If you are a professional business, legal or financial advisor or manufactures representative, we have the clients that need your expertise. Join us and you too can grow your client base, network with like-minded professionals and make more money.
Monday, November 5, 2012
With increasing appeal to investors, Integrated Funding modeling is becoming a particularly interesting topic.
Andice Integrated Funding (AIF) employs a generalist, diversified strategy of investing across a variety of industries with a focus on the lower-middle-market, investing in companies in the United States and Canada with revenues ranging from $5MM - $50MM.
What is Integrated Funding?
Integrated Funding is a unique mezzanine style of subordinated lending that mixes debt and equity. The debt component usually comes with interest rates of 12%-16% for a typical life of 4-6 years. Unlike most senior debt lender and banks, these interest rates do not typically fluctuate with prime and/or LIBOR rates. Integrated Funding is a hybrid of debt and equity, making it quite flexible. The flexibility enables it to be used in a variety of situations — including buyouts, corporate takeovers, mergers, acquisitions, growth capital, or recapitalizations.”
Intergrated Funding is currently on solid footing – it is a vibrant market opportunity. Demand and supply are both very high as a result of banks being half aggressive and half scared, it’s a good time to get deals done.
How does AIF Value Companies?
We share much of the same due diligence criteria as equity lenders. There are multiple factors that contribute to the attractiveness of an opportunity. In addition to the use of proceeds, amount of proceeds, type of transaction, and so on, we like to look at the management team and its past experience with leverage, very much akin to what an equity investor looks for in a business — a scalable business model, recurring revenue, and strong EBITDA margins.
What are the Benefits of AIF?
One of the biggest benefits of AIF is our partner-like mindset and significantly less dilution to the borrower as opposed to a direct equity investment. AIF is more like a private equity firm than a bank. We are a lender by design, and our capital network is deployed as debt, but we think more like a partner than a lender. We work extensively to help our client ompanies through our network and the resources that we can bring to bear. Because of the structure and the equity element of our royalty lending, we are very motivated to see the equity value of the company increase.
For more information visit as at www.andicefunding.com.
What is Integrated Funding?
Integrated Funding is a unique mezzanine style of subordinated lending that mixes debt and equity. The debt component usually comes with interest rates of 12%-16% for a typical life of 4-6 years. Unlike most senior debt lender and banks, these interest rates do not typically fluctuate with prime and/or LIBOR rates. Integrated Funding is a hybrid of debt and equity, making it quite flexible. The flexibility enables it to be used in a variety of situations — including buyouts, corporate takeovers, mergers, acquisitions, growth capital, or recapitalizations.”
Intergrated Funding is currently on solid footing – it is a vibrant market opportunity. Demand and supply are both very high as a result of banks being half aggressive and half scared, it’s a good time to get deals done.
How does AIF Value Companies?
We share much of the same due diligence criteria as equity lenders. There are multiple factors that contribute to the attractiveness of an opportunity. In addition to the use of proceeds, amount of proceeds, type of transaction, and so on, we like to look at the management team and its past experience with leverage, very much akin to what an equity investor looks for in a business — a scalable business model, recurring revenue, and strong EBITDA margins.
What are the Benefits of AIF?
One of the biggest benefits of AIF is our partner-like mindset and significantly less dilution to the borrower as opposed to a direct equity investment. AIF is more like a private equity firm than a bank. We are a lender by design, and our capital network is deployed as debt, but we think more like a partner than a lender. We work extensively to help our client ompanies through our network and the resources that we can bring to bear. Because of the structure and the equity element of our royalty lending, we are very motivated to see the equity value of the company increase.
For more information visit as at www.andicefunding.com.
Tuesday, October 9, 2012
Thursday, August 30, 2012
The Post-Labor Day Boom
Monday is Labor Day and that means two things: the end of summer and the beginning of the busiest period for the PE industry. It’s time for the inevitable post-Labor Day boom. Although everyone knows it exists, we decided to try to quantify the boom. How much does deal activity actually pick up after Labor Day?
To investigate, we dove into the data from 2011. We looked at deal activity on AxialMarket a month before and two months after the holiday. The rumors are confirmed - the number of deals brought to market the week after Labor Day increased 20% compared to the week before. The second week back saw dealflow increase another 47%. By the second week in October, the weekly deal number (and presumably your workload) was nearly 3x larger than any week in August.
To investigate, we dove into the data from 2011. We looked at deal activity on AxialMarket a month before and two months after the holiday. The rumors are confirmed - the number of deals brought to market the week after Labor Day increased 20% compared to the week before. The second week back saw dealflow increase another 47%. By the second week in October, the weekly deal number (and presumably your workload) was nearly 3x larger than any week in August.
Looks like a busy couple of months ahead - hope you’re well rested. Enjoy the weekend and see you back in the market next week!
Wednesday, August 29, 2012
Friday, August 24, 2012
Tuesday, August 21, 2012
Andice Integrated Funding: Intelligent Growth Capital
While questions remain about where the economy may be heading into the latter half of the year, we have seen entrepreneurs obtaining larger orders and taking advantage of opportunities by utilizing our working capital and integrated funding programs.
AIF provides funding of inventory required to fill sales orders from credit worthy end buyers at an advance rate of up to 100% of the cost of the inventory. AIF, as a funding integrator we also work with a factor, asset-based lenders, or banks in each of our transactions and look to partner with senior debt financing sources thereby providing a completely integrated supply chain funding solutions.
Our funding programs are customized to support:
• Finished goods inventory trade transactions for importers, exporters, and wholesale distributors
• Production or value added transactions for light manufacturers, assemblers, and processors
• Companies operating in consumer goods, industrial products, food, and government contract industries
AIF specialized funding programs provide:
• Funding for transactions ranging in size from $300,000 to $200,000,000 or more
• Letters of credit, credit guarantees or cash funding for the purchase of finished goods, raw materials, components, and logistics costs. In certain cases, funding can be made for direct labor and direct overhead relating to specific transactions.
Please call us today to discuss any opportunity that could use our integrated funding expertise and capacity for working capital and contract funding in the U.S. and Canada.
Thank you for your continued support as we look forward to working with you in the near future.
Ann Reade-Moore
www.andicefunding.com
AIF provides funding of inventory required to fill sales orders from credit worthy end buyers at an advance rate of up to 100% of the cost of the inventory. AIF, as a funding integrator we also work with a factor, asset-based lenders, or banks in each of our transactions and look to partner with senior debt financing sources thereby providing a completely integrated supply chain funding solutions.
Our funding programs are customized to support:
• Finished goods inventory trade transactions for importers, exporters, and wholesale distributors
• Production or value added transactions for light manufacturers, assemblers, and processors
• Companies operating in consumer goods, industrial products, food, and government contract industries
AIF specialized funding programs provide:
• Funding for transactions ranging in size from $300,000 to $200,000,000 or more
• Letters of credit, credit guarantees or cash funding for the purchase of finished goods, raw materials, components, and logistics costs. In certain cases, funding can be made for direct labor and direct overhead relating to specific transactions.
Please call us today to discuss any opportunity that could use our integrated funding expertise and capacity for working capital and contract funding in the U.S. and Canada.
Thank you for your continued support as we look forward to working with you in the near future.
Ann Reade-Moore
www.andicefunding.com
Thursday, August 16, 2012
Wednesday, August 15, 2012
Manufacturing Is Returning to America
Although it may not be the panacea that everyone seems to think it will be.
The robots of today aren’t the androids or Cylons that we are used to seeing in science fiction movies, but specialized electromechanical devices run by software and remote control. As computers become more powerful, so do the abilities of these devices. Robots are now capable of performing surgery, milking cows, doing military reconnaissance and combat, and flying fighter jets. Several companies, such as Willow Garage, iRobot and 9th Sense, sell robot-development kits for which university students and open-source communities are developing ever-more sophisticated applications.
Note what’s missing from this picture: Jobs for people from the left side of the Bell Curve, the sort of people who work on assembly lines and join unions. This is bad news for the Democrats and throws them back on the other half of their base, i.e. welfare recipients. Look for them to push even harder for increased dependency on the government largesse that they use to buy votes.
How will we turn these designs into products? By “printing” them at home or at modern-day Kinko’s using shared public manufacturing facilities such as TechShop, a membership-based manufacturing workshop featuring manufacturing technologies now on the horizon.
Another hit for the working class. The emerging technology of ‘contour crafting’ will affect the building trades the way that Henry Ford’s assembly line did the manufacturing trades. Once we have programmable machines to ‘print’ houses, there won’t be a lot for bricklayers, carpenters, plumbers, and electricians to do.
In additive manufacturing, parts are produced by melting successive layers of materials based on three-dimensional models — adding materials rather than subtracting them. The “3D printers” that produce these parts use powdered metal, droplets of plastic and other materials — much like the toner cartridges that go into laser printers. This allows the creation of objects without tools or fixtures. The process doesn’t produce waste material and there is no additional cost for complexity. Just as, thanks to laser printers, a page filled with graphics doesn’t cost much more than one with text (other than the cost of toner), with 3D printers we can print a sophisticated 3D structure for what it would cost to print something simple.
More efficient, more economical, more ‘green’ — you name it, automation does it. What happens when ‘customized’ products are the same price as mass-produced? The ‘fashion’ industry ought to be getting pretty nervous right about now. Upside: Prices will plummet. Downside: How are people going to pay even these low prices without a job to generate income?
Of course, there will always be niche positions for custom craftsmen — there are people today making a living doing custom wood and stone work — but that’s not going to float the working class.
This entry was posted on Monday, August 13th, 2012 at 03:58 and is filed under Think about it. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.
The robots of today aren’t the androids or Cylons that we are used to seeing in science fiction movies, but specialized electromechanical devices run by software and remote control. As computers become more powerful, so do the abilities of these devices. Robots are now capable of performing surgery, milking cows, doing military reconnaissance and combat, and flying fighter jets. Several companies, such as Willow Garage, iRobot and 9th Sense, sell robot-development kits for which university students and open-source communities are developing ever-more sophisticated applications.
Note what’s missing from this picture: Jobs for people from the left side of the Bell Curve, the sort of people who work on assembly lines and join unions. This is bad news for the Democrats and throws them back on the other half of their base, i.e. welfare recipients. Look for them to push even harder for increased dependency on the government largesse that they use to buy votes.
How will we turn these designs into products? By “printing” them at home or at modern-day Kinko’s using shared public manufacturing facilities such as TechShop, a membership-based manufacturing workshop featuring manufacturing technologies now on the horizon.
Another hit for the working class. The emerging technology of ‘contour crafting’ will affect the building trades the way that Henry Ford’s assembly line did the manufacturing trades. Once we have programmable machines to ‘print’ houses, there won’t be a lot for bricklayers, carpenters, plumbers, and electricians to do.
In additive manufacturing, parts are produced by melting successive layers of materials based on three-dimensional models — adding materials rather than subtracting them. The “3D printers” that produce these parts use powdered metal, droplets of plastic and other materials — much like the toner cartridges that go into laser printers. This allows the creation of objects without tools or fixtures. The process doesn’t produce waste material and there is no additional cost for complexity. Just as, thanks to laser printers, a page filled with graphics doesn’t cost much more than one with text (other than the cost of toner), with 3D printers we can print a sophisticated 3D structure for what it would cost to print something simple.
More efficient, more economical, more ‘green’ — you name it, automation does it. What happens when ‘customized’ products are the same price as mass-produced? The ‘fashion’ industry ought to be getting pretty nervous right about now. Upside: Prices will plummet. Downside: How are people going to pay even these low prices without a job to generate income?
Of course, there will always be niche positions for custom craftsmen — there are people today making a living doing custom wood and stone work — but that’s not going to float the working class.
This entry was posted on Monday, August 13th, 2012 at 03:58 and is filed under Think about it. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.
Monday, August 6, 2012
Wednesday, July 25, 2012
Wednesday, July 11, 2012
New Trends of Sustainable Development of Manufacturing Industry
New Trends of Sustainable Development of Manufacturing Industry
Establish a sound system for technological innovation is the key to the sustainable development of China”s equipment manufacturing industry. Of technological innovation system of the equipment manufacturing industry is a common Basic Research → Research → Product Development → industrialization, this structure shows that based on common technology is indispensable, and research institutes in China structural reform to the weakening or even absence of the R & D based on common technology are already evident, is not conducive to the overall innovation. At present, the conversion Institutes of public services to rebuild infrastructure and common technology platform has become essential; otherwise it will affect our overall strategic process of the establishment of an innovative country.
So, what industry is considered high-end equipment manufacturing industry? Next focus of development where? Summed up the view of experts, the areas covered by the high-end equipment manufacturing industry, including aviation equipment, satellite and its application industry, rail transportation equipment marine engineering equipment, and intelligent manufacturing equipment, and so on. These industries have a technology-intensive, high added value and strong leading role, the high-end part of the equipment manufacturing industry, and all belong to the emerging industry. Traditional industries cannot be assigned to them. For example, one million kilowatts of ultra-supercritical generating units, although a high-end part of the manufacturing sector, but it belongs to the traditional industries, and therefore cannot be included in the areas of focus on the development of high-end equipment manufacturing. Some ore equipment manufacturer – ball mill manufacturers must also forward to the high-end intelligent, in order to meet development needs.
In the various fields of high-end equipment manufacturing, intelligent manufacturing equipment is still relatively new concept, but also much concern. The so-called intelligent manufacturing equipment is the perception, analysis, reasoning, decision making, manufacturing equipment control functions; it is an advanced manufacturing technology, information technology and smart technology integration and depth of integration. The development of intelligent manufacturing equipment include: focus on promoting high-end CNC machine tools and basic manufacturing equipment, complete production line automation, intelligent control systems, sophisticated and intelligent instruments and instrumentation and test equipment, the key foundation components, parts and general parts, intelligent dedicated equipment development of production process automation, intelligent, precision, green, driving the overall technology level of the industry. Example, in the field of sophisticated and intelligent instrumentation and test equipment, it should address the development of biological, energy saving and environmental protection, petrochemical and other industries need to focus on the development of intelligent pressure, flow, level, composition, materials, mechanical properties, such as precision instrument and scientific instruments and the environment, security and defense, special testing equipment. In key infrastructure components, parts and general parts of the field to focus on the development of high-parameter, high precision and high reliability bearings, hydraulic / pneumatic / sealing components, gear drives and large, sophisticated, complex, long-life mold and so on.china jaw crusher:http://www.hxjqchina.com/n69.html
artificial sand maker:http://www.hx-china.com/9.html
In the field of intelligent dedicated equipment should focus on the development of a new generation of large electric power and grid equipment, robotics industry, TBM, rapid integration of flexible construction equipment such as intelligent construction machinery, as well as large advanced and efficient intelligent agricultural machinery.
Also, the large aircraft, regional aircraft and general aviation aircraft for the application object, the use of aircraft manufacturing, the combination of machine tool manufacturing and materials production enterprises, the focus on the development of composite materials preparation equipment, automatic auxiliary band / auxiliary wire device, component processing machine, ultrasonic processing / high pressure water cutting equipment and grinding ball mill equipment.
Posted on July 10, 2012, 2:20 am, by lilyyoung89, under I Love Gingers.
Establish a sound system for technological innovation is the key to the sustainable development of China”s equipment manufacturing industry. Of technological innovation system of the equipment manufacturing industry is a common Basic Research → Research → Product Development → industrialization, this structure shows that based on common technology is indispensable, and research institutes in China structural reform to the weakening or even absence of the R & D based on common technology are already evident, is not conducive to the overall innovation. At present, the conversion Institutes of public services to rebuild infrastructure and common technology platform has become essential; otherwise it will affect our overall strategic process of the establishment of an innovative country.
So, what industry is considered high-end equipment manufacturing industry? Next focus of development where? Summed up the view of experts, the areas covered by the high-end equipment manufacturing industry, including aviation equipment, satellite and its application industry, rail transportation equipment marine engineering equipment, and intelligent manufacturing equipment, and so on. These industries have a technology-intensive, high added value and strong leading role, the high-end part of the equipment manufacturing industry, and all belong to the emerging industry. Traditional industries cannot be assigned to them. For example, one million kilowatts of ultra-supercritical generating units, although a high-end part of the manufacturing sector, but it belongs to the traditional industries, and therefore cannot be included in the areas of focus on the development of high-end equipment manufacturing. Some ore equipment manufacturer – ball mill manufacturers must also forward to the high-end intelligent, in order to meet development needs.
In the various fields of high-end equipment manufacturing, intelligent manufacturing equipment is still relatively new concept, but also much concern. The so-called intelligent manufacturing equipment is the perception, analysis, reasoning, decision making, manufacturing equipment control functions; it is an advanced manufacturing technology, information technology and smart technology integration and depth of integration. The development of intelligent manufacturing equipment include: focus on promoting high-end CNC machine tools and basic manufacturing equipment, complete production line automation, intelligent control systems, sophisticated and intelligent instruments and instrumentation and test equipment, the key foundation components, parts and general parts, intelligent dedicated equipment development of production process automation, intelligent, precision, green, driving the overall technology level of the industry. Example, in the field of sophisticated and intelligent instrumentation and test equipment, it should address the development of biological, energy saving and environmental protection, petrochemical and other industries need to focus on the development of intelligent pressure, flow, level, composition, materials, mechanical properties, such as precision instrument and scientific instruments and the environment, security and defense, special testing equipment. In key infrastructure components, parts and general parts of the field to focus on the development of high-parameter, high precision and high reliability bearings, hydraulic / pneumatic / sealing components, gear drives and large, sophisticated, complex, long-life mold and so on.china jaw crusher:http://www.hxjqchina.com/n69.html
artificial sand maker:http://www.hx-china.com/9.html
In the field of intelligent dedicated equipment should focus on the development of a new generation of large electric power and grid equipment, robotics industry, TBM, rapid integration of flexible construction equipment such as intelligent construction machinery, as well as large advanced and efficient intelligent agricultural machinery.
Also, the large aircraft, regional aircraft and general aviation aircraft for the application object, the use of aircraft manufacturing, the combination of machine tool manufacturing and materials production enterprises, the focus on the development of composite materials preparation equipment, automatic auxiliary band / auxiliary wire device, component processing machine, ultrasonic processing / high pressure water cutting equipment and grinding ball mill equipment.
Posted on July 10, 2012, 2:20 am, by lilyyoung89, under I Love Gingers.
Tuesday, July 10, 2012
A Burden Now, a Blessing Later?
A Burden Now, a Blessing Later?
Posted by David McCann | July 05, 2012
I’m a lifelong, avid baseball fan, and when others of my ilk pose “best player” questions, I always query back: best over the course of his career, or best at the peak of his abilities? Sandy Koufax had a short career during which he was inconsistent in the early years but more than brilliant for a final few. Don Sutton was at no time regarded as among the best few pitchers, but bit by bit, over 23 years, he compiled a set of numbers that eventually propelled him, like his one-time teammate Koufax, to the Hall of Fame.http://www3.cfo.com/blogs/human-capital-careers/human-capital--careers-blog/2012/07/A-Burden-Now-a-Blessing-Later
Those guys played decades ago. But these days, when I hear people voice opinions on the Patient Protection and Affordable Care Act — which has been quite often the past two-plus years, reaching a crescendo recently — I notice a reminiscent whiff of that baseball dichotomy. By that I mean, if someone asks me whether I think this law makes sense, I want to rejoin with: over the short term, or over the long term?
In today’s immediacy, the machinations and regulatory interpretations of the law are imposing pain on a host of parties, including health-care providers, insurers, and, most notably to CFO’s audience, companies generally. The costs of compliance are annoying and frustrating. Many are angry at Congress for allegedly overstepping its authority in passing the still-new law, and at the Supreme Court for last week endorsing that supposed faux pas. Some CFOs, as we reported then, are dismayed that they still don’t have closure on the fate of the law, given that the next Congress will probably continue the lively fight over whether to modify or repeal it.
Those are certainly understandable and reasonable objections — even the last one, despite some comments posted to our article that railed against the CFOs quoted in it for sounding like they were too ineffectual to move forward. Please, give these finance chiefs a break. They and their peers strive for efficiency, a goal that is significantly hampered, when it comes to health-care benefits, by having to comply with a law that may or may not exist a year from now.
Still, if even the short-term implications of the law and the court decision are not clear, can anyone say with even modest confidence what the long-term implications might be?
For example, what if the PPACA were allowed to fully flower? If, as the law contemplates, providers were paid based on patient outcomes, rather than on the number of patient visits, procedures performed, and tests ordered? If insurers were forced by the law to reduce administrative costs in order to avoid mandatory customer rebates? If the state health-insurance exchanges that may be created under the law worked so well that many companies could eventually find relief from the burden of paying for workers’ health care at all, not to mention the compliance burden?
Look, I know it’s not as simple as that. The PPACA has many provisions that may be cost factors for corporations in both the short and long terms. The incremental dollars to be pumped into the health-care system by the mandate that almost everyone obtain health insurance might not be enough to pay for all the concessions the insurance industry made, like eliminating annual and lifetime coverage caps and the prohibition on denying coverage to anyone, even those with chronic pre-existing conditions. Additionally, numerous unintended consequences of the law, negative or positive, are almost certain to crop up.
But it was never intended to be an immediate panacea to all of the woes related to health care that plague our society, the economy, and corporate bottom lines. It is a stake in the ground that acknowledges those woes that explicitly says, “There are problems afoot. They need to be dealt with.” And that implicitly says, “Here is a start. And from this start, we can smooth out the law and make it better and fairer over time.”
Companies should, with respect to the health-care arena, climb out of their quarter-to-quarter foxhole, support efforts to gradually improve the system, and look to a farther time horizon. It’s just possible that the view might not be as terrifying as they thought.
Source:
Posted by David McCann | July 05, 2012
I’m a lifelong, avid baseball fan, and when others of my ilk pose “best player” questions, I always query back: best over the course of his career, or best at the peak of his abilities? Sandy Koufax had a short career during which he was inconsistent in the early years but more than brilliant for a final few. Don Sutton was at no time regarded as among the best few pitchers, but bit by bit, over 23 years, he compiled a set of numbers that eventually propelled him, like his one-time teammate Koufax, to the Hall of Fame.http://www3.cfo.com/blogs/human-capital-careers/human-capital--careers-blog/2012/07/A-Burden-Now-a-Blessing-Later
Those guys played decades ago. But these days, when I hear people voice opinions on the Patient Protection and Affordable Care Act — which has been quite often the past two-plus years, reaching a crescendo recently — I notice a reminiscent whiff of that baseball dichotomy. By that I mean, if someone asks me whether I think this law makes sense, I want to rejoin with: over the short term, or over the long term?
In today’s immediacy, the machinations and regulatory interpretations of the law are imposing pain on a host of parties, including health-care providers, insurers, and, most notably to CFO’s audience, companies generally. The costs of compliance are annoying and frustrating. Many are angry at Congress for allegedly overstepping its authority in passing the still-new law, and at the Supreme Court for last week endorsing that supposed faux pas. Some CFOs, as we reported then, are dismayed that they still don’t have closure on the fate of the law, given that the next Congress will probably continue the lively fight over whether to modify or repeal it.
Those are certainly understandable and reasonable objections — even the last one, despite some comments posted to our article that railed against the CFOs quoted in it for sounding like they were too ineffectual to move forward. Please, give these finance chiefs a break. They and their peers strive for efficiency, a goal that is significantly hampered, when it comes to health-care benefits, by having to comply with a law that may or may not exist a year from now.
Still, if even the short-term implications of the law and the court decision are not clear, can anyone say with even modest confidence what the long-term implications might be?
For example, what if the PPACA were allowed to fully flower? If, as the law contemplates, providers were paid based on patient outcomes, rather than on the number of patient visits, procedures performed, and tests ordered? If insurers were forced by the law to reduce administrative costs in order to avoid mandatory customer rebates? If the state health-insurance exchanges that may be created under the law worked so well that many companies could eventually find relief from the burden of paying for workers’ health care at all, not to mention the compliance burden?
Look, I know it’s not as simple as that. The PPACA has many provisions that may be cost factors for corporations in both the short and long terms. The incremental dollars to be pumped into the health-care system by the mandate that almost everyone obtain health insurance might not be enough to pay for all the concessions the insurance industry made, like eliminating annual and lifetime coverage caps and the prohibition on denying coverage to anyone, even those with chronic pre-existing conditions. Additionally, numerous unintended consequences of the law, negative or positive, are almost certain to crop up.
But it was never intended to be an immediate panacea to all of the woes related to health care that plague our society, the economy, and corporate bottom lines. It is a stake in the ground that acknowledges those woes that explicitly says, “There are problems afoot. They need to be dealt with.” And that implicitly says, “Here is a start. And from this start, we can smooth out the law and make it better and fairer over time.”
Companies should, with respect to the health-care arena, climb out of their quarter-to-quarter foxhole, support efforts to gradually improve the system, and look to a farther time horizon. It’s just possible that the view might not be as terrifying as they thought.
Source:
Sunday, July 8, 2012
Tuesday, July 3, 2012
US manufacturing shrinks for first time in 3 years
BY NEIL SHAH AND BEN CASSELMAN
The global economic slowdown has finally caught up with American manufacturers.
The U.S. factory sector shrank in June for the first time since July 2009—the first month of the economic recovery—the Institute for Supply Management said Monday. Exports fell, and new orders, which gauge future factory activity, dropped at their fastest pace since the post-9/11 plunge in October 2001.
The report is the strongest evidence yet that Europe's troubles and slowing growth in China are hurting American factories, one of the biggest drivers of the U.S. recovery. Separate reports have shown U.S. exports fell in April for the first time.
The global economic slowdown has finally caught up with American manufacturers.
The U.S. factory sector shrank in June for the first time since July 2009—the first month of the economic recovery—the Institute for Supply Management said Monday. Exports fell, and new orders, which gauge future factory activity, dropped at their fastest pace since the post-9/11 plunge in October 2001.
The report is the strongest evidence yet that Europe's troubles and slowing growth in China are hurting American factories, one of the biggest drivers of the U.S. recovery. Separate reports have shown U.S. exports fell in April for the first time.
Tuesday, June 26, 2012
Thursday, June 21, 2012
Five Capabilities That Mid-Sized Manufacturers Need To Build
A mid-sized manufacturer needs to do the following five things right, so it can continue to successfully compete and maintain its growth rate.
Mid-size companies, with revenues between $10 million and $1 billion, are expected to outpace larger companies in growth over the next 12 months, according to recent research by the Ohio State University Fisher College of Business and GE Capital.
These companies account for a third of the nation’s GDP, more than 41 million jobs, and are considered a leading indicator of America’s future competitiveness. Mid-sized companies added 2.2 million jobs between 2007 and 2010 (a period of economic crisis), while big businesses shed 3.7 million jobs during the same period. Although mid-market companies may not dominate the headlines, they are the engine of the American economy. This article identifies the advantages that mid-sized manufacturers have (which drive their growth) and the key investments they need to make in continuing to maintain this growth.
Mid-sized manufacturing companies have three very big advantages over larger companies. They are:
■Focus: Unlike large companies, a mid-sized manufacturing company offers a narrow range of products and services, allowing them to maintain a sharp focus. As a result, their business and market strategies are more crisp, resulting in a better potential to out-execute the large manufacturers.
■Speed: The ability to move faster than larger companies to take advantage of a new market opportunity is one of the biggest advantages of mid-sized manufacturing companies. The likely presence of an entrepreneurial founder (or a family member) running the day-to-day operations, coupled with smaller size, allows mid-sized companies to move quickly when they identify a new opportunity in an existing or related market segment.
■Closeness to customers: Customer relationships and satisfaction are important for any business’s success, but mid-sized manufacturers (especially those that are family owned) take it to the next level by connecting with the customers they deal with, emphasizing the community and accentuating the personal touch. Their sharper focus and smaller size enable them to stay closer to their customers.
As we discussed above, the primary source of a mid-sized manufacturer’s competitive advantage is its ability to stay close to its customers, be nimble and offer superior service, while still making respectable margins. But as such companies grow, they begin to get squeezed from both sides – they can no longer be as flexible and personalized as their smaller competitors, but at the same time, they do not have the operational sophistication to compete with the big boys. This affects their ability to grow at the pace they want. How can they counter it?
A mid-sized manufacturer needs to do the following five things right, so it can continue to successfully compete and maintain its growth rate:
■Hire the right managerial skill set: As an organization grows, it needs managerial talent who know how to scale the company to the next inflection point. Lack of such skills within the company has tripped many companies who were very successful when they were small, but are now struggling. Mid-sized manufacturers also need managers who know how to grow their business internationally. Easy growth in revenues and profits from an expanding domestic economy is gone – so mid-sized companies have to build their presence in the fast-growing emerging economies. As a result, they need to hire managerial talent that has done this before and knows how to navigate these new waters.
■Gain access to cash and working capital: Most mid-sized companies need access to sufficient working capital to fuel their growth. While financial discipline ensures they have sufficient cash-on-hand, it is often not enough to fund their growth. Challenges to improving working capital performance remain, partly as a result of mid-market firms deriving a large volume of business (57%) from bigger companies. This imbalance, according to an American Express study, affects their ability to negotiate better deals and payment terms, requiring them to tap into financing arrangements outside the company. As a result, mid-sized businesses need to continuously evaluate and build relationships with banks and capital markets to fund their cash and working capital needs.
■Deploy technology that provides insights into business performance: Mid-sized companies have limited resources. Therefore, they cannot afford to make many mistakes. They need visibility into what is working well, so it can be quickly capitalized. They also need visibility into what is not working well, so it can be rapidly addressed. For example, if their managers have analytics technology that provides clear visibility into planned vs. actual revenue, costs, and spend for new products introduced in the last 12 months, they could easily identify poor performers and quickly shift the spending away from them until their issues were addressed. Without the benefit of such information, it may take either longer to make such decisions, and they may continue betting on poor performers. Continued success also comes from getting everyone in the company on the same page, using the same set of assumptions, and seeing the same version of the truth. For example, if engineering, sales, finance, and marketing organizations use the same analysis on marketing pipeline trends, quarterly sales performance and profitability by various segments, they are more likely to share the same conclusions and be aligned on priorities to maximize growth and fix problem areas.
■Look bigger than they are: One of the greatest challenges for a mid-size company is to find a way to profitably scale their operations. They now need to look big in the eyes of their large customers – where the average lifetime contract value is highly prized and will provide fuel for their rapid growth. But in order to successfully acquire such customers, they must appear seasoned in all aspects of their customer interactions – from marketing campaigns, to sales force’s interactions with customers, to after-sales support and service. Examples include:
◦Being able to segment the prospect base and deliver highly customized marketing campaigns to them at a caliber one expects from large companies.
◦Enabling sales people to have ready access via their mobile phones to information such as pricing or configuration or shipment dates, providing for rich customer interactions.
◦Providing specialized support to VIP customers by routing calls quickly to the best support people and rapidly escalating unresolved issues.
CRM technology implements such capabilities, so the organization will appear seasoned and operationally sound to the bigger prospects.
■Improve operational capabilities and deploy changes rapidly: In order to scale successfully, mid-sized manufacturers also need to develop operational sophistication to predictably deliver the right product to the right customer at the right time in the right quantity at the right cost. It requires extremely tight integration between the front-office (sales, marketing, and service) and back-office operations (engineering, planning, procurement, manufacturing, distribution and finance) to coordinate all aspects of the supply chain to meet customer commitments. It requires eliminating any information silos within the organization and across the supply chain, so nothing can fall through the cracks. But that is not enough. Agility, one of the sources of competitive advantage of mid-sized companies, cannot be sacrificed in favor of well-defined and integrated processes. Mid-sized organizations need to ensure their technology is flexible, so they can quickly deploy process changes to support rapid deployment of new initiatives or rapidly respond to shifting market dynamics.
Mid-sized companies are the growth engine of US economy. A mid-sized company that develops these five capabilities can continue to successfully compete in the market against companies of all sizes and grow its business.
--------------------------------------------------------------------------------
By: Mindy Fiorentino, SAP Mindy Fiorentino is Vice President of Portfolio Marketing in the Global Ecosystem Channels Solution Marketing Group at SAP
Mid-size companies, with revenues between $10 million and $1 billion, are expected to outpace larger companies in growth over the next 12 months, according to recent research by the Ohio State University Fisher College of Business and GE Capital.
These companies account for a third of the nation’s GDP, more than 41 million jobs, and are considered a leading indicator of America’s future competitiveness. Mid-sized companies added 2.2 million jobs between 2007 and 2010 (a period of economic crisis), while big businesses shed 3.7 million jobs during the same period. Although mid-market companies may not dominate the headlines, they are the engine of the American economy. This article identifies the advantages that mid-sized manufacturers have (which drive their growth) and the key investments they need to make in continuing to maintain this growth.
Mid-sized manufacturing companies have three very big advantages over larger companies. They are:
■Focus: Unlike large companies, a mid-sized manufacturing company offers a narrow range of products and services, allowing them to maintain a sharp focus. As a result, their business and market strategies are more crisp, resulting in a better potential to out-execute the large manufacturers.
■Speed: The ability to move faster than larger companies to take advantage of a new market opportunity is one of the biggest advantages of mid-sized manufacturing companies. The likely presence of an entrepreneurial founder (or a family member) running the day-to-day operations, coupled with smaller size, allows mid-sized companies to move quickly when they identify a new opportunity in an existing or related market segment.
■Closeness to customers: Customer relationships and satisfaction are important for any business’s success, but mid-sized manufacturers (especially those that are family owned) take it to the next level by connecting with the customers they deal with, emphasizing the community and accentuating the personal touch. Their sharper focus and smaller size enable them to stay closer to their customers.
As we discussed above, the primary source of a mid-sized manufacturer’s competitive advantage is its ability to stay close to its customers, be nimble and offer superior service, while still making respectable margins. But as such companies grow, they begin to get squeezed from both sides – they can no longer be as flexible and personalized as their smaller competitors, but at the same time, they do not have the operational sophistication to compete with the big boys. This affects their ability to grow at the pace they want. How can they counter it?
A mid-sized manufacturer needs to do the following five things right, so it can continue to successfully compete and maintain its growth rate:
■Hire the right managerial skill set: As an organization grows, it needs managerial talent who know how to scale the company to the next inflection point. Lack of such skills within the company has tripped many companies who were very successful when they were small, but are now struggling. Mid-sized manufacturers also need managers who know how to grow their business internationally. Easy growth in revenues and profits from an expanding domestic economy is gone – so mid-sized companies have to build their presence in the fast-growing emerging economies. As a result, they need to hire managerial talent that has done this before and knows how to navigate these new waters.
■Gain access to cash and working capital: Most mid-sized companies need access to sufficient working capital to fuel their growth. While financial discipline ensures they have sufficient cash-on-hand, it is often not enough to fund their growth. Challenges to improving working capital performance remain, partly as a result of mid-market firms deriving a large volume of business (57%) from bigger companies. This imbalance, according to an American Express study, affects their ability to negotiate better deals and payment terms, requiring them to tap into financing arrangements outside the company. As a result, mid-sized businesses need to continuously evaluate and build relationships with banks and capital markets to fund their cash and working capital needs.
■Deploy technology that provides insights into business performance: Mid-sized companies have limited resources. Therefore, they cannot afford to make many mistakes. They need visibility into what is working well, so it can be quickly capitalized. They also need visibility into what is not working well, so it can be rapidly addressed. For example, if their managers have analytics technology that provides clear visibility into planned vs. actual revenue, costs, and spend for new products introduced in the last 12 months, they could easily identify poor performers and quickly shift the spending away from them until their issues were addressed. Without the benefit of such information, it may take either longer to make such decisions, and they may continue betting on poor performers. Continued success also comes from getting everyone in the company on the same page, using the same set of assumptions, and seeing the same version of the truth. For example, if engineering, sales, finance, and marketing organizations use the same analysis on marketing pipeline trends, quarterly sales performance and profitability by various segments, they are more likely to share the same conclusions and be aligned on priorities to maximize growth and fix problem areas.
■Look bigger than they are: One of the greatest challenges for a mid-size company is to find a way to profitably scale their operations. They now need to look big in the eyes of their large customers – where the average lifetime contract value is highly prized and will provide fuel for their rapid growth. But in order to successfully acquire such customers, they must appear seasoned in all aspects of their customer interactions – from marketing campaigns, to sales force’s interactions with customers, to after-sales support and service. Examples include:
◦Being able to segment the prospect base and deliver highly customized marketing campaigns to them at a caliber one expects from large companies.
◦Enabling sales people to have ready access via their mobile phones to information such as pricing or configuration or shipment dates, providing for rich customer interactions.
◦Providing specialized support to VIP customers by routing calls quickly to the best support people and rapidly escalating unresolved issues.
CRM technology implements such capabilities, so the organization will appear seasoned and operationally sound to the bigger prospects.
■Improve operational capabilities and deploy changes rapidly: In order to scale successfully, mid-sized manufacturers also need to develop operational sophistication to predictably deliver the right product to the right customer at the right time in the right quantity at the right cost. It requires extremely tight integration between the front-office (sales, marketing, and service) and back-office operations (engineering, planning, procurement, manufacturing, distribution and finance) to coordinate all aspects of the supply chain to meet customer commitments. It requires eliminating any information silos within the organization and across the supply chain, so nothing can fall through the cracks. But that is not enough. Agility, one of the sources of competitive advantage of mid-sized companies, cannot be sacrificed in favor of well-defined and integrated processes. Mid-sized organizations need to ensure their technology is flexible, so they can quickly deploy process changes to support rapid deployment of new initiatives or rapidly respond to shifting market dynamics.
Mid-sized companies are the growth engine of US economy. A mid-sized company that develops these five capabilities can continue to successfully compete in the market against companies of all sizes and grow its business.
--------------------------------------------------------------------------------
By: Mindy Fiorentino, SAP Mindy Fiorentino is Vice President of Portfolio Marketing in the Global Ecosystem Channels Solution Marketing Group at SAP
Wednesday, June 20, 2012
Friday, June 15, 2012
US Manufacaturing Renaissance: Which Industries?
Though margin has driven outsourcing to China for decades, the advantage is eroding according to the Boston Consulting Group. “Seven ‘tipping point’ sectors are poised to return to the U.S. for manufacturing: transportation goods, computers and electronics, fabricated metal products, machinery, plastics and rubber, appliances and electrical equipment, and furniture. Combined with increased U.S. exports, these groups could boost annual output in the economy by $100 billion, [and] create 2 to 3 million jobs…“(The U.S. Manufacturing Renaissance: Which Industries?).
Hopeful Sign: Small Manufacturers Buy Big Machines
NEW YORK (AP) — Small businesses that make machines and components for other manufacturers are experiencing an upswing that could be a sign of things to come for the broader economy.
The industries fueling the demand vary. In some cases, business is coming from medical device makers, which are expected to see increasing growth as baby boomers age and need more medical care. An uptick in orders is coming from oil and gas producers supplying energy to growing economies in countries such as China and India. And then some are getting a pop in sales from aerospace manufacturers that are busy building fuel-efficient aircraft and engines and need special parts to get the job done.
As different as these manufacturers may be, they have two things in common: Their industries are expected to see continued growth and they're investing in expensive machinery that can cost millions of dollars.
This small manufacturer machinery boom may seem at odds with an economy that is suffering from slow job growth following the worst recession many can remember. But the increase in demand for gear that businesses use to make a variety of machines, parts, tools and devices is a sign that companies are more confident and are willing to spend. They're also getting loans from banks to buy the equipment — evidence that lenders are feeling more secure.
Last year, industrial and materials manufacturers had a 37 percent increase in big equipment purchases, according to PayNet, a company that tracks lending to small businesses. That compares to an average of 17 percent for all the industries PayNet follows.
"We're positioning ourselves now to have the capacity to respond quickly," says Pat Pastoors, general manager of Dynamic Sealing Technologies, which last month spent $450,000 on new equipment after spending $800,000 last year. In 2011, Dynamic Sealing paid $3.2 million to expand its Andover, Minn., factory. The company makes manufacturing equipment for companies including food packagers and oil and gas producers. Pastoors says the company sees good potential growth in the industries it serves. The company's revenue rose 20 percent last year after doubling in 2010.
THE FIRST STEP
Skeptics should talk to the bankers who grant loans to companies that make gear and parts for othermanufacturers, like Anthony Cracchiolo, president of U.S. Bank's equipment finance unit. U.S Bank's lending through its Manufacturing Vendor Services division, part of the equipment finance unit, is up 15 percent this year from the same period of 2011. And last year's lending level was up 26 percent from 2010. Equipment sales had fallen 70 percent during the recession. More recently, the bank, which is based in Minneapolis and has branches in 25 states, has seen an increase in demand for big machines like lasers, molding equipment and plastic injection machines.
By the end of this year, U.S. Bank expects this type of lending to be at 90 percent of pre-recession levels. It expects the recovery among these manufacturers to reach other parts of the economy.
"This is the first step, the people that build the machines," Cracchiolo says.
Sales for privately held industrial machinery manufacturers, including companies of all sizes, are up nearly 23 percent in the last 12 months, according to Sageworks, a financial research firm.
Wells Fargo & Co. also is seeing an increase in lending to companies that manufacture products for other companies, says Hugh Long, head of business banking. The bank would not provide a breakdown of how much lending to companies that make machinery and components has gone up, but "that particular subset of themanufacturing business is quite active," Long says.
Morris Technologies spent $1 million on an electronic beam melting machine in January. The company, based in Cincinnati, uses a sophisticated technology called additive metal fabrication to create complex parts for planes, turbines, medical equipment and other machinery. It's a manufacturing method that uses computer models and molten metals to build components one layer at a time rather than carving them out of a block of metal.
CEO Greg Morris says the interest he's seeing in the technology from his customers justifies the purchase of an expensive machine even though the economy is looking a little more uncertain these days.
"I think the handwriting on the wall is that this technology is going to be huge," he says.
Generous tax breaks that small businesses got during the recession were also an incentive for thesemanufacturers to buy big equipment. Morris said the laws that allowed him to speed up depreciation of new equipment were a factor in his decision to buy. However, those breaks have been scaled back dramatically this year. For example, what was a $500,000 deduction last year is now down to $125,000. It's not certain that Congress will increase them before Dec. 31.
TAKING BUSINESS FROM CHINA
Many of these small manufacturers spend months on design and development to customize parts for their customers. The complexities involved have given U.S. manufacturers an edge. That's helped some smallcompanies in the U.S. take business away from manufacturers in China.
"For specialty manufacturing products, the end users are concluding it's better to have production close by, here in the U.S.," says William Phelan, the president of PayNet. "If there's a problem, they can get the parts shipped overnight, and transportation costs are less."
Wells Fargo also sees the trend in its lending to small manufacturers. "We're seeing this reverse offshoring — some call it onshoring," Long says.
Some of these companies are getting more business from the government. Peter Boucher, whose company, 3v Precision Machining, makes components for industries including aerospace and medical devices, is also making parts for the new F-35 fighter plane. He began buying machines during the recession and will buy one this year. He has spent $1.6 million on four machines since 2007.
Boucher says his business from aircraft makers has risen sharply because airlines that weren't buying planes during the recession now want to replace them. When Boeing. Co. released its first-quarter earnings in April, it said it had orders for more than 4,000 commercial planes.
"It's a good food chain to be involved in," says Boucher, whose company is located in Tacoma, Wash.
The heavy toll that the recession took on the manufacturing business has also encouraged many companies tobuy machinery. Manufacturers that went out of business left behind a glut of machines.
John Maurer has bought four machines in the last year and has been getting bargains — some cost just 40 percent of the price of a new one and were only a year old. He expects to buy two this year for his family's Springfield, Ohio-based company, Esterline & Sons Manufacturing, whose customers include aerospace and medical device companies and power plants
The industries fueling the demand vary. In some cases, business is coming from medical device makers, which are expected to see increasing growth as baby boomers age and need more medical care. An uptick in orders is coming from oil and gas producers supplying energy to growing economies in countries such as China and India. And then some are getting a pop in sales from aerospace manufacturers that are busy building fuel-efficient aircraft and engines and need special parts to get the job done.
As different as these manufacturers may be, they have two things in common: Their industries are expected to see continued growth and they're investing in expensive machinery that can cost millions of dollars.
This small manufacturer machinery boom may seem at odds with an economy that is suffering from slow job growth following the worst recession many can remember. But the increase in demand for gear that businesses use to make a variety of machines, parts, tools and devices is a sign that companies are more confident and are willing to spend. They're also getting loans from banks to buy the equipment — evidence that lenders are feeling more secure.
Last year, industrial and materials manufacturers had a 37 percent increase in big equipment purchases, according to PayNet, a company that tracks lending to small businesses. That compares to an average of 17 percent for all the industries PayNet follows.
"We're positioning ourselves now to have the capacity to respond quickly," says Pat Pastoors, general manager of Dynamic Sealing Technologies, which last month spent $450,000 on new equipment after spending $800,000 last year. In 2011, Dynamic Sealing paid $3.2 million to expand its Andover, Minn., factory. The company makes manufacturing equipment for companies including food packagers and oil and gas producers. Pastoors says the company sees good potential growth in the industries it serves. The company's revenue rose 20 percent last year after doubling in 2010.
THE FIRST STEP
Skeptics should talk to the bankers who grant loans to companies that make gear and parts for othermanufacturers, like Anthony Cracchiolo, president of U.S. Bank's equipment finance unit. U.S Bank's lending through its Manufacturing Vendor Services division, part of the equipment finance unit, is up 15 percent this year from the same period of 2011. And last year's lending level was up 26 percent from 2010. Equipment sales had fallen 70 percent during the recession. More recently, the bank, which is based in Minneapolis and has branches in 25 states, has seen an increase in demand for big machines like lasers, molding equipment and plastic injection machines.
By the end of this year, U.S. Bank expects this type of lending to be at 90 percent of pre-recession levels. It expects the recovery among these manufacturers to reach other parts of the economy.
"This is the first step, the people that build the machines," Cracchiolo says.
Sales for privately held industrial machinery manufacturers, including companies of all sizes, are up nearly 23 percent in the last 12 months, according to Sageworks, a financial research firm.
Wells Fargo & Co. also is seeing an increase in lending to companies that manufacture products for other companies, says Hugh Long, head of business banking. The bank would not provide a breakdown of how much lending to companies that make machinery and components has gone up, but "that particular subset of themanufacturing business is quite active," Long says.
Morris Technologies spent $1 million on an electronic beam melting machine in January. The company, based in Cincinnati, uses a sophisticated technology called additive metal fabrication to create complex parts for planes, turbines, medical equipment and other machinery. It's a manufacturing method that uses computer models and molten metals to build components one layer at a time rather than carving them out of a block of metal.
CEO Greg Morris says the interest he's seeing in the technology from his customers justifies the purchase of an expensive machine even though the economy is looking a little more uncertain these days.
"I think the handwriting on the wall is that this technology is going to be huge," he says.
Generous tax breaks that small businesses got during the recession were also an incentive for thesemanufacturers to buy big equipment. Morris said the laws that allowed him to speed up depreciation of new equipment were a factor in his decision to buy. However, those breaks have been scaled back dramatically this year. For example, what was a $500,000 deduction last year is now down to $125,000. It's not certain that Congress will increase them before Dec. 31.
TAKING BUSINESS FROM CHINA
Many of these small manufacturers spend months on design and development to customize parts for their customers. The complexities involved have given U.S. manufacturers an edge. That's helped some smallcompanies in the U.S. take business away from manufacturers in China.
"For specialty manufacturing products, the end users are concluding it's better to have production close by, here in the U.S.," says William Phelan, the president of PayNet. "If there's a problem, they can get the parts shipped overnight, and transportation costs are less."
Wells Fargo also sees the trend in its lending to small manufacturers. "We're seeing this reverse offshoring — some call it onshoring," Long says.
Some of these companies are getting more business from the government. Peter Boucher, whose company, 3v Precision Machining, makes components for industries including aerospace and medical devices, is also making parts for the new F-35 fighter plane. He began buying machines during the recession and will buy one this year. He has spent $1.6 million on four machines since 2007.
Boucher says his business from aircraft makers has risen sharply because airlines that weren't buying planes during the recession now want to replace them. When Boeing. Co. released its first-quarter earnings in April, it said it had orders for more than 4,000 commercial planes.
"It's a good food chain to be involved in," says Boucher, whose company is located in Tacoma, Wash.
The heavy toll that the recession took on the manufacturing business has also encouraged many companies tobuy machinery. Manufacturers that went out of business left behind a glut of machines.
John Maurer has bought four machines in the last year and has been getting bargains — some cost just 40 percent of the price of a new one and were only a year old. He expects to buy two this year for his family's Springfield, Ohio-based company, Esterline & Sons Manufacturing, whose customers include aerospace and medical device companies and power plants
Thu, 06/14/2012 - 9:11am
Thursday, June 14, 2012
Analysis: After decades of outsourcing, manufacturing jobs coming home to US
Beginning in the 1970s America’s high-paying manufacturing jobs in the steel, textile, electronics and automotive industries relocated first south to Latin America and then east to Asia.
In what some dubbed “a global race to the bottom,” labor rights have dwindled all along the way and the American middle class, long sustained by those manufacturing jobs, finds itself gutted. Now the fate of what is left of the American middle class is at the center of a presidential election and forcing a reexamination of the impact of the global decline of labor rights.
But after years of pain for America’s manufacturing sector and its workers, some economists and analysts are wondering if the tide may be turning. Call it “re-shoring” or “rebalancing” or just “revenge,” but the dynamics of global labor, transportation and productivity costs that eviscerated American manufacturing over the past decade have begun to shift again.
Over the past few years, some key American manufacturers have either brought jobs back to the US from Asia and Latin America, or have made important decisions not to relocate them in the first place.
For several years now, the anecdotal data has been tantalizing:
Caterpillar is building a $120 million plant to make giant earthmovers in Victoria, Texas, including some models that were previously built in Japan and shipped back to North American customers. The Japan plant is now free to devote more capacity to the booming Asian market.
Master Lock, in Milwaukee, landed a visit from President Barack Obama in February after its decision to bring 300 jobs back from China.
General Electric reversed a decision to build a new “green” refrigerator plant in Asia and decided instead to invest $93 million in refurbishing a plant in Bloomington, Indiana, saving 700 jobs. The company followed up in 2010 by investing $80 million in a water heater plant in Louisville, Kentucky, preventing another 400 jobs from heading east.
Not to be outdone, GE competitor Whirlpool decided to break ground on a new $200 million plant in Cleveland, Tennessee rather than send the 1,500 jobs overseas. The facility is part of a four-year, $1 billion American investment campaign.
Dow Chemical, the cash register company NCR, Sauder Woodworking and the machine tool firm GF AgieCharmilles have all brought overseas production back to the US market in the past three years.
More from GlobalPost: Team America needs a new game plan
Most economists — even those inclined to sympathize with the Obama administration’s economic policies — scoffed in 2010 when, in his State of the Union address, the president vowed to double US exports in five years — creating 2 million jobs in the process. It’s not that this wasn’t possible in the eyes of economists. It just wasn’t likely, they thought, that the global conditions and political climate in the United States would allow it.
The “zero effect” — the distorting phenomenon of measuring growth starting at an unnaturally low point — kept a damper on enthusiasm even as export figures soared in 2010-2011.
Many experts assumed that the favorable trends supporting that growth had little to do with long-term shifts. Instead, most felt the numbers reflected a coincidental confluence of events: sky-high oil prices that drove the costs of shipping upwards, a mega-recession that undermined American labor’s negotiating leverage, Federal Reserve “quantitative easing” that kept the dollar cheap and pumped up US exports, and freak events like the euro zone meltdown and the Japanese earthquake/tsunami that took major players off the economic chessboard.
But the data has started to cause reassessments. Monthly net exports have grown from $140 billion to $180 billion since the start of 2010. Indeed, energy exports (mostly refined gasoline, jet fuel and natural gas) have suddenly grown into the single most valuable product sent abroad by American manufacturers, the first time in 60 years the US has been a net exporter of any of these items.
A new revolution
So what’s behind this strange counterintuitive trend? For some economists, this represents the start of the “third industrial revolution,” the dawn of the new high-tech, value-added era of manufacturing that follows the first two global revolutions: England in the mid-1800s, and the one sparked by Henry Ford’s mass production innovations in the 1920s in Detroit.
“The factory of the past was based on cranking out zillions of identical products,” writes The Economist in a special report on the new trend published in April. “Now a product can be made on a computer and ‘printed’ on a 3D printer, which creates a solid object by building up successive layers of material. … the cost of producing much smaller batches of a wider variety, with each product tailored precisely to each customer’s whims, is falling.”
Manufacturers have discovered the value of bringing production closer to the point of sale, where their employees can engage more directly with customers and adapt quickly to changes in the market. And for all the changes in the global economy, the point of sale, by and large, will still tend to be in the world’s largest consumer economy.
For America, this could be the start of something good, according to the Boston Consulting Group. In 2011, BCG reported that, due to a number of changing economic realities — including rising salaries and economic expectations among Chinese workers, new labor, environmental and safety regulations abroad, the higher cost of energy required to ship products halfway around the world, and the US market and the uncertainties of political risk in these places — the cost benefits of producing in Asia no longer automatically outweigh the risks.
Indeed, the BCG report predicts a “renaissance for US manufacturing” citing the fact that labor costs in the United States and China are expected to converge around 2015.
“Executives who are planning a new factory in China to make exports for sale in the US should take a hard look at the total costs,” says BCG’s Harold L. Sirkin, an author of the report. “They’re increasingly likely to get a good wage deal and substantial incentives in the US so the cost advantage of China might not be large enough to bother and that’s before taking into account the added expense, time, and complexity of logistics.”
More from Global Post: Islamic banking on the rise amid the credit crunch
Skeptics continue to question whether this is sustainable. Not in the political realm, of course; it is anathema for any politician to suggest that America should content itself to life as a “post-industrial society,” in part because so few can explain how to employ 300 million people in such a place.
“Even if we didn’t have to compete with lower-wage workers overseas, we’d still have fewer factory jobs because the old assembly line has been replaced by numerically-controlled machine tools and robotics. Manufacturing is going high-tech,” writes Robert Reich, a University of California at Berkeley professor who served as Bill Clinton’s labor secretary. “Bringing back American manufacturing isn’t the real challenge, anyway. It’s creating good jobs for the majority of Americans who lack four-year college degrees.”
BCG, which launched a cottage industry with its 2011 report on manufacturing, believes this line of argument misses the changes underway in the global economy. On April 20 its economists released a survey of the largest American manufacturing firms. The results: one third of all US manufacturing executives of companies with sales above $1 billion per year now say they are planning or considering “reshoring”; in effect, bringing home manufacturing plants that were sent to China and other low labor cost countries during the 1990s and first decade of this century.
The top factors for bringing these jobs home cited by these executives surveyed by BCG: Higher labor costs in Asia (57 percent), ease of doing business (29 percent), and proximity to customers (28 percent).
For the American worker, this will be rare good news. But the jobs that are returning will look nothing like those that left. Rote assembly lines, low value-added manufacturing like textiles, furniture and heavy smelting operations like the steel industry may never again be profitable in the way they were after World War II, when the US economy was the last bastion of capitalism not destroyed by war.
But history shows that workers adapt to change when the incentives are present. Displaced hunters became farmers; displaced farmers became artisans; displaced artisans learned the skills of the factory; and displaced factory workers can learn the techniques of the 21st century.
Source: http://www.globalpost.com/dispatch/news/regions/americas/united-states/120504/american-manufacturing-jobs-returning-outsourcing-reshoring
In what some dubbed “a global race to the bottom,” labor rights have dwindled all along the way and the American middle class, long sustained by those manufacturing jobs, finds itself gutted. Now the fate of what is left of the American middle class is at the center of a presidential election and forcing a reexamination of the impact of the global decline of labor rights.
But after years of pain for America’s manufacturing sector and its workers, some economists and analysts are wondering if the tide may be turning. Call it “re-shoring” or “rebalancing” or just “revenge,” but the dynamics of global labor, transportation and productivity costs that eviscerated American manufacturing over the past decade have begun to shift again.
Over the past few years, some key American manufacturers have either brought jobs back to the US from Asia and Latin America, or have made important decisions not to relocate them in the first place.
For several years now, the anecdotal data has been tantalizing:
Caterpillar is building a $120 million plant to make giant earthmovers in Victoria, Texas, including some models that were previously built in Japan and shipped back to North American customers. The Japan plant is now free to devote more capacity to the booming Asian market.
Master Lock, in Milwaukee, landed a visit from President Barack Obama in February after its decision to bring 300 jobs back from China.
General Electric reversed a decision to build a new “green” refrigerator plant in Asia and decided instead to invest $93 million in refurbishing a plant in Bloomington, Indiana, saving 700 jobs. The company followed up in 2010 by investing $80 million in a water heater plant in Louisville, Kentucky, preventing another 400 jobs from heading east.
Not to be outdone, GE competitor Whirlpool decided to break ground on a new $200 million plant in Cleveland, Tennessee rather than send the 1,500 jobs overseas. The facility is part of a four-year, $1 billion American investment campaign.
Dow Chemical, the cash register company NCR, Sauder Woodworking and the machine tool firm GF AgieCharmilles have all brought overseas production back to the US market in the past three years.
More from GlobalPost: Team America needs a new game plan
Most economists — even those inclined to sympathize with the Obama administration’s economic policies — scoffed in 2010 when, in his State of the Union address, the president vowed to double US exports in five years — creating 2 million jobs in the process. It’s not that this wasn’t possible in the eyes of economists. It just wasn’t likely, they thought, that the global conditions and political climate in the United States would allow it.
The “zero effect” — the distorting phenomenon of measuring growth starting at an unnaturally low point — kept a damper on enthusiasm even as export figures soared in 2010-2011.
Many experts assumed that the favorable trends supporting that growth had little to do with long-term shifts. Instead, most felt the numbers reflected a coincidental confluence of events: sky-high oil prices that drove the costs of shipping upwards, a mega-recession that undermined American labor’s negotiating leverage, Federal Reserve “quantitative easing” that kept the dollar cheap and pumped up US exports, and freak events like the euro zone meltdown and the Japanese earthquake/tsunami that took major players off the economic chessboard.
But the data has started to cause reassessments. Monthly net exports have grown from $140 billion to $180 billion since the start of 2010. Indeed, energy exports (mostly refined gasoline, jet fuel and natural gas) have suddenly grown into the single most valuable product sent abroad by American manufacturers, the first time in 60 years the US has been a net exporter of any of these items.
A new revolution
So what’s behind this strange counterintuitive trend? For some economists, this represents the start of the “third industrial revolution,” the dawn of the new high-tech, value-added era of manufacturing that follows the first two global revolutions: England in the mid-1800s, and the one sparked by Henry Ford’s mass production innovations in the 1920s in Detroit.
“The factory of the past was based on cranking out zillions of identical products,” writes The Economist in a special report on the new trend published in April. “Now a product can be made on a computer and ‘printed’ on a 3D printer, which creates a solid object by building up successive layers of material. … the cost of producing much smaller batches of a wider variety, with each product tailored precisely to each customer’s whims, is falling.”
Manufacturers have discovered the value of bringing production closer to the point of sale, where their employees can engage more directly with customers and adapt quickly to changes in the market. And for all the changes in the global economy, the point of sale, by and large, will still tend to be in the world’s largest consumer economy.
For America, this could be the start of something good, according to the Boston Consulting Group. In 2011, BCG reported that, due to a number of changing economic realities — including rising salaries and economic expectations among Chinese workers, new labor, environmental and safety regulations abroad, the higher cost of energy required to ship products halfway around the world, and the US market and the uncertainties of political risk in these places — the cost benefits of producing in Asia no longer automatically outweigh the risks.
Indeed, the BCG report predicts a “renaissance for US manufacturing” citing the fact that labor costs in the United States and China are expected to converge around 2015.
“Executives who are planning a new factory in China to make exports for sale in the US should take a hard look at the total costs,” says BCG’s Harold L. Sirkin, an author of the report. “They’re increasingly likely to get a good wage deal and substantial incentives in the US so the cost advantage of China might not be large enough to bother and that’s before taking into account the added expense, time, and complexity of logistics.”
More from Global Post: Islamic banking on the rise amid the credit crunch
Skeptics continue to question whether this is sustainable. Not in the political realm, of course; it is anathema for any politician to suggest that America should content itself to life as a “post-industrial society,” in part because so few can explain how to employ 300 million people in such a place.
“Even if we didn’t have to compete with lower-wage workers overseas, we’d still have fewer factory jobs because the old assembly line has been replaced by numerically-controlled machine tools and robotics. Manufacturing is going high-tech,” writes Robert Reich, a University of California at Berkeley professor who served as Bill Clinton’s labor secretary. “Bringing back American manufacturing isn’t the real challenge, anyway. It’s creating good jobs for the majority of Americans who lack four-year college degrees.”
BCG, which launched a cottage industry with its 2011 report on manufacturing, believes this line of argument misses the changes underway in the global economy. On April 20 its economists released a survey of the largest American manufacturing firms. The results: one third of all US manufacturing executives of companies with sales above $1 billion per year now say they are planning or considering “reshoring”; in effect, bringing home manufacturing plants that were sent to China and other low labor cost countries during the 1990s and first decade of this century.
The top factors for bringing these jobs home cited by these executives surveyed by BCG: Higher labor costs in Asia (57 percent), ease of doing business (29 percent), and proximity to customers (28 percent).
For the American worker, this will be rare good news. But the jobs that are returning will look nothing like those that left. Rote assembly lines, low value-added manufacturing like textiles, furniture and heavy smelting operations like the steel industry may never again be profitable in the way they were after World War II, when the US economy was the last bastion of capitalism not destroyed by war.
But history shows that workers adapt to change when the incentives are present. Displaced hunters became farmers; displaced farmers became artisans; displaced artisans learned the skills of the factory; and displaced factory workers can learn the techniques of the 21st century.
Source: http://www.globalpost.com/dispatch/news/regions/americas/united-states/120504/american-manufacturing-jobs-returning-outsourcing-reshoring
Wednesday, June 13, 2012
USA: Feds give $54M to cut manufacturing energy use
USA: Feds give $54M to cut manufacturing energy use
Funding innovation and manufacturing to create jobs is a big theme in this election year, and you can expect a flurry of announcements from the Department of Energy to drive that point home. In fact, the DOE announced Tuesday that it’s giving away $54 million to 13 projects to develop technologies that will help manufacturers reduce energy use and lower production costs of components that will lead to cheaper clean power equipment.
The money is going to academic research institutions and quite a few large companies such as General Motors and Delphi Automotive. Some projects aren’t sexy. GM’s project, for example, “will develop an integrated super-vacuum die casting process using a new magnesium alloy to achieve a 50% energy savings compared to the multi-piece, multi-step, stamping and joining process currently used to manufacture car doors,” the DOE press release said.
The funding announcement underscores President Obama’s twin goals: reminding his clean energy supporters that he still cares and positioning himself as a job creator, which he hopes will help him attract voters on the right as well.
It’s a perennial cause for politicians to show they want and can boost domestic manufacturing of a variety of goods. But accomplishing that goal is difficult, and the bottomline is manufacturers will set up factories at places where they could produce more cheaply and easily ship their products to customers. Enticing them with incentives – such as grants, loans and tax breaks – certainly helps, and so will relaxing rules. Adding regulations that require, say, government agencies to buy only American-made goods also will prompt some manufacturers to set up shop domestically. But manufacturing is a largely a global business these days, and there are many countries that are happy to provide more lucrative incentive packages and relaxed environmental and other rules in exchange for manufacturing jobs and tax revenues.
Here is a look at some of the more interesting projects from the DOE announcement today:
1. PolyPlus: The battery maker is getting nearly $9 million to complete its work on encapsulating the lithium anode and enter mass production of three types of lithium-based batteries for electric vehicles: lithium-water, lithium-air and lithium-sulfur batteries. These batteries should be able to pack a lot more energy into a given space than conventional lithium-air batteries today, the company said. Polyplus previously received a DOE grant to develop one of the three, the lithium air battery, which has been a subject to academic debates over whether it would be suitable for electric cars. PolyPlus plans to work with Corning and Johnson Controls on the project.
More gigaom.com
Funding innovation and manufacturing to create jobs is a big theme in this election year, and you can expect a flurry of announcements from the Department of Energy to drive that point home. In fact, the DOE announced Tuesday that it’s giving away $54 million to 13 projects to develop technologies that will help manufacturers reduce energy use and lower production costs of components that will lead to cheaper clean power equipment.
The money is going to academic research institutions and quite a few large companies such as General Motors and Delphi Automotive. Some projects aren’t sexy. GM’s project, for example, “will develop an integrated super-vacuum die casting process using a new magnesium alloy to achieve a 50% energy savings compared to the multi-piece, multi-step, stamping and joining process currently used to manufacture car doors,” the DOE press release said.
The funding announcement underscores President Obama’s twin goals: reminding his clean energy supporters that he still cares and positioning himself as a job creator, which he hopes will help him attract voters on the right as well.
It’s a perennial cause for politicians to show they want and can boost domestic manufacturing of a variety of goods. But accomplishing that goal is difficult, and the bottomline is manufacturers will set up factories at places where they could produce more cheaply and easily ship their products to customers. Enticing them with incentives – such as grants, loans and tax breaks – certainly helps, and so will relaxing rules. Adding regulations that require, say, government agencies to buy only American-made goods also will prompt some manufacturers to set up shop domestically. But manufacturing is a largely a global business these days, and there are many countries that are happy to provide more lucrative incentive packages and relaxed environmental and other rules in exchange for manufacturing jobs and tax revenues.
Here is a look at some of the more interesting projects from the DOE announcement today:
1. PolyPlus: The battery maker is getting nearly $9 million to complete its work on encapsulating the lithium anode and enter mass production of three types of lithium-based batteries for electric vehicles: lithium-water, lithium-air and lithium-sulfur batteries. These batteries should be able to pack a lot more energy into a given space than conventional lithium-air batteries today, the company said. Polyplus previously received a DOE grant to develop one of the three, the lithium air battery, which has been a subject to academic debates over whether it would be suitable for electric cars. PolyPlus plans to work with Corning and Johnson Controls on the project.
More gigaom.com
Thursday, June 7, 2012
CRM Giants Snapping Up Social Technology Startups
By sschablow
It’s hard not to notice the recent flurry of the big CRM outfits acquiring social technology startups. It’s even more conspicuous when an acquisition price tag is in the hundreds of millions of dollars. For Salesforce.com and Oracle there appears to be a deliberate effort to one-up each other’s social management technology. Perhaps
Forrester research convinced them with a recent report calling this “the age of the customer.” Forrester claims “the only sustainable competitive advantage is knowledge of and engagement with customers.” I agree with the premise, although I have not read the full $499 report. Salesforce.com made a high profile move into social technology a year ago with the purchase of Radian6, a leading social media monitoring platform.
Last month Oracle acquired Vitrue, a leading cloud-based social marketing and engagement platform. The combination is expected to help organizations develop more meaningful customer engagements, improve ROI, provide enhanced customer service with real-time response and high touch relationships. Thomas Kurian, executive vice president, Oracle Development said, “Vitrue’s leading social marketing and engagement platform coupled with Oracle’s leading sales, service, and commerce products offers a complete social experience solution to our customers.”
A week after Oracle’s announcement, Salesforce.com countered with the acquisition of Buddy Media. The Buddy Media platform allows customers to publish content, place and optimize social advertising and measure the effectiveness of social media marketing programs. Their purpose is to help customers determine which content is driving the most engagement, test different strategies and understand which campaigns are delivering the greatest return on investment.
“By bringing together market leaders Radian6 and Buddy Media, we are doubling down on the Salesforce.com Marketing Cloud to provide CMOs with the ability to manage the entire social marketing lifecycle,” said Marcel LeBrun, SVP of Salesforce Radian6.
Not to be outdone, a day later Oracle announced it will acquire Collective Intellect, a social intelligence company. Collective Intellect’s is a cloud-based solution that claims to help organizations transform social conversations into actionable intelligence leading to better marketing campaigns, improved customer service, more targeted leads, and enhanced products and services with real-time customer feedback.
These M&As make sense on paper and if their combined potential can be realized, will provide the kind social customer relationship management services that we’ve only dreamed about. But the process of managing such disparate data is not going to be easy. Acquiring the technology is only the first step. To get to real, useful Social CRM you need to be able to monitor conversations, capture and analyze the data, extract insights from the data, translate the insights into actions, and then have the means to publish a response or message. The process can’t be fully automated, but it at least needs to be integrated into a single SAAS to make the process manageable.
That’s a tall order and one I’ve been discussing for years now with (other) start-ups that are in various stages of alpha or beta testing. Whether they will stand alone or be gobbled up in the social technology feeding frenzy (or even make it out of beta testing) is anybody’s guess. For now Oracle and Salesforce.com are both closing in on the Social CRM holy grail. It promises to be quite an adventure.
It’s hard not to notice the recent flurry of the big CRM outfits acquiring social technology startups. It’s even more conspicuous when an acquisition price tag is in the hundreds of millions of dollars. For Salesforce.com and Oracle there appears to be a deliberate effort to one-up each other’s social management technology. Perhaps
Forrester research convinced them with a recent report calling this “the age of the customer.” Forrester claims “the only sustainable competitive advantage is knowledge of and engagement with customers.” I agree with the premise, although I have not read the full $499 report. Salesforce.com made a high profile move into social technology a year ago with the purchase of Radian6, a leading social media monitoring platform.
Last month Oracle acquired Vitrue, a leading cloud-based social marketing and engagement platform. The combination is expected to help organizations develop more meaningful customer engagements, improve ROI, provide enhanced customer service with real-time response and high touch relationships. Thomas Kurian, executive vice president, Oracle Development said, “Vitrue’s leading social marketing and engagement platform coupled with Oracle’s leading sales, service, and commerce products offers a complete social experience solution to our customers.”
A week after Oracle’s announcement, Salesforce.com countered with the acquisition of Buddy Media. The Buddy Media platform allows customers to publish content, place and optimize social advertising and measure the effectiveness of social media marketing programs. Their purpose is to help customers determine which content is driving the most engagement, test different strategies and understand which campaigns are delivering the greatest return on investment.
“By bringing together market leaders Radian6 and Buddy Media, we are doubling down on the Salesforce.com Marketing Cloud to provide CMOs with the ability to manage the entire social marketing lifecycle,” said Marcel LeBrun, SVP of Salesforce Radian6.
Not to be outdone, a day later Oracle announced it will acquire Collective Intellect, a social intelligence company. Collective Intellect’s is a cloud-based solution that claims to help organizations transform social conversations into actionable intelligence leading to better marketing campaigns, improved customer service, more targeted leads, and enhanced products and services with real-time customer feedback.
These M&As make sense on paper and if their combined potential can be realized, will provide the kind social customer relationship management services that we’ve only dreamed about. But the process of managing such disparate data is not going to be easy. Acquiring the technology is only the first step. To get to real, useful Social CRM you need to be able to monitor conversations, capture and analyze the data, extract insights from the data, translate the insights into actions, and then have the means to publish a response or message. The process can’t be fully automated, but it at least needs to be integrated into a single SAAS to make the process manageable.
That’s a tall order and one I’ve been discussing for years now with (other) start-ups that are in various stages of alpha or beta testing. Whether they will stand alone or be gobbled up in the social technology feeding frenzy (or even make it out of beta testing) is anybody’s guess. For now Oracle and Salesforce.com are both closing in on the Social CRM holy grail. It promises to be quite an adventure.
Wednesday, June 6, 2012
Monday, May 28, 2012
Monday, May 14, 2012
bcg.perspectives - Made in America, Again
For more than a decade, deciding where to build a manufacturing plant to supply the world was simple for many companies. With its seemingly limitless supply of low-cost labor and an enormous, rapidly developing domestic market, an artificially low currency, and significant government incentives to attract foreign investment, China was the clear choice.
bcg.perspectives - Made in America, Again
bcg.perspectives - Made in America, Again
Thursday, April 26, 2012
The return of 'Made in America'
The return of 'Made in America' For all our problems, the stage is set for a renaissance of US manufacturing. That's largely because our dollars are worth less and our pay is shrinking.Clearly, something's still wrong with the economy. By the metrics that matter to most people, the Great Recession has not ended. Employment, retail sales, industrial production, home prices, most of the stock market and real incomes are all below their 2007 peaks. Food stamp usage is at a record high and rising.
But something's going right, too. And I want to focus on that this week.
American competitiveness is back, albeit largely because of the pain we've endured. Our dollars are worth less, and real wages are lower. Corporations are responding, with new factories springing up and manufacturing jobs blooming like flowers welcoming the spring. Overall, the U.S. has added nearly 500,000 manufacturing jobs since the beginning of 2010 -- the first period of significant growth since the late 1990s.
Meanwhile, the costs of producing goods overseas, and getting them here, are rising. Workers in places like China are demanding more, and oil prices make shipping costlier.
Products still made in America
Experts say these trends are likely to continue.
Bank of America Merrill Lynch researcher John Inch wrote in a recent note to clients that the "U.S. economy is in the early stages of a long-term manufacturing renaissance." Analysts at the Boston Consulting Group add that rising wages and other forces have steadily eroded China's "once-overwhelming cost advantage as an export platform for North America."
Anthony Mirhaydari
Thanks to higher U.S. worker productivity, as well as supply chain, cheap energy (natural gas) and logistical advantages, the BCG team says that by around 2015 "it may start to be more economical to manufacture many goods in the U.S."
In short, we could be on the cusp of revival of "Made in America," with workers paid good wages for building things again. And for the millions in the army of the unemployed, it can't come soon enough.
Silver lining to storm clouds?
Don't get me wrong. Our problems still run deep, and I'm not saying happy days are here again; I'm merely pointing out one of the few silver linings to be found.
Playing the manufacturing comeback
We've long been too reliant on credit to supplement stagnant wages -- and that's left the West with an $8 trillion debt hole, according to Credit Suisse calculations. This fueled two bubbles and a financial crisis, and it resulted in the pitiful "recovery" we're in now.
And so far, if the economy is reviving, most workers aren't sharing in it. Real, inflation-adjusted wages have fallen in three of the past four months. This has never happened outside recession before. So it's very possible we're following Europe into the depths of a new downturn.
Last September, I argued that "the real recession never ended" and that, in reality, it started a decade or more ago as labor participation peaked in the late 1990s. We've been sliding lower ever since, trying to compensate for a lack of high-quality jobs and stagnant pay, with voodoo stimulus efforts out of Washington and an extreme, inflation-igniting easy-money policy from the Federal Reserve.
The core problem has been a hollowing-out of America's manufacturing base because of increased globalization, the manipulative trade policies of China and others, and rapid technological change.
Washington, of course, hasn't done anything about trade or jobs (except talk, of course). But the U.S. economy may find a way out of the hole anyway.
The depth of the problem
Before moving on, it's worth remembering that something similar has happened before.
In many respects, the current situation resembles the Gilded Age of the late 1800s and the Long Depression, a global downturn that lasted from the 1870s through the 1890s. Replace the robber barons with hedge-fund managers and multinational CEOs, and the agitation over the Free Silver Movement with the Tea Party and the debate over the Federal Reserve's stimulus efforts, and the similarities are striking.
The downturn was preceded by a period of global economic integration as steam power, the telegraph and railroads made the world smaller. Workers lost jobs to technology and foreign competition. The banking system was rocked by the panics of 1873, 1884 and 1893, driven by real-estate bubbles and stock speculation.
Our current role was played by the United Kingdom, an aging sovereign struggling to maintain its role as the world's superpower. The role of the upstart United States is now played by vigorous up-and-comers like China and India. Check out this excerpt from A.E. Musson's "The Great Depression in Britain, 1873-1896: A Reappraisal":
"Britain was losing her technological lead; she was failing to modernize her plant, to develop new processes, or to modify her industrial structure with the same rapidity as Germany and the United States -- owing to conservatism, the heavy cost of replacing old plant, and deficiencies in technical education."
In other words, the British got lazy, making them vulnerable. We have the same problem now, and I outlined in "Are American workers getting lazy?"
Source: http://money.msn.com/investing/the-return-of-made-in-america-mirhaydari.aspx?goback=%2Egde_56423_member_107279081
Tuesday, April 17, 2012
Wednesday, April 11, 2012
Enterprise Mobility: Changing the Business of Manufacturing
The Transformative Power of Enterprise Mobility: Now On-Demand
Executives, line-of-business managers, employees, and, yes, customers, too, are becoming increasingly empowered by mobile devices and applications. The ability to connect, access information, get feedback, and make decisions faster is altering the way manufacturers work. But what are the implications and opportunities with increased mobility? Will it change how manufacturers produce products, manage supply chains, relate to customers? What's required for effective management of a mobile enterprise and workforce? How do manufacturers maximize ROI from this game-changing trend?
Join Manufacturing Executive for an important and informative Webinar on Enterprise Mobility. The findings from a new, exclusive survey of manufacturers will be presented and discussed by a panel of experts.
Core topics will include:
Strategies manufacturers are adopting to take advantage of mobile concepts and technologies.
Policies and procedures they are implementing to manage mobile workers.
Technologies they are acquiring to empower their people with the tools necessary to maximize return from the mobile opportunity.
Mark your calendars now so you don't miss this Manufacturing Executive Webinar on Enterprise Mobility.
Executives, line-of-business managers, employees, and, yes, customers, too, are becoming increasingly empowered by mobile devices and applications. The ability to connect, access information, get feedback, and make decisions faster is altering the way manufacturers work. But what are the implications and opportunities with increased mobility? Will it change how manufacturers produce products, manage supply chains, relate to customers? What's required for effective management of a mobile enterprise and workforce? How do manufacturers maximize ROI from this game-changing trend?
Join Manufacturing Executive for an important and informative Webinar on Enterprise Mobility. The findings from a new, exclusive survey of manufacturers will be presented and discussed by a panel of experts.
Core topics will include:
Strategies manufacturers are adopting to take advantage of mobile concepts and technologies.
Policies and procedures they are implementing to manage mobile workers.
Technologies they are acquiring to empower their people with the tools necessary to maximize return from the mobile opportunity.
Mark your calendars now so you don't miss this Manufacturing Executive Webinar on Enterprise Mobility.
Monday, April 9, 2012
3 Reasons America is having a Major Manufacturing Renaissance
America is making stuff again.
The Wall Street Journal's Jack Hough wrote an article about the hot new idea economists are buzzing about: the American manufacturing boom.
Hough spoke to Bank of America Merrill Lynch economist Neil Dutta who identified three trends that lay the foundation to a coming American manufacturing renaissance.
First, the cost advantages of outsourcing factory work are narrowing. Emerging market wages, while still much lower than U.S. wages, are rising, and high oil prices have made shipping more expensive. That is expanding the range of goods U.S. factories can produce at competitive prices (think sophisticated machines, not toys).
Second, a weakening dollar makes U.S. goods more attractive to foreign buyers. The dollar has fallen by nearly one-third over the past decade against a basket of currencies including the euro, British pound and yen.
Third, energy production is booming in the U.S., and domestic natural-gas prices have recently plunged. That gives an edge to U.S. producers of fabricated steel, transportation equipment, machinery and chemicals, which use natural gas extensively, according to a recent report from Citigroup.
Meanwhile, economist Tyler Cowen is out with a similarly-themed essay on America's great export boom. He also cites three big bullish factors: Domestic energy, huge demand from growing emerging markets, and artificial intelligence that are helping to solve big manufacturing problems.
Bottom line: This is definitely a hot line of thinking across financial and academic circles.
Read more: http://www.businessinsider.com/bofa-economist-3-trends-american-manufacturing-renaissance-2012-4
The Wall Street Journal's Jack Hough wrote an article about the hot new idea economists are buzzing about: the American manufacturing boom.
Hough spoke to Bank of America Merrill Lynch economist Neil Dutta who identified three trends that lay the foundation to a coming American manufacturing renaissance.
First, the cost advantages of outsourcing factory work are narrowing. Emerging market wages, while still much lower than U.S. wages, are rising, and high oil prices have made shipping more expensive. That is expanding the range of goods U.S. factories can produce at competitive prices (think sophisticated machines, not toys).
Second, a weakening dollar makes U.S. goods more attractive to foreign buyers. The dollar has fallen by nearly one-third over the past decade against a basket of currencies including the euro, British pound and yen.
Third, energy production is booming in the U.S., and domestic natural-gas prices have recently plunged. That gives an edge to U.S. producers of fabricated steel, transportation equipment, machinery and chemicals, which use natural gas extensively, according to a recent report from Citigroup.
Meanwhile, economist Tyler Cowen is out with a similarly-themed essay on America's great export boom. He also cites three big bullish factors: Domestic energy, huge demand from growing emerging markets, and artificial intelligence that are helping to solve big manufacturing problems.
Bottom line: This is definitely a hot line of thinking across financial and academic circles.
Read more: http://www.businessinsider.com/bofa-economist-3-trends-american-manufacturing-renaissance-2012-4
Monday, April 2, 2012
Reshoring: Seven Industries to Reach Tipping Point in Five Years
In the next five years, seven major manufacturing industries will reach the tipping point where it becomes more economical for them to shift the production of products consumed in the US to the US from China, according to a report released last week by the Boston Consulting Group.
Those industries account for $200 billion in annual exports from China to the US, two-thirds of China's total annual exports to the US. The report, a follow-up to a BCG study last fall of rising costs in China, predicts that, as a result of reshoring, between 2 million and 3 million jobs will be created over the next decade, between 600,000 and 1 million of them direct manufactuirng jobs. The reshoring will add between $20 billion and $55 billion per year to the US economy, the report projects.
The report also predicts that US exports, particularly to Western Europe, will grow by $65 billion annually in five years, driven by improving productivity in the US as well as the depreciating dollar.
Driving the predicted reshoring, the BCG study states, are rising costs associated with production in China as well as increasing productivity in the US. Labor costs in China, which have been growing, are predicted to rise by 18% per year through 2015. At the same time, manufacturers producing in China face higher transportation costs and higher costs related to the slow rise in value of the Chinese currency.
The seven industries that will reach the reshoring tipping point in five years, according to the study, are:
--Transportation goods ($582 billion consumed in the US, $6 billion imported from China)
--Computers and electronics ($467 billion/$122 billion)
--Fabricated metals ($262 billion/$10 billion)
--Machinery ($251 billion/$16 billion)
--Plastics and rubber ($170 billion/$9 billion)
--Appliances and electrical equipment ($134 billion/$25 billion)
--Furniture ($75 billion/$13 billion)
The report cautions that manufacturers should take a holistic, global, long-term approach when evaluating what products to reshore and what to continue to make in China. Assessments should include worker productivity in different countries, labor as a share of total costs, the relative importance of logistics, and other hidden supply chain costs and risks associated with global production.
But, the report says, the time for that reassessment is now. "The message emerging from this analysis is that companies that have not done so already must start reassessing their global manufacturing footprint," the report says. "Those companies that continue to see China as the default option for manufacturing could find themselves at a competitive disadvantage."
Has your company begun to reassess its global sourcing and production profile, particularly production in China? Have you begun to reshore some production? Do you agree that this is likely to gain momentum over the next few years?
Source: http://www.manufacturing-executive.com/message/3155#3155
Those industries account for $200 billion in annual exports from China to the US, two-thirds of China's total annual exports to the US. The report, a follow-up to a BCG study last fall of rising costs in China, predicts that, as a result of reshoring, between 2 million and 3 million jobs will be created over the next decade, between 600,000 and 1 million of them direct manufactuirng jobs. The reshoring will add between $20 billion and $55 billion per year to the US economy, the report projects.
The report also predicts that US exports, particularly to Western Europe, will grow by $65 billion annually in five years, driven by improving productivity in the US as well as the depreciating dollar.
Driving the predicted reshoring, the BCG study states, are rising costs associated with production in China as well as increasing productivity in the US. Labor costs in China, which have been growing, are predicted to rise by 18% per year through 2015. At the same time, manufacturers producing in China face higher transportation costs and higher costs related to the slow rise in value of the Chinese currency.
The seven industries that will reach the reshoring tipping point in five years, according to the study, are:
--Transportation goods ($582 billion consumed in the US, $6 billion imported from China)
--Computers and electronics ($467 billion/$122 billion)
--Fabricated metals ($262 billion/$10 billion)
--Machinery ($251 billion/$16 billion)
--Plastics and rubber ($170 billion/$9 billion)
--Appliances and electrical equipment ($134 billion/$25 billion)
--Furniture ($75 billion/$13 billion)
The report cautions that manufacturers should take a holistic, global, long-term approach when evaluating what products to reshore and what to continue to make in China. Assessments should include worker productivity in different countries, labor as a share of total costs, the relative importance of logistics, and other hidden supply chain costs and risks associated with global production.
But, the report says, the time for that reassessment is now. "The message emerging from this analysis is that companies that have not done so already must start reassessing their global manufacturing footprint," the report says. "Those companies that continue to see China as the default option for manufacturing could find themselves at a competitive disadvantage."
Has your company begun to reassess its global sourcing and production profile, particularly production in China? Have you begun to reshore some production? Do you agree that this is likely to gain momentum over the next few years?
Source: http://www.manufacturing-executive.com/message/3155#3155
Prime Advantage, the leading buying consortium for midsized manufacturers, announced the findings of its fourth annual Group CFO Survey, revealing financial projections and top concerns of its Member companies’ CFOs in 2012.
CFOs continue to see solid signs of the economic recovery in U.S. manufacturing. While Member companies are planning more hiring, wage increases, and capital expenditures, the availability of skilled workers is a growing challenge.
Summary of Findings
Nearly 95% of CFOs plan to invest in manufacturing equipment and 63% in computer hardware this year 69% of executives are more optimistic about their companies’ financial prospects in 2012 (compared to 67% in 2011).
While more CFOs are optimistic about their own financial prospects, fewer respondents are more optimistic about the U.S. economy than in 2011, with 67% feeling better about 2012 than the prior year (compared to 74% in 2011) 59% of manufacturers expect moderate to high growth from their key customers in 2012.
Top priorities in 2012 include cutting operational costs, developing new products and services, and long-term strategic planning (which rose 13 points from 2011).
The Prime Advantage Group CFO Survey was conducted in January and February using an online survey platform. Prime Advantage surveyed a cross section of finance executives from its Member companies consisting of industrial manufacturing firms from various sectors with annual revenues ranging between $10 million and $10 billion, of which the majority ranges between $20 million and $500 million.
Methodology: In February 2012, Prime Advantage surveyed financial executives from its Member companies whom represent US-based manufacturers in more than 25 different industries, including commercial foodservice, packaging, truck and trailer, material handling, food processing and construction. These small and mid-market companies range in annual revenues between $10 million and $4 billion, of which the majority ranges between $20 million and $500 million. The survey received a 21% response rate from 200 surveyed.
Founded in 1997, Prime Advantage is a buying consortium for manufacturers with more than 750 Members and more than 125 Endorsed Suppliers. For more information on Prime Advantage, visit the website at www.primeadvantage.com.
To order a free copy of the full Group CFO Survey, click here.
Source: Equipment Finance Industry News
CFOs continue to see solid signs of the economic recovery in U.S. manufacturing. While Member companies are planning more hiring, wage increases, and capital expenditures, the availability of skilled workers is a growing challenge.
Summary of Findings
Nearly 95% of CFOs plan to invest in manufacturing equipment and 63% in computer hardware this year 69% of executives are more optimistic about their companies’ financial prospects in 2012 (compared to 67% in 2011).
While more CFOs are optimistic about their own financial prospects, fewer respondents are more optimistic about the U.S. economy than in 2011, with 67% feeling better about 2012 than the prior year (compared to 74% in 2011) 59% of manufacturers expect moderate to high growth from their key customers in 2012.
Top priorities in 2012 include cutting operational costs, developing new products and services, and long-term strategic planning (which rose 13 points from 2011).
The Prime Advantage Group CFO Survey was conducted in January and February using an online survey platform. Prime Advantage surveyed a cross section of finance executives from its Member companies consisting of industrial manufacturing firms from various sectors with annual revenues ranging between $10 million and $10 billion, of which the majority ranges between $20 million and $500 million.
Methodology: In February 2012, Prime Advantage surveyed financial executives from its Member companies whom represent US-based manufacturers in more than 25 different industries, including commercial foodservice, packaging, truck and trailer, material handling, food processing and construction. These small and mid-market companies range in annual revenues between $10 million and $4 billion, of which the majority ranges between $20 million and $500 million. The survey received a 21% response rate from 200 surveyed.
Founded in 1997, Prime Advantage is a buying consortium for manufacturers with more than 750 Members and more than 125 Endorsed Suppliers. For more information on Prime Advantage, visit the website at www.primeadvantage.com.
To order a free copy of the full Group CFO Survey, click here.
Source: Equipment Finance Industry News
Tuesday, March 27, 2012
AMT- The Association For Manufacturing Technology and AMTDA- The American Machine Tool Distributors’ Association Announce Merger
AMT- The Association For Manufacturing Technology and
AMTDA- The American Machine Tool Distributors’ Association Announce Merger
Orlando, Fla. ... AMT-The Association For Manufacturing Technology and AMTDA-The American Machine Tool Distributors’ Association today announce the merger of the two associations that will integrate their products and services to better serve the members of both associations. The announcement was made at The MFG Meeting (Manufacturing for Growth) being held in Orlando, Fla., which is a gathering of hundreds of manufacturing leaders.
The new AMT – The Association For Manufacturing Technology will be headquartered in McLean, Va. All current employees of AMTDA will be joining the new AMT immediately.
This merger marks the beginning of a more powerful voice for the industry and an unparalleled scope of benefits for AMT’s members. The numerous advantages of this new organization include:
•Strengthened and expanded products and services;
•Access to powerful business intelligence systems;
•Data and information from industry economists and analysts;
•A focus on the priorities and needs of the industry;
•Networking and collaboration through expanded membership; and
•Education and “smartforce” development.
AMTDA Chairman Steve M. Wherry said, “This merger is a logical evolution for the manufacturing technology industry. We are uniting the entire manufacturing technology supply chain from engineering and building machines, to integrating automation and support, to distribution services, which will well serve the users of manufacturing technology for their future.”
Eugene R. Haffely, Jr., Chairman of AMT added, “This move exponentially increases member benefits and services to both organizations. We are now a stronger, more complete organization, representing the entire value chain of the manufacturing technology industry. Most important, this will give our industry a more clarified and unified voice.”
Both Boards of Directors voted unanimously for the merger, and an unprecedented percentage of the combined membership participated in the vote to approve the move.
As a result of the merger between AMT and AMTDA, the organization took on an intensive process to design a new logo, and hence, a rebranding of the newly conjoined group. The logo was inspired by the Al Moore Award, which recognizes extraordinary service to the industry. The design is a mathematical Lissajous curve suggestive of a three-dimensional knot. This pyramid style shape is evocative of a solid base with stability and strength.
“It has always been our goal to find better ways to serve the manufacturing industry,” said Douglas K. Woods, President of AMT. “This process, upon which we embarked two years ago, is a natural partnership that will help both organizations as we seek to advance manufacturing in the United States.”
AMT- The Association For Manufacturing Technology and AMTDA- The American Machine Tool Distributors’ Association Announce Merger
AMTDA- The American Machine Tool Distributors’ Association Announce Merger
Orlando, Fla. ... AMT-The Association For Manufacturing Technology and AMTDA-The American Machine Tool Distributors’ Association today announce the merger of the two associations that will integrate their products and services to better serve the members of both associations. The announcement was made at The MFG Meeting (Manufacturing for Growth) being held in Orlando, Fla., which is a gathering of hundreds of manufacturing leaders.
The new AMT – The Association For Manufacturing Technology will be headquartered in McLean, Va. All current employees of AMTDA will be joining the new AMT immediately.
This merger marks the beginning of a more powerful voice for the industry and an unparalleled scope of benefits for AMT’s members. The numerous advantages of this new organization include:
•Strengthened and expanded products and services;
•Access to powerful business intelligence systems;
•Data and information from industry economists and analysts;
•A focus on the priorities and needs of the industry;
•Networking and collaboration through expanded membership; and
•Education and “smartforce” development.
AMTDA Chairman Steve M. Wherry said, “This merger is a logical evolution for the manufacturing technology industry. We are uniting the entire manufacturing technology supply chain from engineering and building machines, to integrating automation and support, to distribution services, which will well serve the users of manufacturing technology for their future.”
Eugene R. Haffely, Jr., Chairman of AMT added, “This move exponentially increases member benefits and services to both organizations. We are now a stronger, more complete organization, representing the entire value chain of the manufacturing technology industry. Most important, this will give our industry a more clarified and unified voice.”
Both Boards of Directors voted unanimously for the merger, and an unprecedented percentage of the combined membership participated in the vote to approve the move.
As a result of the merger between AMT and AMTDA, the organization took on an intensive process to design a new logo, and hence, a rebranding of the newly conjoined group. The logo was inspired by the Al Moore Award, which recognizes extraordinary service to the industry. The design is a mathematical Lissajous curve suggestive of a three-dimensional knot. This pyramid style shape is evocative of a solid base with stability and strength.
“It has always been our goal to find better ways to serve the manufacturing industry,” said Douglas K. Woods, President of AMT. “This process, upon which we embarked two years ago, is a natural partnership that will help both organizations as we seek to advance manufacturing in the United States.”
AMT- The Association For Manufacturing Technology and AMTDA- The American Machine Tool Distributors’ Association Announce Merger
Manufacturing Rebound To Outpace GDP Growth In US In 2012-MAPI
“Manufacturing production should outperform GDP growth…”
The U.S. manufacturing recovery continues on track and should outperform overall GDP growth through 2013, according to the Manufacturers Alliance for Productivity and Innovation (MAPI) U.S. Industrial Outlook (E0-103), a quarterly report that analyzes 27 major industries.
Manufacturing outlook is positive.
“There exists pent-up demand for consumer durable goods, particularly for motor vehicles, and firms are profitable and need to spend more for both traditional and high-tech business equipment,” said Daniel J. Meckstroth, Ph.D., MAPI Chief Economist and author of the analysis.
“In addition, strong—though decelerating—growth in emerging economies is still driving U.S. exports.”
Despite the fact that the global economy remains volatile, Meckstroth said the risk of recession for the U.S. has receded in the last three months.
Takeaway for precision machining shops:
Manufacturing industrial production increased 4.5 percent in 2011. MAPI forecasts that it will increase 4 percent in 2012 and 3.5 percent in 2013. The 2012 forecast is up 1 percent and the 2013 forecast is down 0.5 percent from the December 2011 report.
Manufacturing production should outperform GDP growth, which MAPI estimates will be 2.2 percent in 2012 and 2.4 percent in 2013.
MAPI full report
Subscribe to:
Posts (Atom)