SME Toronto WWW.SMETORONTO.CA Nigel Southway SME Chair 2012/2013 - - PDF document

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SME Toronto WWW.SMETORONTO.CA Nigel Southway SME Chair 2012/2013 - - PDF document

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5/23/2013 SME Toronto WWW.SMETORONTO.CA Nigel Southway SME Chair 2012/2013 MEET KNOW GROW About SME: www.sme.org. The Society of Manufacturing Engineers Premier source for manufacturing knowledge, education and networking. Connecting

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SME Toronto

WWW.SMETORONTO.CA

Nigel Southway

SME Chair 2012/2013

About SME:

The Society of Manufacturing Engineers Premier source for manufacturing knowledge, education and networking.

Connecting manufacturing practitioners together. Provide Tradeshow , Expo and network events. Reviews latest manufacturing technologies/processes/techniques/practices. SME world-wide supported network of Chapters and technical communities. Many programs, events, magazines, publications, huge technical database and online training …. SME leader in manufacturing workforce Education/training/skill development. SME is a LEAN Business Certification Authority.

www.sme.org. MEET KNOW GROW

WWW.SMETORONTO.CA

$125 per Year

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Automated Manufacturing & Assembly Identifies and pursues advancing technologies and techniques in automation and assembly. Forming & Fabricating Concentrates on key metal forming and fabricating technologies. Industrial Laser Promotes laser technology in North America with high intensity by educating the market and advancing the laser technology base. Machining & Material Removal Discusses, explores and advances ideas related to cutting processes and machining systems.

SME Technical Community Networks (8)

Manufacturing Education & Research Advances education and research in manufacturing, career and professional development, and the manufacturing enterprise's need for a skilled workforce. Plastics, Composites & Coatings Addresses the manufacturing processes of plastics, composites, and finishing and coatings technology. Product & Process Design and Management Discusses, investigates and advances ideas related to the design and management of products and processes, as well as lean manufacturing concepts and certification. Rapid Technologies & Additive Manufacturing Concentrates on the technologies and processes that help conceive, develop, test, improve and manufacture new products to bring them to market faster and more cost effectively.

TBM

Take Back Manufacturing

A Forum Dedicated to Restoring

  • ur Manufacturing Sectors.

A HUGE CHALLENGE!!!

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5

Tak ake e Bac Back k Manuf Manufactur acturing ing

… to North America We will explain the TBM initiative and how we must all work together to revitalize our North American Manufacturing sectors and return them to the economic powerhouse they once were. The latest expert economic outlook is that localized manufacturing close to our consumer base can be much more competitive than the existing globalized manufacturing approach and is now resulting in decisions to Reshore products and to manufacture the next generation
  • f products for the North American market in more localized manufacturing facilities with
an integrated supply base. We will explain the local Canadian imperatives and opportunities to be gained from this new, strong local manufacturing sector approach and how this provides an incubator for innovation and leads to a balanced economy by integrating our strong knowledge, service and existing manufacturing bases for maximum competitiveness and prosperity. But as industrialists, engineers and investors we must be ready for this resurgence of manufacturing in North America and provision the required knowledge, skills, capacity, technology, infrastructure and we will explain the strong implementation Roadmap we will need to ensure success. Nigel Southway SME Chair Toronto 2012/2013

TBM

Take Back Manufacturing

www.SME-TBM.org

A Forum Dedicated to Restoring

  • ur Manufacturing Sectors.
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Manufacturing and Engineering has been a good career for a lot of us!!

It’s been good to me!

1966….. 4 Important things happened….

England wins Soccer World Cup The Beatles release Revolver LP Star Trek premiers on TV I start my Engineering Apprenticeship at 16

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THE BEATLES

MODS Miniskirts

THE WHO

BRITISH 60’s

The MODs British Rock Music MINI 10

This?….

OR

This?….

Career choice…

WHICH INSTRUMENT??

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British Engineering Apprenticeship

Education Training

?

NIGEL SOUTHWAY

  • 40 years Broad Business and Manufacturing Experience
  • British Engineering Apprentice…Aerospace/Electronics (1966)
  • BSc EEE C-Eng. in Engineering/MSc Management….
  • Manufacturing Engineer (1972)

British Engineering Apprenticeship

Education Training

British Aerospace

Electronics / Space-Systems group Bristol Division England Student Engineering Apprenticeship Indentured and Integrated with industry Embedded Education within Industrial Training program
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CONCORDE SST

002 April 1969

Proto-test platform Mach 2 (1350 mph) 120 Passengers

INTELSAT/COMSTAR/ANIK Communication Satellite

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NIGEL SOUTHWAY

  • 40 years Broad Business and Manufacturing Experience
  • British Engineering Apprentice…Aerospace/Electronics (1966)
  • BSc EEE C-Eng. in Engineering/MSc Management….
  • Manufacturing Engineer (1972)
  • MOTOROLA Director Manufacturing Eng / Lean and Six Sigma Implementation (1980,s)
  • Engineer / Manager / Director
  • Change Agent/Educator/Coach/Advisor/Auditor for LEAN business improvement
Owner of NEXUS CONSULTING SERVICE

HI Tech Boom….ABM Secure Networks

Modems/Multiplexors

NIGEL SOUTHWAY

  • 40 years Broad Business and Manufacturing Experience
  • British Engineering Apprentice…Aerospace/Electronics (1966)
  • BSc EEE C-Eng. in Engineering/MSc Management….
  • Manufacturing Engineer (1972)
  • MOTOROLA Director Manufacturing Eng / Lean and Six Sigma Implementation (1980,s)
  • Engineer / Manager / Director / VP Operations
  • Change Agent/Educator/Coach/Advisor for LEAN business improvement
  • AUTHOR : CYCLE TIME MANAGEMENT… Fast Track to Productivity Improvement
  • Consulted many organizations in different industry sectors.
www.nigelsouthway

NEXUS

Owner of NEXUS CONSULTING SERVICE (1992)

Manufacturing has been good to me!

Automotive, Aerospace, Avionics, High-tech and consumer Electronics, Pharmaceuticals, Food, Beverage. Consumer Products and Appliances, Steel, Fabrication, Mining, Resource extraction equipment, Construction, Off-road equipment, Service and Financial Industries. LEAN THINKING
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NIGEL SOUTHWAY

  • 40 years Broad Business and Manufacturing Experience
  • British Engineering Apprentice…Aerospace/Electronics (1966)
  • BSc EEE C-Eng. in Engineering/MSc Management…. (Bristol)
  • Manufacturing Engineer (1972)
  • MOTOROLA Director Manufacturing Eng / Lean and Six Sigma Implementation 1980,s
  • Engineer / Manager / Director / VP Operations / General Manager
  • Change Agent/Educator/Coach/Advisor for LEAN business improvement
  • AUTHOR : CYCLE TIME MANAGEMENT… Fast Track to Productivity Improvement
  • Consulted many organizations in different industry sectors in many countries.
  • Have assisted many Global Sourcing programs and Joint Ventures (2004 Onward)
  • Society of Manufacturing Engineers …2012 Chair Toronto Chapter
  • Globalized Manufacturing will remain a significant challenge!!
  • Strong Coach to Vision and Plan a Balanced Source Evolution !
www.nigelsouthway

NEXUS

Owner of NEXUS CONSULTING SERVICE (1992) (Member since 1983)

GLOBALIZED MANUFACTURING

2004 Onward
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CHINA MANUFACTURING CANADA MANUFACTURING

20
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21

The future of manufacturing in Ontario’s economy.

Nigel Southway SME Chair 2012 PEO

?

TBM

A NORTH AMERICAN PROBLEM

TBM

Take Back Manufacturing

www.SME-TBM.org A Forum Dedicated to Restoring

  • ur Manufacturing Sectors.
25 Technical Associations 3 Trade associations 5 Educational policy makers 7 Media experts 3 Local government reps 5 Industry experts
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23 M 24 M
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TBM…Our Ultimate Goal

25

Work together ….

Government, Education organizations Industry leaders ROADMAP……..Recover our future industrial capability …… and therefore our future prosperity.

SORRY!

26

We apologize in advance for any offence taken by our strong position on certain subjects, however we believe the clear transmission of the facts and the importance

  • f the TBM goal must transcend any possible

sensitivity. We ask for an open mind as we deliver this important message and perspective. The TBM Forum

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CMTS Toronto Canada October 2011 FABTEC Toronto Canada March 2012 MMTS Montreal Canada May 2012 SME Annual Conference Cleveland USA June 2012 Many other Society and Association events in 2012

Presentations.... TAKE BACK MANUFACTURING M

Raising the Awareness

http://www.canadianmanufacturing.com/fabrication/production/taking-back-manufacturing-51066
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http://sme-tbm.org/app/download/5809147904/PEO+TBM+article.pdf

Professional Engineers Ontario

30
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CIM: What factors are driving manufacturers' decisions to bring production back to Canada? Southway: It's a North American-wide realization that
  • ff shoring is getting more expensive with increased
transportation expense due to oil costs, as well as labor price escalation in emerging economies. Many corporations and large consulting groups also recognize that there are many hidden costs and issues in supporting a remote supply chain. In general, local manufacturing is now considered to be no more expensive than offshore
  • production. The landed cost tipping point in some sectors
and commodities is projected to be reached by 2015. Local manufacturing also offers more stability and the ability to innovate at home more effectively. And, being closer to the customer has added inventory and flexibility advantages. CIM: How can industry members communicate the importance and value of manufacturing to the general population? Southway: We have had three decades of people thinking manufacturing is bad news. Manufacturing has been viewed as dirty and dangerous, risky and unstable employment, and so forth. We have a lot of work to do to change this negative image. Just talking about TBM, telling the real story, and showing what we do will help. If we look at the long term, today's 12- to 15-year-olds will lead the way. When they reach 22 years old, we will have a thriving localized manufacturing economy. It certainly won't be based on cheap oil or energy, but it will be very lean and very green. Things will be made in local manufacturing hubs or clusters. Factories will be very high-tech and their
  • peration will demand high levels of skill and education.
All this needs vision and a can-do attitude. Not having both
  • f these is our biggest risk.
Take Back Manufacturing 32 Take Back Manufacturing on TVO The Agenda Marie Laird … Past Chair SME Toronto
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33

TBM

COMBINED OPERATIONS

Take Back Manufacturing
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WHY?..Take Back Manufacturing

FOR OUR KIDS!!

35 36

Our Kids will think we don't make things!!!

This is NOT a game!!!...

? ? ? ?

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GLOBALIZED MANUFACTURING

Moved Off-shore…..

38

Textiles

Furniture Footwear Electronics AUTO PARTS Appliances Plastic goods Equipment metalwork Fittings Foods

Un-controlled trade…..

“herd behavior”

For low cost labor rates

15% Reduction in Manufacturing Intensity in the last decade
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Yet ….we have a skill shortage!!! (NOT a labor shortage)

39 2009 2010 2011

CANADA

More than 500,000 jobs lost in last 6 years 25% Reduction (Both in Quantity and Quality) We have created an Over-educated / Under-trained /Redundant Workforce!!!

1,000,000 Young Canadians Now out of work!!

Redeployed to part time and lower paying service jobs Only 25000 jobs added in Resource Sector 40 ? Ontario sets the pace. Any ratio far above 1 is an issue EAST WEST
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41 2009 2010 2011

CANADA

More than 500,000 jobs lost in last 6 years

JOBS.. Prosperity loss and wealth in-equity ……….A Political & Social Issue!!

?

USA situation worse…..EU far worse

What happened?

42
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  • 1% GDP
43

OUR BIG BROTHER

(US GDP 2010=14000B)

USA

Globalized Trade
  • 1% GDP
44

OUR BIG BROTHER

(US GDP 2010=14000B)

USA

Free Market forces… Chased Emerging Markets

Used liberalized Trade approach Removed barriers and controls Assumed More Service Sector Jobs???? Accepted Out of Balance Trade.
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  • 4% GDP
Globalized Trade Cumulative Deficit is now 50% 2010 GDP
  • 1% GDP
45 (US GDP 2010=14000B) Significant government deficit and foreign borrowing

USA

How did it happen?

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How did it happen?

Corporate “brow-beating”

“If you don’t Go Offshore you wont be on the bidders list!” (Fortune 500 Corporations to local NA Suppliers) Corp cash stash Middle Class 50% of the mid –sized manufacturers (100 to 500 employees ) have disappeared since 2000 Citizens need passports But Jobs and capital don’t! Hard Lesson…Globalization Rule #1 “Is the only way to compete with a 3rd World Economy to Become One!!”

?

Economic Doctrine
  • 4% GDP
Globalized Trade Cumulative Deficit is now 50% 2010 GDP
  • 1% GDP
48 (US GDP 2010=14000B) Significant government deficit and foreign borrowing

USA

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(GDP=1350B)
  • 10% GDP

CANADA

  • 1% GDP
  • 2% GDP

Worse than USA numbers!!!

Canada/World 49
  • 1% GDP
50 Declining

Prosperity INDEX

CANADA

We have lost our BALANCE to remain Productive.

It is not that we are less productive.. but more about having idle capacity!
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Ontario Economic Performance

How has Globalized Manufacturing Affected our Province?

M 13% GDP & 15% Employment ONTARIO Reduction Intensity Gap
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Offshore content has increased Reduced Manufacturing intensity Declining Capital Investment (70% LESS)
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SERVICE JOBS????

? ? ? ?

Significant “out-shoring” in some of these sectors

(1 Manf Job = 3 Service Jobs)

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Large Out-of-Balance Trade Gap…. -15% of GDP. Unbalanced Revenue Flat to low growth … so recovery difficult. Business and Job loss….. no real plan to fix. Under- Capitalization and low technology investment… Productivity loss (Utilization loss) Erosion of skills and knowledge Apathy and no vision for the future!

Summary

We are now a “have-not” Province!

M Resources

A Balanced Economy

58 Education Manufacturing Service Exports Public Services Government Imports

Was

CANADA/ONTARIO COSTS REVENUE
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A Far Less Balanced Economy?

59 less More less Low value added

Is

CANADA/ONTARIO Much Less? Much Less? Less? Liquidation sale! COSTS REVENUE

Resetting the balance must be the priority!!!

  • Off-shoring/Foreign jobs sourcing /Global “free” trade deal entrapment
  • Trade imbalance and ensuing government budget problems
  • Decline in Manufacturing sectors and export capability.
  • “Liquidation sale” of natural resources
  • Low Corp local investing and global cash hoarding and tax avoidance
  • Low base bank rate and low investment rate of return
  • Stock market bubbles
  • Unemployment/under-employment
  • Less career development and long term employment options
  • High youth unemployment
  • Inadequate national infrastructure planning for the future
  • Inequity of wealth
  • Reduced prosperity…. Stress!
60 Mature Economy Issues
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Strong Manufacturing = Better Prosperity options

Nations with weak or weakened manufacturing sectors will have less robust and balanced economies … And they will have to over rely (if they have them) on trade of natural resources This situation will provide “far less options” to balance the economy and may jeopardize the long term prosperity of its citizens…

61 England France Italy Greece Spain USA etc. Germany Japan China South Korea India Other Emerging economies.. Latest Economist Debate… Canada Russia Brazil Mexico With-out With With-out + Resources

Questions?

62

OUR ECONOMY NEEDS MANUFACTURING!

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So what’s next?

63

We need a critical mass of awareness by every-one to force action taking to recover our future……

THE GAME CHANGER! A 2nd Chance?

GLOBALIZED MANUFACTURING

? ?

TBM Positional Paper on the Waste in a Global Supply Chain
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65

Waste of VERY Expensive Bunker Fuel Much Non-Value-Adding Inventory

PURE WASTE 66

Waste of VERY Expensive Bunker Fuel

This low grade bunker fuel is used by the worlds 90,000 cargo ships A single large container ship emits pollutants equivalent to 50 million cars. Total container ship pollution is 6 times that of the TOTAL cars in world 2,000 times the amount of sulfur compared to diesel automobiles. Container ships account for 90% of global trade by volume. Our Economies will be jeopardized by this global warming enabler

VERY LARGE CARBON FOOTPRINT

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67 Numeric data is available, click here for information. Crude Oil Prices in USDs Start of Globalization Globalization breakeven point Note: localized supply of energy will not change this outlook We will not run out of Oil… but …. We will run out of Oil we can afford to burn!! The end of cheap China

What do soaring Chinese wages mean for global manufacturing?

Mar 10th 2012 | HONG KONG AND SHENZHEN | from the print edition

CHINA … Low Cost Country?

WEALTH TRANSFER???
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GLOBALIZED MANUFACTURING

? ?

START THINKING LEAN & GREEN

?

GLOBAL SUPPLY CHAIN

CHINA/ASIA Manufacturing recycle loop Canada USA 9000 km Each way MIN 6 weeks Transit Inventory MIN $100/M cube to transport MIN Many Transactions / Handling…… Much Waste of Natural Resource’s 70 HIGH WASTE NOT LEAN NOT GREEN Dig Resources Ship resources Dock resources Use Resources Ship products Dock products Ship Store ship Sell Process

LEAN Review of Trading Models

SCRAP $

NOW

Cost Drivers
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GLOBAL SUPPLY CHAIN

CHINA/ASIA Manufacturing recycle loop Canada USA 9000 km Each way MIN 6 weeks Transit Inventory MIN $100/M cube to transport MIN Many Transactions / Handling…… Much Waste of Natural Resource’s 71 HIGH WASTE NOT LEAN NOT GREEN Dig Resources Ship resources Dock resources Use Resources Ship products Dock products Ship Store ship Sell Process

LEAN Review of Trading Models

SCRAP $

NOW

When Interest rates are “normalized” we will have a “High cost of Inventory trap”

Cost Drivers

GLOBAL SUPPLY CHAIN

CHINA/ASIA Manufacturing recycle loop Canada USA 9000 km Each way MIN 6 weeks Transit Inventory MIN $100/M cube to transport MIN Many Transactions / Handling…… Much Waste of Natural Resource’s 72 HIGH WASTE NOT LEAN NOT GREEN Dig Resources Ship resources Dock resources Use Resources Ship products Dock products Ship Store ship Sell Process

LEAN Review of Trading Models

SCRAP $

NOW

When Interest rates are “normalized” we will have a “High cost of Inventory trap”

Cost Drivers
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INSANITY

73

GLOBAL SUPPLY CHAIN

CHINA/ASIA Manufacturing recycle loop Canada USA 9000 km Each way MIN 6 weeks Transit Inventory MIN $100/M cube to transport MIN Many Transactions / Handling…… Much Waste of Natural Resource’s 74 HIGH WASTE NOT LEAN NOT GREEN Dig Resources Ship resources Dock resources Use Resources Ship products Dock products Ship Store ship Sell Process

LEAN Review of Trading Models

SCRAP $

NOW

When Interest rates are “normalized” we will have a “High cost of Inventory trap”

Cost Drivers
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Canada USA 9000 km Each way MIN 6 weeks Transit Inventory MIN $100/M cube to transport MIN Many Transactions / Handling…… Much Waste of Natural Resource’s 75 Dig Resources Ship resources Dock resources Use Resources Ship products Dock products Ship Store ship Sell Process

LEAN Review of Trading Models

CHINA/ASIA

Localized TRADE Bloc FUTURE

Cost Drivers Canada USA 9000 km Each way MIN 6 weeks Transit Inventory MIN $100/M cube to transport MIN Many Transactions / Handling…… Much Waste of Natural Resource’s 76 Dig Resources Ship resources Dock resources Use Resources Ship products Dock products Ship Store Ship Sell Process

Localized TRADE Bloc

1000 km Each way MAX 1 week Transit Inventory Max $10/M cube to transport Max Few Transactions Minimal Inventory/Interest rate exposure

Short Supply Chains FAST RESPONSE to customers

LEAN Review of Trading Models

FUTURE

Cost Drivers 11% 16% 10% 10% 1%
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Canada USA 77

LEAN Review of Trading Models

LEAN & GREEN

Intrinsically less wasteful Short Supply Chains FAST RESPONSE to customers

Local Manufacturing Strong Incubator for INNOVATION Balanced Trade 1000 km Each way MAX 1 week Transit Inventory Max $10/M cube to transport Max Few Transactions Minimal Inventory/Interest rate exposure

BALANCED ECONOMY

Localized TRADE Bloc

HEALTHCARE EDUCATION TRAINING

We have “Run the Numbers”

78

USED BALANCED SOURCING MODELS

Every Engineer should understand business costing and economics!!!

LEAN Review of Trading Models

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BEST WORST % of Total Cost LOCAL OFFSHORE OFFSHORE Issues Material content 40 40 50 Foreign country materials may need harmonizing with your designs Labor content 25 3 3 A clear advantage, but product skill and training may be an issue Overhead 25 4 6 A lack of foreign management capability may effect other hidden costs Local Support costs 7 10 10 Your internal support for offshore will be an adder to your business costs Offshore support costs 3 6 Support at offshore site will be an adder to your business costs Transportation 6 8 These added costs can also be effected by containerization skills and knowledge Inventory costs 3 6 10 longer line of supply and maybe associated forecasting will attract inventory Duty (export and import) 8 10 Brokerage, duty and insurance will add to the costs Total factory cost 100 80 103 Baseline set on local supply 20 40 60 80 100 120 LOCAL BEST CASE WORSE CASE

We built Cost Trade-off Models … LOCAL versus Off-shore

BALANCED SOURCING

BALANCED LANDED COST LOCAL BEST OFF-SHORE WORST OFF-SHORE

?

OFFSHORE SAVINGS CAN GO POSITIVE OR VERY NEGATIVE OFFSHORE LOCAL

We built Cost Trade-off Models … LOCAL versus Off-shore

LOCAL BEST OFF-SHORE WORST OFF-SHORE

?

Boston Consulting Group (BCG)……

Predict BALANCED LANDED COST parity by 2015 in most sectors

Due to exchange, tariffs, Transportation, wage inflation, other hidden drivers…. The REAL Costs to Manufacture OFF-SHORE will continue to rise. OFFSHORE LOCAL

BALANCED SOURCING

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GLOBALIZED MANUFACTURING

? ?

START THINKING LEAN & GREEN

What is happening in the USA?

  • Resurgence of Manufacturing in USA … Now at “tipping point”

via lower US exchange rate ……………………………... Rethinking of globalized supply

Balanced Sourcing Cost trade-off modeling

Re-shoring !!!

BOSTON CONSULTING GROUP STUDY ..April 20, 2012 More Than a Third of Large Manufacturers Are Considering Reshoring from China to the U.S. BCG Survey Confirms That Rising Chinese Wages, Logistics, and Other Factors Are Prompting Companies to Rethink Where They Manufacture……
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What is happening in the USA?

  • Resurgence of Manufacturing in USA … Now at “tipping point”

via lower US exchange rate ……………………………... Rethinking of globalized supply

Balanced Sourcing Cost trade-off modeling

Re-shoring !!!

Reasons.. Transportation costs Labor costs Product quality Customer location Ease of doing business

90 70 10 50 30 40 20 60 80 % LABOR CONTENT POST LCC ESCALATION PERIOD BEST LCC PERFORMER

OFFSHORE VERSUS LOCAL MANUFACTURING BY % LABOR CONTENT

(SINGLE LEVEL COMPONENT) OFFSHORE OFFSHORE MIGRATE ALL OUR PRODUCTS TO THIS ZONE VIA AUTOMATION AND INNOVATIVE PROCESS PLUS SIMPLIFICATION TO REMOVE LABOR CONTENT TYPICAL EXAMPLE 84 Material Content LOCAL
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90 70 10 50 30 40 20 60 80 % LABOR CONTENT Post LCC Escalation Period

OFFSHORE VERSUS LOCAL MANUFACTURING BY % LABOR CONTENT

(SINGLE LEVEL COMPONENT) OFFSHORE OFFSHORE MIGRATE ALL OUR PRODUCTS TO THIS ZONE VIA AUTOMATION AND PROCESS INNOVATION PLUS SIMPLIFICATION TO REMOVE LABOR CONTENT TYPICAL EXAMPLE 85 Material Content LOCAL

What is happening in the USA?

  • Resurgence of Manufacturing in USA … Now at “tipping point”

via lower US exchange rate ……………………………... Rethinking of globalized supply

Balanced Sourcing Cost trade-off modeling

Re-shoring !!!

Most next generation products will Re-shore if:

Large bulk shipping cost % Low/Mid labor content (less than 50%) Hi Technology (Embedded Innovation) Value adding local supply chains Integrated with customer services

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  • Resurgence of Manufacturing in USA … Now at “tipping point”

via lower US $ value …….. Rethinking of globalized supply

Balanced Sourcing Cost trade-off modeling

Re-shoring !!!

Maybe not us with a RESOURCE ESCALATED

TBM

88

CANADA / US $ EXCHANGE

(Appreciated)

Not Entitled to $ Appreciation

Created by Resource boom/ hedge funding. Appreciates Currency Reduces ability to Export \ be productive Reduces Competitive Manufacturing Increases exposure to global instability

75 cent $

It is creating… lost Prosperity!!

RESOURCE ESCALATED 0.5 1.0 100 cent $ 1985 1990 2000 2010
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  • Resurgence of Manufacturing in USA … Now at “tipping point”

via lower US $ value …….. Rethinking of globalized supply

Balanced Sourcing Cost trade-off modeling

Re-shoring !!!

Maybe not us with a RESOURCE ESCALATED

TBM

Experts are certain Manufacturing will Re-shore to North America …….

……..but not sure it will be Canada!

New Pressures on LCC Globalization (Resource & Product Transfers)

90 Low Cost Country Global Trade

Localized Trade

Oil /transport price increases Emerging Economy Price Inflation Public and industrial Pressure Interest Rate Normalization Re-evaluated Balanced Sourcing Models Corporate taxation adjust Complex Supply Chain Costs Import/Export Re-balance Re-shoring! Local Re-Capitalization! Re-Hiring! / Re-training! Government budget Re-balance High Loonie! The Globalization Purist!

Our Inability to Understand And Take Action!!!

M Close proximity to customer IP protection issues Ease of doing business
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Questions?

91 MANUFACTURING CAN RETURN IF WE TAKE IT BACK

But….Are WE Ready???

TBM

M

?

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TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

M

TBM

Government

TBM – The 3 Parallel Imperatives

M
  • Provide MORE support for Manufacturing
  • Embrace Waste-Free Forms of Globalization
  • Focused POLICY and PLANS
  • Avoid duplicated policy and support organizations
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High Waste and Transportation Volatile Labor and Wealth Transients Improved Productivity and Less Waste Balanced Local Economies

INNOVATION IP KNOWLEDGE SKILLS

Equitable IP / Knowledge Trade Limited Transfer Materials and Products

TBM

GLOBALIZED MANUFACTURING

Policy support for TBM

FISCAL POLICY
  • Fix Canadian Dollar to get to the same “tipping point” with the USA (Or equivalent strategy)
  • Adjust Ultra low Interest Rates to a “normalized” level
  • Lower taxes for investments on new products / technologies / equipment and skill training.
  • Install a Global based carbon tax to reduce waste/usage of energy and combat global ineptitude
TRADE POLICY
  • Embrace a return toward a Localized TRADE bloc…. (Ensure all trade deals are FAIR not FREE trade based)
  • Reduce Non-North America IMPORTS via Controls and better support Strategic EXPORTS
  • Participate in a Knowledge Based Economy .. BUT with Improved IP controls
Improve Canada-US border and regulatory differences INVESTMENT POLICY
  • Re-deploy/encourage capital Investment into local value adding industries.
  • Simplify industry Incentives (SR&ED etc)…. hold industry 100% accountable for results
  • Encourage innovation and the commercialization of new products and technologies
EDUCATION / INFRASTRUCTURE / ENERGY POLICY
  • Implement Industrial Education/Training via an Integrated Apprenticeship system
  • Fix our declining infrastructure (Energy/logistics/communications)
  • Improve regulatory efficiency. (Make it easier to do business..safety/legal/human rights etc)
  • Simplify product and process compliance requirements, remove wasted efforts.

Define BOLD Policies to …Take Back Manufacturing.

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Policy support for TBM

FISCAL POLICY
  • Fix Canadian Dollar to get to the same “tipping point” with the USA
  • Adjust Ultra low Interest Rates to a “normalized” level
  • Lower taxes for investments on new products / technologies / equipment and skill training.
  • Install a Global based carbon tax to reduce waste/usage of energy and combat global ineptitude
TRADE POLICY
  • Embrace a return toward a Localized TRADE bloc. (Ensure all trade deals are FAIR not FREE trade based)
  • Reduce Non-North America IMPORTS via Controls and better support Strategic EXPORTS
  • Participate in a Knowledge Based Economy .. BUT with Improved IP controls
  • Improve Canada-US border and regulatory differences
INVESTMENT POLICY
  • Re-deploy capital Investment into local value adding industries.
  • Simplify industry Incentives (SR&ED etc)…. hold industry 100% accountable for results
  • Encourage innovation and the commercialization of new products and technologies
EDUCATION / INFRASTRUCTURE / ENERGY POLICY
  • Implement Industrial Education/Training via an Integrated Apprenticeship system
  • Fix our declining infrastructure (Energy/logistics/communications)
  • Improve regulatory efficiency. (Make it easier to do business..safety/legal/human rights etc)
  • Simplify product and process compliance requirements, remove wasted efforts.

Define BOLD Policies to …Take Back Manufacturing.

The Wealth Transfer Machine

99 Consume Imports Exports Wealth transfer (National debt) We have developed a Wealth Transfer Machine from North America to emerging economies that is mainly one way. 1.0 1.3 0.3 (Value added portion only 20% the balance is natural resources ) Concept from “THE END OF THE FREE MARKET” Bremmer
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Some Economists say we have had :

3 decades of economic folly with “free fall” globalization ……. Giving it all away!!!! 100 Emerging Economies Mature Economies

=

Non entitled growth and Prosperity In state managed emerging economies Mature free market driven economies Lost considerable national wealth and prosperity. Consume Imports Exports 1.0 1.3 0.3 Wealth transfer (National debt) (Value added portion only 20% the balance is natural resources ) We have developed a Wealth Transfer Machine from North America to emerging economies that is mainly one way.

The Wealth Transfer Machine

Concept from “THE END OF THE FREE MARKET” Bremmer

Some Economists say we have had :

3 decades of economic folly with free fall globalization ……. Giving it all away!!!! 101 Emerging Economies Mature Economies

=

Non entitled growth and Prosperity In state managed emerging economies Mature free market driven economies Lost considerable national wealth and prosperity. Consume Imports Exports 1.0 1.3 0.3 Wealth transfer (National debt) (Value added portion only 20% the balance is natural resources ) We have developed a Wealth Transfer Machine from North America to emerging economies that is mainly one way.

The Wealth Transfer Machine

Concept from “THE END OF THE FREE MARKET” Bremmer

They have been handed Growth and Prosperity in 3 Decades that took the Mature Economies 30 Decades to develop.

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Some Economists say we have had :

3 decades of economic folly with free fall globalization ……. Giving it all away!!!! Emerging Economies Mature Economies

=

Non entitled Growth and Prosperity In state managed emerging economies Mature free market driven economies Floundering with considerable loss in National wealth and prosperity. The reasons: Followed the wrong form of Globalization…. Resource/Product transfer versus Equitable IP Transfer Unbalanced Trade & Capital markets ……Over liberalized and under controlled (now discredited) Corporate Globalism …..dis-association from national interest ,,, focus on emerging markets. Disconnected Consumer base ….. lower value adding GDP via Globalized Manufacturing Lost Intellectual Property ….Rampant low value transfer and significant theft. Adverse Income distribution …. Increased Inequality (devaluation of mid class labor versus capital) Weaker National Governments ….Decline in power to represent its citizens in a globalized world.

Some Economists say we have had :

3 decades of economic folly with free fall globalization ……. Giving it all away!!!! Emerging Economies Mature Economies

=

Non entitled growth and Prosperity In state managed emerging economies Mature free market driven economies Lost considerable national wealth and prosperity.

Outcome.... Career opportunity loss for next generation of citizens

Declining legacy of prosperity for the next Generation in Mature economies… Double digit youth unemployment. ,,, yet… a skill shortage! 70% of new professionals are un-employed or under-employed Career practice to gain Professional accreditation getting much more difficult.. Foreign students blocking learning access and accelerating the IP transfer rate. Temporary Foreign Worker (TFW) program is compounding the issue.
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Our Economy ( A Wealth Transfer Machine)

Exports non resources (value adding) Exports resources (low value adding) Exports Financial services (low value adding) EXPORTS IMPORTS Products Components Materials (indigenous) Outsourced service/support jobs Materials (non-indigenous) Temp Foreign worker program Foreign Capital Investments Foreign Students ? The Gain? GLOBALIZATION IS NOT WORKING (FOR US) Foreign Education and Aid (unless wealth transfer managed) Reduced Product Price to consumers? Compensation paid for offshore manufacturing risk and moral hazards Outsource Costs: Transportation/Inventory/Added support/IP theft/Poor Quality etc. Tax loss/budget imbalance due to under-and unemployed citizens Salary compression due to imbalance between Labor and capital Career opportunity loss for next generation of citizens The losses + carbon foot print due to immature use of energy in emerging economies Emerging Economies Growth Large Corporations Global Finance Corp Tax Evasion CORP WEALTH TRANSFER Fueled by ultra low interest rates & Misplaced government direction Sanctioned by fanatical Economists who still cling to out-dated free market principals! 15%

NEED To Re-Evaluate the Trade value system.

Our Economy ….. The FIX!

Exports non resources (value adding) Exports resources (Add more value) Exports Financial services (low value adding) EXPORTS IMPORTS Products Components Materials (indigenous) Outsourced service/support jobs Materials (non-indigenous) Temp Foreign worker program Foreign Capital Investments Foreign Students ? Foreign Education and Aid (unless wealth transfer managed) Reduced Product Price to consumers Emerging Economies Growth Large Corporations Global Finance CORP WEALTH TRANSFER

NEED To Re-Evaluate the Trade value system.

Import tax (selective) Investment in Industrial Education and training
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The Balanced Economy (North America)

Organic growth Exports non resources (value adding) Exports resources (Add more value) Exports Financial services EXPORTS IMPORTS Products Components Materials (indigenous) Outsourced service/support jobs Materials (non-indigenous)

NEED To Re-Evaluate the Trade value system.

Import tax (selective) Investment in Industrial Education and training Prosperity Export service/support (IP control) 107 Significantly less than 100% Planned Employment 100% Planned Employment Idle Capacity FREE TRADE Significant Economic Cost advantage

We need Fair Trade…. Not Free Trade

100% Planned Employment 100% Planned Employment FAIR TRADE Small Economic Cost advantage Wealth Stability
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Crazy Globalization Model

108 “Hands in each other pockets” A person employees another person to cut his lawn as he is working full time with long hours… Then he loses his job and decides to stop the help and do the grass cutting himself, as he now has the idle time and wants to save the fee for his own economy and he does not want to import the effort any more…. But a 3rd party decides that this is unfair trade as the other person has an equal right to the job… This is how the World Trade Organization operates. 109

An option to fix the problem…. 15% Selective Import tax (Fair but not Free trade)

Put our population back to work via a national or continental trade bloc approach.. Dear UN and UNDER-employed Citizen…Here is the deal!!! ………..Please choose wisely!!! Option 1. We will set national policies to increase imported cloths, food and luxury goods and most durable consumables by 15%...but your housing, health and education costs will remain the same. These policies will ensure that everyone both you and your children will eventually have a well-paying permanent job.. Option 2. We do nothing, most purchased items including a high % of your food and drugs will be imported and many service jobs will be outsourced to low cost countries.. You will enjoy the option to buy these products and services at lower costs… however, we cannot guarantee you or your children full time employment. Also our government will be forced to reduce social services such as education and health care due to the ongoing loss in tax revenue from your reduced earnings.. Note: The tax revenue will be redeployed 100% into industrial education to fuel the next generation workforce that can continue to be entitled to Take Back Manufacturing. Yes….. this means no more Walmart cheap goods…some costs to our consumers will go up, but the feedback we have received is that most once aware of the issues will pick option 1. Our calculations can demonstrate that this 15% selective price increase through a consumer tax that is focused on the Non Value- adding portion of GDP (Imports) is a very realistic number and would also kick start the economy as the growth in manufacturing sector jobs from this policy would also boost 3 time ratio of spin off service jobs. The tax code would also be adjusted to ensure low income situations will not be effected.
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TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

TBM

North-American Manufacturing Prosperity for all.

TBM – The 3 Parallel Imperatives

Educators

We have created an Over-educated / Under-trained /Redundant Workforce!!!
  • Education must better serve its citizens
  • Ensure it is value adding to the economy
  • Re-Balance Education versus Training
  • Integrated Industrial Apprenticeship System
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Industrial Apprenticeship System

112 Take Back Manufacturing (TBM) Will demand the availability Of a future manufacturing workforce that Is both well- educated and well-trained with industry experience. The Development Of The future Industrial Workforce Has Suffered A Decline. The Current Skill Mix Is in Disarray and misaligned. We Need Significant Re-Planning And Action Now To Avoid An Increasing Shortage Of Experience, Knowledge And Skills When We Try To Rebirth Most Manufacturing Sectors. This Will Require An Integrated And Scalable Apprenticeship System! Will Demand TOTAL Involvement From Industry Sectors, Educational Institutions with strong leadership from both federal and Local Governments.
  • Integrated Career Pathway
Apprentice Journeyperson Technician Technologist Engineer
  • Industry Recognized Skills and Education Development Progression
  • Apprenticeship Pool From The Best, the Brightest And The Most Talented
  • Become The Learning/Occupation Destination Of Choice for High School Students
  • Apprenticeship Courses Transferrable And Articulated To Other Post Secondary Colleges And
Universities, Supporting Lifelong Progression In Learning As Shown In Career Pathway Above
  • Industry must lead on driving and installing this system. ( So..can’t complain about skill shortage!!)
  • The Integrated education and training must provide a highly flexible workforce.
  • DO IT!...... Before we loose the Industrial Experience of the Baby Boomers!!
Trade Technician Technologist Engineer Eng Degree Eng Diploma Tech Certificate Trade Certified High school Manufacturing needs YOU !

VISION ..Re-focus on New Apprenticeship System

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TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

TBM

TBM – The 3 Parallel Imperatives

Educators

Industry

  • Gain a Vision & Aptitude for all forms of “INNOVATION”
  • Use BALANCED SOURCING…. Run the numbers!!
  • Reinstall a “MINDSET” for Continuous Improvement
  • Install New Technology and Capital Re-investment
  • Re-build Strong LOCALIZED Manufacturing Communities

(Incubators/clusters)

North-American Manufacturing Prosperity for all. Niche and hobby Manufacturing not enough to sustain us
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Manufacturing has an IMAGE problem!!

Most manufacturing-based businesses are beyond dispirited…. Our Politicians/Government/Population have little understanding of business and manufacturing…We must EDUCATE them!! Manufacturing is deemed:

Dark, Dirty, Dangerous, Deafening and Difficult….

116

….. And Smelly!

M And…. Highly unstable as a career!

?

117

TBM

EXCITE the NEXT GENERATION

Change ….

The Image of Manufacturing

Let’s Make Manufacturing

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Questions?

118 IT NEEDS A DELIBERATE ACT OF NATIONAL LEADERSHIP AND PLANNING.

THE TBM ROADMAP

119 M

Our Support to Industry

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www.SME-TBM.org

TBM SURVEY

THEN PUSH HERE

Do You Care About Manufacturing in CANADA?? TBM Self Positioning Survey

TBM Self Positioning Survey

Help us to Help you!

POLICY EDUCATION Industry Excellence

TBM

TBM

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TBM Survey Results

Presented at the SME TORONTO Monthly Meeting 22nd Nov 2012

From an ongoing online survey on the www.sme-tbm.org website

How many people are in your business?

TBM SURVEY RESULTS 60% 12% 20% 8% 478 participants 72% are “Small” 20% are “Mid sized” 8% are “large” “large” “Mid sized” “Small”
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Size of manufacturing facility

78% of manufacturing sites design own product. 45% approx. are below 20,000 sq. ft. 0% 2% 4% 6% 8% 10% 12% agricultural equipment appliance manufacturing building componensts construction materials metal extrusions mining equipment
  • il and gas equipment
pulp and paper security equipment solar equipment steel making commercial parts Food & Beverage material handling equipt medical equipment packaging software aerospace electrical HVAC equip pharma treatments and finninshing plastics electronics furniture industrial equipment fabrications machining tooling automotive Manufacturing participants only by sector (389 Participants)
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Were you aware of the Take Back Manufacturing initiative?

65%

KEY QUESTIONS WE ASKED?

Are you concerned about global competitiveness?

87%

Do you feel you can compete with the global economy as a Canadian manufacturer?

66%

Are you concerned about the decline of manufacturing in your sector?

82%

Do you feel pressure from the level of the Canadian dollar?

73%

Are you satisfied with local government support for your industry?

44%

Are you satisfied with Federal government support for your industry?

43%

Do you feel your business is under capitalized?

62%

CONFIRMS NEED FOR TBM!!

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If your company were to engage in an effort to Take Back Manufacturing, what would you need the most help with? Calculating total real cost of production (Balanced Sourcing)

42%

Productivity Improvements

68%

New product development and innovation

49%

New product introduction

35%

Workforce training and development

65%

Information/education on new technologies

53%

Which of the following process improvements are you planning to pursue?

[Lean thinking and implementation]

60%

[Six Sigma]

29%

[ERP Class A]

9%

[ISO]

26%

[Productivity through computerization]

27%

[Innovation systems for products and processes]

47%

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5 biggest challenges ?

1.4% delivery 1.4% lack of supply base 1.4% logistics and transportation costs 1.4% Quality issues 1.4% technology gap 1.8% customer satisfaction 1.8% lack of government support 1.8% taxes 1.1% government regulations 0.7% Distribution issues 0.7% IP control 0.7% liquidity 0.7% market barriers 0.7% material sources 0.7% product launch 0.7% Supply base availability 0.4% international regulations 0.4% material quality 0.4% Offshore quality 0.4% quality of imports 0.4% unionism 0.4% US protectionism 15.2% Skill shortage (mis-alignment) 13.4% Economic demand 12.7% Offshore competition 7.6% Productivity 6.2% High $ DOLLAR 5.8% Investment 5.4% Legislation (Safety/environmental/products) 3.6% Material costs 3.3% Energy costs 2.2% Managing change TOP 10 The Others Over 50%

How interested are you in educational assistance for the following?

  • Understanding how to Improve Total Business Cycle Time to satisfy the customer.
LEAN thinking Implementation….simplify your operational and material support systems? Having e a Certified LEAN instructor as part of your operating team Nominating some -one to Train as a certified LEAN instructor. Installing a LEAN performance measurement system Installing a Cost of Poor Quality system…... how to measure and improve for business success. Installing Total Productive Maintenance and Calibration systems. Implementing Statistical Process Control (SPC) as a strategic weapon for process improvement. 57% 60% 44% 43% 50% 52% 51% 45%
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SME Positional Survey Business Process Improvement / LEAN Strategic planning / Innovation New Product Introduction & Rapid Prototyping Balanced Sourcing Production Process Excellence / Supply Partnering Distribution and Inventory management Manufacturing Technology Toolkits Business Systems & Computer Integrated Manufacturing Management technique upgrades Organizational learning systems / Apprenticeship program

The TBM Evolution Plan

132

Lets get organized…..

SME Monthly TBM Journey………

  • January 2012
TBM Overview
  • February 2012
Innovation
  • March 2012
Balanced Sourcing
  • April 2012
Industrial Education and Training
  • May 2012
Computer Integrated Manufacturing
  • September 2012
Rapid Prototyping (Methods/Technologies)
  • October 2012
Survey results … TBM Roadmap
  • November 2012
TBM Roadmap Roll-out
  • December 2012
Productivity and Lean
  • January 2013
SME expanded chapter mission review
  • February 2013
Student Chapter planning
  • March 2013
TBM review
  • April 2013
Apprenticeship planning
  • May 2013
Product compliance and certification
  • June 2013
TBD We are holding regular SME Chapter meetings with TBM as the central theme With one of the TBM imperatives discussed as a special topic each month.
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Where We Are With TBM

  • Almost 2 years since we launched the initiative
  • Gained a lot of press and moral support (mainly inside the industry)
  • Provided some support to our Industrial membership
  • Limited penetration in public awareness..
  • Some attention span from government … some limited action ..FED budget..
  • Little attention at provincial level… Trapped in minority government mode
  • Some alignment with policy groups…… But still a mixed message environment
  • Some solid realization that globalization and free trade not working..
– Outsourcing of support jobs – Temp worker scandal – Garment industry third world employment mistakes
  • But….Not sure if they will connect the dots!!
  • Still need to stay in the fight!!!.... A huge challenge!!
5/23/2013 134

The TBM Outlook/Time-line

135 2011 2012 2013 2014 2015 2017 2018 2016 Integrated Apprenticeship plan Economic Policy review (Provincial) Federal Economic Policy re-aligned Ontario Joint Industrial Apprenticeship Board Re-align PEO/OCETT with others to provide Integrated Technical Career pathway TBM kick-off Brief Educational institutions on Integrated Apprenticeship requirements. TBM Awareness building TBM Imperative subject sessions First Industrial Apprenticeship/sector 13 year old Today 18 year old 2011 2012 2013 2014 2015 2017 2018 2016
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www.SME-TBM.org

TBM SURVEY

THEN PUSH HERE

Do You Care About Manufacturing in CANADA?? TBM Self Positioning Survey

137

Take Back Manufacturing

www.SME-TBM.org

T B M

Government support & Focus New and BOLD policies Fix impact of Hi Cdn $ Tax supportive re-capitalization Rethink globalized manufacturing Balanced sourcing Local supply clusters Build factories of the future More innovation capability New technology Refocus LEAN / Continuous improvement Enhance business systems Fix energy/support infrastructure Integrated Apprenticeships Re-Engineer Manufacturing Image

Reshore to NA/Canada Local trade bloc Balanced trade Balanced economy Rebirth business energy Recover jobs More career Stability/growth More prosperity via Value Jobs Improved legacy for our Kid’s

Let’s Re-engineer Our Economy to Work Again!

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Why…. Take Back Manufacturing

For Our…. Population Province/State Workforce Business Leaders Investors Kids

M

MAKE SURE They Listen / Take action!!

For our Population Recover lost prosperity and reduce risk of global economic instability now and into the future. Recover higher income jobs of all types via manufacturing's higher productivity Recover the ability for manufacturing to create the 3:1 economic activity into other sectors. For Our Province Recover lost tax revenue to balance budgets at all levels of government and public services. Recover an autonomous and balanced economy without over reliance on natural resources For our Workforce Stabilize future skills and career opportunities at all levels ……. Including Professionals For Business Leaders Provide a strong incubator and support system for local Innovation and R&D investment. Better protect and sustain the Intellectual property of the next generation of innovations Improve ability to compete world wide from a stable home market/manufacturing base. For our Investors Provide solid Value-added investment opportunities for local capital via manufacturing. For Our Kids Reduce the Global Carbon Footprint and oil dependency … Reduce the Negative wealth flow

Why…. Take Back Manufacturing

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140

Take Back Manufacturing

www.SME-TBM.org

FOR OUR KIDS!!!

Let’s Re-engineer Our Economy to Work Again!

TBM Questions?

141 KEEP ASKING…. WHY?…
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END

142