wind Energy, for longer, more efficient blade designs
8. Sporting Goods
9. Medical
While all of these applications are growth industries, not all of them represent advanced composites. What is the distinction? Let’s start at the beginning.
To date, there are nine major applications for composites:
1. Civil Infrastructure, including rapid repair and installation
2. High Pressure Ga Storage Tanks, for superior strength-to-weight ratios
3. Power Transmission, for less bulky structures and zero thermal expansion
4. Oil & Gas, for corrosion-resistant offshore structural components
5. Vehicle Technologies, for significant weight and mass reduction
6. Aerospace, for significant weight savings, superior strength and design innovations
7. Wind Energy, for longer, more efficient blade designs
8. Sporting Goods
9. Medical
While all of these applications are growth industries, not all of them represent advanced composites. What is the distinction? Let’s start at the beginning.
Composites 101
A Composite Material is actually a material system. It’s formed from two or more materials where the sum of the material properties is greater than the individual parts.
The classic example is using straw as reinforcement in mud to create bricks. Without the mud, the straw would bend easily. Without the straw the mud would break apart. A modern equivalent is steel-reinforced concrete, with the steel representing a high-strength “straw” and
the concrete as the “mud” material.
Using a different group of materials we can accomplish the same kind of synergy. If we used carbon fibers and epoxy, for example, we can create very stiff, lightweight materials that can give us 30-40% greater strength than steel, yet with 30-40% less weight than aluminum.
The classic example is using straw as reinforcement in mud to create bricks. Without the mud, the straw would bend easily. Without the straw the mud would break apart. A modern equivalent is steel-reinforced concrete, with the steel representing a high-strength “straw” and
the concrete as the “mud” material.
Using a different group of materials we can accomplish the same kind of synergy. If we used carbon fibers and epoxy, for example, we can create very stiff, lightweight materials that can give us 30-40% greater strength than steel, yet with 30-40% less weight than aluminum.
So What Are Advanced Composites?
With Advanced Composites, generally the same kinds of materials are used but with a much better performance, along with a greater degree of complexity, accuracy and design.
As a result, since advanced composites demand an elevated level of manufacturing expertise, they command a higher price. While wind blades, for example, demand a competitive price of $10-15 per pound, aerospace hardware can command prices that vary from $500 per pound to more than $5,000 per pound.
As a result, since advanced composites demand an elevated level of manufacturing expertise, they command a higher price. While wind blades, for example, demand a competitive price of $10-15 per pound, aerospace hardware can command prices that vary from $500 per pound to more than $5,000 per pound.
What Kind of Jobs Are Created By The Advanced Composites Industry?
Sanded and cel-lwo rap carbon fiber tube
Look forward to high-paying engineering jobs. These jobs include manufacturing, chemical, structural and mechanical engineering. They also include jobs in design and analysis, disciplines that are much more highly refined than in other industries.
Then there are technician jobs. In other industries, these workers would be considered blue-collar laborers. Except the skills required in the advanced composites industry demand a higher level of skill. As a result, they command a higher wage structure.
A study by Wichita State University showed the following mean hourly wages for advanced
composite technicians:
bonus, for every technician manufacturing product there are four or five additional support personnel.
These include functional disciplines such as supervision, inspection, quality assurance, record gathering and data retention. All of these individuals are focused on the vital function of ensuring the stringent quality requirements of incoming materials along with the stringent quality demands of outgoing product.
As a result, many of these people are found to be earning much higher wages than the specialized technicians. Regardless, the current average wage for all workers in advanced composites manufacturing is between $50,000 and $65,000 per year.
So that’s the upside. But what’s the downside? What does it take to build a healthy advanced
manufacturing community?
Then there are technician jobs. In other industries, these workers would be considered blue-collar laborers. Except the skills required in the advanced composites industry demand a higher level of skill. As a result, they command a higher wage structure.
A study by Wichita State University showed the following mean hourly wages for advanced
composite technicians:
- Entry Level Technician 1: $13.73/Hour
- Experienced Technician 1: $22.79/Hour
- Entry Level Technician 2: $17.15/Hour
- Experienced Technician 2: $25.48/Hour
bonus, for every technician manufacturing product there are four or five additional support personnel.
These include functional disciplines such as supervision, inspection, quality assurance, record gathering and data retention. All of these individuals are focused on the vital function of ensuring the stringent quality requirements of incoming materials along with the stringent quality demands of outgoing product.
As a result, many of these people are found to be earning much higher wages than the specialized technicians. Regardless, the current average wage for all workers in advanced composites manufacturing is between $50,000 and $65,000 per year.
So that’s the upside. But what’s the downside? What does it take to build a healthy advanced
manufacturing community?
Creating A Sustainable Advanced Manufacturing Environment
As with any economic development effort, there are six key components to creating and sustaining businesses in the advanced manufacturing industry:
1. Workforce development using vocational schools, community colleges, universities and
specialized training.
2. Innovation including new, cutting-edge technologies, process equipment and advanced
materials.
3. Access to capital to initiate, equip and expand businesses.
4. A healthy business culture, both internally and externally.
5. Physical infrastructure including access to adequate shipping, power and water.
6. Quality of Life
You will note that workforce development is number one on the list. Given the high-tech nature of industries like advanced composites, workforce development cannot be over-emphasized. It follows then that in order to attract advanced manufacturing companies to your neck of the
woods, high-quality training must be readily available at all levels.
This becomes even more critical for what we call called the “Super Techs.”
These folk occupy a vital space between the incoming unskilled (hourly) labor force and the university-educated (salaried) engineering work force. Super Techs are trained not only in the “how” of manufacturing advanced composites, but also the “why.”
They are the ones that can be depended on to deliver products at a high level of quality—day in, day out. In fact, the level of skill demanded of Super Techs can rise beyond technical competence to a level that could only be described as Art (yes, with a capital “A”).
So much so, Super Techs create a talent pool from which to draw for supervisory positions, as well as more advanced roles within a company. Very often they bridge the gap between engineering and manufacturing.
Need it be said that quality training at the local level in advanced manufacturing is imperative. Any company considering locating in your state or county has to easily recognize that your schools are up to snuff on current advanced manufacturing technologies. In other words, they have the courses and the relevant curriculum to graduate a highly skilled workforce at all levels.
1. Workforce development using vocational schools, community colleges, universities and
specialized training.
2. Innovation including new, cutting-edge technologies, process equipment and advanced
materials.
3. Access to capital to initiate, equip and expand businesses.
4. A healthy business culture, both internally and externally.
5. Physical infrastructure including access to adequate shipping, power and water.
6. Quality of Life
You will note that workforce development is number one on the list. Given the high-tech nature of industries like advanced composites, workforce development cannot be over-emphasized. It follows then that in order to attract advanced manufacturing companies to your neck of the
woods, high-quality training must be readily available at all levels.
This becomes even more critical for what we call called the “Super Techs.”
These folk occupy a vital space between the incoming unskilled (hourly) labor force and the university-educated (salaried) engineering work force. Super Techs are trained not only in the “how” of manufacturing advanced composites, but also the “why.”
They are the ones that can be depended on to deliver products at a high level of quality—day in, day out. In fact, the level of skill demanded of Super Techs can rise beyond technical competence to a level that could only be described as Art (yes, with a capital “A”).
So much so, Super Techs create a talent pool from which to draw for supervisory positions, as well as more advanced roles within a company. Very often they bridge the gap between engineering and manufacturing.
Need it be said that quality training at the local level in advanced manufacturing is imperative. Any company considering locating in your state or county has to easily recognize that your schools are up to snuff on current advanced manufacturing technologies. In other words, they have the courses and the relevant curriculum to graduate a highly skilled workforce at all levels.
Building A Hub Of Advanced Manufacturing Activity
While we acknowledge the need for high-quality workforce development and training, how do you build the community that will demand that training?
Workforce development is not a “build-it-and-they-will-come” proposition: You need an industry that requires the skills and expertise you have agreed to provide. So how do you fill the pipeline with qualified companies? There are four basic ways:
1. Relocation of existing companies
2. Upgrading equipment at existing companies
3. Expansion of existing companies
4. Establishment of new companies
Let’s quickly look at each:
1. Relocation of existing companies This demands a critical look at the cost and ROI of moving personnel and the heavy equipment used in the advanced manufacturing. These may include heavy equipment such as autoclaves, 5-axis CNC machines, automated machinery or sheet metal brakes and shears.
2. Upgrading of equipment of existing companies This comes about due to the basic prospect of moving. Does a company simply want to move their existing equipment—along with all the related costs? Or would the move justify purchasing new equipment that offers improved
performance?
If the second option, the company could see that they could sell their existing equipment in place and purchase state-of-the-art equipment and have it installed in the new plant. This, of course, would give the company an additional competitive edge.
What’s more, the company could apply the latest in integrated lean manufacturing concepts to the initial design and layout of the new facility. In fact, given the chance of improved efficiency and reduced overhead costs, these issues can be used as significant talking points in removing some of the hurdles found in option one.
3. Expansion of existing companies This would be warranted when a company wants to retain its existing plant and simply divisionalize or expand its operations in order to exploit new opportunities. These could include meeting increased output demands, new market niches, and/or customers’ tighter delivery demands.
Workforce development is not a “build-it-and-they-will-come” proposition: You need an industry that requires the skills and expertise you have agreed to provide. So how do you fill the pipeline with qualified companies? There are four basic ways:
1. Relocation of existing companies
2. Upgrading equipment at existing companies
3. Expansion of existing companies
4. Establishment of new companies
Let’s quickly look at each:
1. Relocation of existing companies This demands a critical look at the cost and ROI of moving personnel and the heavy equipment used in the advanced manufacturing. These may include heavy equipment such as autoclaves, 5-axis CNC machines, automated machinery or sheet metal brakes and shears.
2. Upgrading of equipment of existing companies This comes about due to the basic prospect of moving. Does a company simply want to move their existing equipment—along with all the related costs? Or would the move justify purchasing new equipment that offers improved
performance?
If the second option, the company could see that they could sell their existing equipment in place and purchase state-of-the-art equipment and have it installed in the new plant. This, of course, would give the company an additional competitive edge.
What’s more, the company could apply the latest in integrated lean manufacturing concepts to the initial design and layout of the new facility. In fact, given the chance of improved efficiency and reduced overhead costs, these issues can be used as significant talking points in removing some of the hurdles found in option one.
3. Expansion of existing companies This would be warranted when a company wants to retain its existing plant and simply divisionalize or expand its operations in order to exploit new opportunities. These could include meeting increased output demands, new market niches, and/or customers’ tighter delivery demands.
4. Establishment of new companies This, in many ways, is the best of all worlds: An entrepreneur who’s looking to establish a new company to exploit an expanding market as identified for advanced composites. They have the option locate their new enterprise in your area or in some other region or state.
There is no need to point out that entrepreneurs are very open to attractive incentives and tax structures. They can be difficult to find, however.
There is no need to point out that entrepreneurs are very open to attractive incentives and tax structures. They can be difficult to find, however.
What To Look For In A Relocation Consultant
Let’s say you’ve decided you want to build an advanced manufacturing hub. As you can imagine, there can be many more issues to grapple with beyond the considerations discussed above. The devil, as they say, is in the details…and there are a myriad of details to be handled in any given relocation.
In my experience there are always numerous (unknown?) hurdles to overcome and curve balls to dodge when attempting to persuade a company to relocate or expand to another state. This becomes even more so with an industry with which you may currently be unfamiliar.
It would make sense then to seriously consider partnering with someone who’s already jumped the hurdles and dodged the curve balls more than once. And especially someone who has intimate knowledge of the industry in question.
To give you an idea of what I’m talking about, consider the following list of issues:
How to do a recurring benefit analysis
In my experience there are always numerous (unknown?) hurdles to overcome and curve balls to dodge when attempting to persuade a company to relocate or expand to another state. This becomes even more so with an industry with which you may currently be unfamiliar.
It would make sense then to seriously consider partnering with someone who’s already jumped the hurdles and dodged the curve balls more than once. And especially someone who has intimate knowledge of the industry in question.
To give you an idea of what I’m talking about, consider the following list of issues:
How to do a recurring benefit analysis
- Benefits of an immediate reduced tax structure
- Mitigation of risk concerning an increasing tax structure
- Reduction of over-regulation
- Optimized plant layout
- Planning a company for predictive uptime
- Benefits of new equipment
- Maintaining of existing contracts
- Identification of new opportunities due to reduced overheads
- Benefits of an optimized engaged workforce
- Clearly communicate the details of the relocation and the proposed schedule
- Integrate key customers into the process
- Coordinate the build-ahead requirements
- Learn the qualification requirements of the new facility
- Create detailed information management system (IMS)
- Initiate scheduled functional discipline reviews during the whole process of relocation
- Determine who are the candidates for relocation
- Communicate the intent of the relocation and schedule one-on-one meetings
- Develop and present the relocation package, along with its benefits
- Develop new-hire guidelines
- Hire local residents for training at customer’s existing facility prior to the move
- How to work with local educators to provide training needed for the workforce
- Establish the unique processes and document the same
- Figure out how to expeditiously disassemble, package, tag and ship all relevant equipment and inventory
- Identify and manage all environmental considerations
- Review and manage all lease considerations
- Develop kaizen events in order to lay out the facility for optimum efficiency
- Liaise between the company and your economic development department
- Set up training programs for additional personnel
- Establish qualification requirements, plans, and write a detail IMS
- Coordinate and liaise with existing and new customers
- Establish learning curves in order to set in motion rapid production
- Optimize the Quality Management System (QMS)
- Leverage the proper industry certifications
- Incorporate forensic software to reduce overhead expenses
- Manage distributed power within the facility
- Reduce repair and maintenance costs
- Prolong equipment life
- Reduce equipment-related unplanned downtime
- Equip employees with appropriate “soft skills”
- Improve employee engagement
- Encourage innovation
- Optimize functional staff skills
- Focused business development
- Develop a 'Blue-Ocean’ strategy of uncontested market space
What Else To Look For In A Relocation Consultant
You want someone who…
Advanced composites is one of many advanced manufacturing industries in which my associates and I have expertise. If you are currently considering a new initiative for economic development in your county or state, please contact me for an informal discussion on how we might be of help.
- Speaks the language of industry
- Can bridge the negotiation gap between government and industry
- Knows how to negotiate pre- and post-performance incentives with the state, county and city.
- Understands workforce development in terms of training curriculum and skill sets
- Has extensive contacts with the advanced manufacturing community for targeted training
- Knows how to develop talent at all levels of education: high school, technology college, community college and university
- Is familiar with the establishment of small business incubators that would give birth to qualified sub contractors for the relocated company
- Is experienced with mergers and acquisitions, along with the vetting process
- Knows how to identify and vet hot candidates for relocation
- Is experienced in the full logistics of relocation
- Has a bone-deep understanding of sustainable growth and economic stability
- Has a passion for creating high-quality, highly-compensated jobs in the advanced manufacturing industries
Advanced composites is one of many advanced manufacturing industries in which my associates and I have expertise. If you are currently considering a new initiative for economic development in your county or state, please contact me for an informal discussion on how we might be of help.
Call me +1 801.259.8450. Or email at steven.r@emergentek.com
Sincerely,
Steven R. Rodgers
EmergenTek, LLC
Sincerely,
Steven R. Rodgers
EmergenTek, LLC
P.S. Contact me and learn what advanced manufacturing companies I know about who are currently considering a relocation.