NC State of Business

In my recent blog posts, I have outlined several reasons why manufacturing matters. My goal has been to highlight the tremendous importance of manufacturing while plenty of attention seems to be focused on its “decline”. Let me share another reason why manufacturing matters.

The global economy has changed the nature of competition. United States manufacturers can no longer focus solely on being a low-cost producer, rather need to focus on high-value products. Creativity and innovation unlock new customer benefits resulting in higher-value products. Consequently, innovation and creativity have been the center of economic development attention for some time. I recommend an excellent new blog on the topic: Change Papers: A shared effort to change North Carolina's climate for innovation

So, exactly how does creativity and innovation convert into economic value? Let me start with some definitions:

Creativity – the ability to transcend traditional ideas, rules, patterns, relationships, or the like, and to create meaningful new ideas, forms, methods, interpretations.

Innovation – introduction of new things or methods.

Manufacturing – the making or producing of anything especially on a large scale.

Given these definitions, creativity can be viewed as the input into innovations. Transcending traditional thinking and creating new approaches are building blocks to introducing new things to market. While creativity produces new ideas and approaches, innovation applies these ideas in some context. Once applied, if they are product innovations, they need to be produced and reproduced economically. Consequently, manufacturing converts product innovations into economic value. Therefore manufacturing is the key to unlocking the economic prosperity of creativity and innovation.

Creativity, innovation, and manufacturing matter! What are other ways that manufacturing matters? Let me hear your ideas.

I recently learned some staggering statistics.

• In 2007, 400 workers in the US manufacturing industry lost their lives on the job. The leading causes of these fatalities were contact with objects and equipment, transportation incidents, and falls.

• During the same year, 783,100 non-fatal occupational injuries and illnesses occurred, with more than half requiring days away from work, job transfer, or job restriction. The leading causes of these incidents were contact with objects and equipment, overexertion and repetitive motion, and falls.

So how do we reduce these hazards in the manufacturing industry? Two federal agencies were created in 1970 by the Occupational Safety and Health Act with the mission of protecting our workers. The Occupational Safety and Health Administration (OSHA) was created to set and enforce workplace standards and regulations. The National institute for Occupational Safety and Health (NIOSH) was established to help assure safe workplace conditions through research, information, education and training.

NIOSH has established the National Occupational Research Agenda (NORA) for specific sectors of industry, including the manufacturing sector, to move research results into practice to reduce work-related injury, illness and death. The Manufacturing Sector Council has established 10 preliminary strategic research goals based on the noted staggering statistics. Of these 10 goals,

• Goal 1: Reduce number of injuries and fatalities due to contact with objects and equipment
• Goal 2: Reduce number of injuries and fatalities resulting from falls

How can we get the wonderful research that NIOSH has conducted into the workplace to truly make a difference in the lives of American workers? I’m interested in hearing your thoughts.

In my last blog post, I highlighted the strength of manufacturing output and exports. These statistics may appear contradictory to the prominent attention given to manufacturing job loss. Yet, did you know that the decline in manufacturing employment has been taking place since an employment peak in 1979?

Let me suggest the contradiction in strong manufacturing output and job loss is related to several factors. Indeed, these factors help explain the paradox between the strength of manufacturing output in the face of manufacturing employment decline. It is important to understand these factors and recognize the important role we have to keep manufacturing strong. I will focus on two factors.

First, competitiveness in any industry relies partially on being productive. Simply stated, this means producing more outputs with less inputs. Therefore manufacturing outputs can remain strong while fewer inputs, such as labor, are needed. As technology has been integrated into manufacturing processes less labor, particularly low skill/ low wage jobs, are needed. While manufacturing output remains the greatest contributor to North Carolina’s Gross State Product, the number of people needed to produce these outputs has declined. This is good for us as consumers as we watch product costs decline and as citizens while we witness an increase in high skill/high wage jobs. Furthermore, increased outputs can be exported bringing new money into the local economy.

Second, the outsourcing trend has gained tremendous momentum in recent decades. Manufacturers have focused on outsourcing “non-core” processes in order to devote resources to enhancing productivity and performance of their core processes. In other words, logistics and transportation, attorneys, and many other professions that were once on a manufacturer’s payroll are no longer. Consequently, positions that used to be counted in manufacturing employment numbers are now counted in other occupational categories even though their primary customers may be manufacturers.

These two factors, productivity and outsourcing, should offer you optimism that we can affect more than we may realize with respect to the success of North Carolina’s manufacturing. This optimism should be a call for action to support this vital economic sector. Here are a few of my ideas for supporting manufacturing success in our state:

1) Advocate and educate about manufacturing’s role as a vital economic engine.

2) Market manufacturing as a viable career choice. Over twenty manufacturing occupations are expected to have “average” to “much faster than average” growth nationally. Yet, this message does not appear to be getting out.

3) Align education and skills development with the growing high technology jobs needed for manufacturing productivity.

4) Support manufacturers in their development of innovation. For innovation, I mean both new approaches and products for customers as well as continuous improvement of processes within the organization.

These are just a few ideas….....what are yours?

So often in the past, I have seen companies devote huge amounts of cash, personnel, materials, and other valuable resources on initiatives and strategies without putting forth the upfront work to make sure that all of the effort will yield a bountiful harvest. While I am sure the reasons vary and all appear to be justified, I have always been amazed that so much hinged on so little actual sustenance. I am starting to see a change in this type thinking.

My clients have been much more focused on: what type results they should expect, how they will get the results, what commitment level will be required, and so on. I have always gotten these type questions; but, now I see significantly more focus on the details. This may be one of the few pluses of the current slow economy. Maybe now, leadership is more cost conscience? Maybe it is lack of funds? Whatever it is, folks are asking the right questions.

On your core initiatives, make sure you are asking the right questions. Here are a few that I think need answers:

(1). How and to what extent will this help you? Dig down into the weeds here. Do not just accept that you will benefit. Will this benefit your customers? Your company finances? Your associates?

(2). How much will you have to commit? Time, money, materials, organizational involvement, supplier involvement, customer involvement, etc…

(3). Do you have the expertise to execute the initiative? Can you draw help from other sources in your company? Do you need outside assistance?

(4). Do you have time to make this happen? Most changes do not happen in short periods of time. Avoid running out of gas before you get a successful implementation by making sure you are robust in PDCA.

(5). Will your culture support the initiative in both the short and long term? If not, this will have to be addressed or failure is certainly a likely outcome.

I believe you have to have these and other core questions answered in detail as part of your upfront work. If you do not know where to start or what questions to ask, please call us at IES. We know the questions to ask and can provide real examples and data to support your efforts.

Nine Eleven. 9/11. These two words, this date, will always remind me of the acts of heroes and the coming together of the American public. Today is the first officially-designated September 11 National Day of Service and Remembrance. It is marked by service projects in all 50 states as a way to honor the victims and heroes of 9/11 and to rekindle the spirit of unity and compassion that followed the attacks.

Today is a good day to remember that Tuesday eight years ago, and commit to service in your community. Many organizations pursuing sustainable strategies already recognize the triple bottom line approach of protecting people, the environment and the economy. Community involvement is a great way to engage your employees in socially responsible activities.

Where do you start? Conduct a search for volunteer opportunities in your city, remember and act!