[PDF] - Take Back Manufacturing . E ssential for Sustainable Supply Chains in PDF Document

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TBM Take Back Manufacturing

WWW.SME-TBM.ORG

Take Back Manufacturing

…. Essential for Sustainable Supply Chains in the future.

The Globalized manufacturing approach with efficient supply chain management has been the business norm in the last 2 decades and many experts now predict yet another sea change underway to move to a more balanced sourcing approach involving reshoring and localized trade blocs. The logic of Sustainable supply chains and a return to LEAN business practices throughout the whole supply chain and what that will mean to how business will be done will be the next initiative that many supply chain managers will have to understand and embrace. We will explain the latest global trends and sustainable supply chain concepts and how the events that are unfolding will affect us all.

TBM Take Back Manufacturing

WWW.SME-TBM.ORG

Take Back Manufacturing

…. Essential for Sustainable Supply Chains in the future. Or how to reverse 30 years of poor global management

Nigel Southway

TBM Advocate & Past Chair

Society Manufacturing Engineers

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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 won the Soccer World Cup The Beatles released the LP…. Revolver Star Trek premiers on TV I start my Engineering Apprenticeship at 16

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5

BRITISH 60’s

THE BEATLES

MODS Miniskirts

THE WHO

BRITISH 60’s

The MODs British Rock Music MINI

The Small Faces

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7

This?….

OR

This?….

Career choice…

WHICH INSTRUMENT??

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 Aerospace/SPAR

British Engineering Apprenticeship

British Aerospace

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

www.nigelsouthway.com

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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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11 Space Shuttle Remote Manipulator System (SRMS) Canada

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 Aerospace/SPAR
MOTOROLA Director Manufacturing Eng / Lean and Six Sigma Implementation (1980,s)
Engineer / Manager / Director ……….Brampton / Chicago / Nogales Mexico

HI Tech Boom….ABM Secure Networks

Modems/Multiplexors

www.nigelsouthway.com

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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
Consultant/Change Agent/Educator/Coach for LEAN business improvement
AUTHOR : CYCLE TIME MANAGEMENT… Fast Track to Productivity Improvement

www.nigelsouthway

NEXUS

Owner of NEXUS CONSULTING SERVICE (1992) Automotive, Aerospace, Avionics, High-tech and consumer Electronics, Pharmaceuticals, Food, Beverage. Consumer Products and Appliances Steel, Fabrication and Mining Service and Financial Industries. Ever-Ready Battery, J.M. Schneider Inc, Procter and Gamble, Inland Steel, Morton Metal-craft, Inter-City Products, FABCO, Thompson Pipe & Steel. ECCO, A 0 Smith, Grote Industries, NBS, Royal Canadian Mint, BFL, British Airways, BTR, Tectrol, Tiercon, ACS, Imperial Rubber, GTD, VERTIGO, Canadian Pools, Telephoto SXA GlaxoSmithKline. Baxter, Ciba Corning, Citibank, Royal Ford, GE MARCONI, Clubcar Toro John Deere NOMA, McCoy Polaris Clients in Canada, USA, Asia and Europe.

Supported Clients World Wide on LEAN THINKING & Productivity Improvement.

Electronic assembly
Meat processing plant..
Metal fabrications
HVAC Manufacturing
Toothpaste manufacturing
Steel mill processes
Bank check clearing house
US army medical Corp
Whiskey distilling
Dry-cell battery production
Credit card emboss house
Electrical products
Custom Power-Supplies
Computer design/manufacture
Sheet-metal fabricators
Plastic injection molding
Truck Components supplier
Construction equipment
Oil industry equipment providers
Aerospace equipment providers
Soap factory
Bubblegum and candy factory
Food additive producer
Data-com system provider
Computer software developer
Mint (Coins and Medals)
Security equipment
Off-road equipment
Water pipeline manufacturer
Exhaust System Manufacturing
Commercial swimming pool manufacturing
Auto dealerships
Medical equipment Design/Manufacturer
Oil extraction equipment manufactures
Nano-tech Battery Manufacturing
Automotive parts supplier
Generic drug manufacturer
Vaccine Development and Manufacturing
Robotic Medical surgical devices
Commercial Heating Equipment

NEXUS

Canada / USA / Mexico / UK / China / Russia / India / Ukraine

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15

NAFTA Manufacturing Expansion…To a LCC (Low Cost Country) MEXICO 1996 to 2002

A Maquiladora or Maquila (used interchangeably) is a plant in Mexico that retains a Maquiladora Permit from the Mexican government to import raw materials duty free into Mexico for manufacturing, assembly, repair or other processing. The foreign company must agree to re-export a majority of its production.

Low cost labor: Wages range from 15% to 25% of comparable

rates in the U.S. Normal work week is 48 hours. Productivity often exceeds the U.S. rates.(U.S. Bureau of Labor)

Favorable duty/tax treatment: Southbound, the Mexican

government allows duty-free imports of all materials and machinery needed for the plant. Northbound, many North American sourced products are now duty free under NAFTA.

100% Ownership of subsidiary: Leaves total control for

all operations in the hands of the parent. There are professional services available to handle such matters as personnel, accounting and import/export management.

Proximity to U.S.: Lower turnaround times compared to other

low labor rate countries, lower transportation costs, and the ability for managers or skilled technicians to commute on a daily basis to the Mexican facilities is possible in the border areas.

Access to the Mexican Market: Maquilas may sell part of

their previous years export output in Mexico’s 107 Million person consumer market . Also… Free trade with EU and other trade jurisdictions with registered Mexican subsidiary status. And tax compliance

GLOBALIZED MANUFACTURING

2004 Onward

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CHINA MANUFACTURING

18

Components Subassemblies Some final assemblies Mixed Volumes Metal and Plastics + Welded Assemblies

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CHINA MANUFACTURING CHINA MANUFACTURING CHINA MANUFACTURING

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CANADA MANUFACTURING

21

The future of Manufacturing in Ontario’s economy.

CANADA MANUFACTURING

22

The future of Manufacturing in Ontario’s economy.

A NORTH AMERICAN PROBLEM

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TBM

Take Back Manufacturing

www.SME-TBM.org

A Forum Dedicated to Restoring

ur Manufacturing Sectors.

TBM Take Back Manufacturing

WWW.SME-TBM.ORG

Since Mid 2011

TBM

Take Back Manufacturing

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

ur Manufacturing Sectors.

25 Technical Associations 3 Trade associations 5 Educational groups 6 Economic Policy makers 7 Media experts 3 Local government 5 Industry experts

TBM Take Back Manufacturing

WWW.SME-TBM.ORG

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CMTS Toronto Canada October 2011 SME Annual Conference Cleveland USA June 2012 Many Society and Association events in 2012/13

Presentations.... TAKE BACK MANUFACTURING M

Raising the Awareness

TBM

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

28

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29

BNN BUSINESS NEWS NETWORK

What can Canada learn from German Manufacturing?

TBM…Our Ultimate Goal

30

Work together ….

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

TBMTake Back Manufacturing

WWW.SME-TBM.ORG

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TBM…Our Ultimate Goal

31

TBMTake Back Manufacturing

WWW.SME-TBM.ORG

SORRY!

We ask for an open mind as we deliver this important message and perspective.

Honest and Factual Provocative concepts Perhaps test and conflict with your current beliefs Mind bending, Scary, Frustrating, Inspiring.

WHY?..Take Back Manufacturing

FOR OUR KIDS!!

32

TBM Take Back Manufacturing

WWW.SME-TBM.ORG

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

This is NOT a game!!!...

? ? ? ?

GLOBALIZED MANUFACTURING

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Moved Off-shore…..

35

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

TBM

36 2009 2010 2011

CANADA

More than 500,000 jobs lost in 6 year period (300,000 Ontario) 25% Reduction (Quantity and Quality)

TBM

Lost 50% MFG SME’s in Ontario 10% Productivity Loss due to reduced Capacity utilization

Due to this….we have a skill shortage!!! (NOT a labor shortage)

1,000,000 Young Canadians Now un or under employed!!

Redeployed to part time and lower paying service jobs Source: Statistics Canada Lost 10,500 Plants in Ontario

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What happened?

37

4% GDP

Globalized Trade Cumulative Trade Deficit is now 50% GDP

1% GDP

38 (US GDP 2010=14000B)

USA

Washington Consensus

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4% GDP

Cumulative Trade Deficit is now 50% 2010 GDP

1% GDP

39 (US GDP 2010=14000B) Significant government deficit and foreign borrowing High Unemployment / Growing wealth inequality / Prosperity decline Loss of National Sovereignty and balance between Capital and Labor

USA

HUGE ONGOING TRADE IMBALANCE

Some experts call this “Wealth dilution”

40 Wealth transfer gradient

Global Trade Balance Imbalance

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41

Globalized Trade has outpaced Wealth Creation Wealth Dilution

Winners Emerging Economies Bankers Traders Global Corporations Global Capitalists Losers Mature Economies National governments Mature Economy Middle class Citizen level investors Youth early in careers The Planet! Significant failure to correctly manage trade balance Trade is an inefficient method to generate wealth! 42

Global Change is taking place at an Exponential Rate!!

Globalization is Enabling Change (Positively and Negatively)… Exponential

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43

Global Change is taking place at an Exponential Rate!!

Globalization is Enabling Change (Positively and Negatively)… Religious/Ethnic pressures Higher Expectations to share wealth Cultural Mobility National boundaries (Much Migration) Technology (Supply Chains) Market and Commerce (unbalanced) Economics (unplanned) Politics Age of Disruption Ecological Sustainability Issues Age of Over-Supply 44

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45 2B 4B 6B 1950 2000 1960 1970 1980 1990 2010 2015 2020 The Global Workforce 250% Increase People Demand For Labor In all forms Capacity “Over-Supply” Higher Productivity via Technology + Unequal Consumer/Output balance

Added 3 Billion to the workforce

[25% un or under employed]

3 4 7 9 10 11 12 21 13 23 22 20 19 15 13 8 UNDER + UN UNDER % % Global un and under Employment (GDP=1350B)

CANADA

1% GDP
2% GDP

46

Increasing dependence on Imports Increasing dependence on Exports of raw resources

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(GDP=1350B)

10% GDP

CANADA

1% GDP
2% GDP

Worse than USA numbers!!!

Canada/World 47

1% GDP

48 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! Emerging Market Resource Demand Dependent

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49

OUR ECONOMY NEEDS MANUFACTURING!

It is VERY obvious that we need a Balanced Economy

(Resources/Services/Manufacturing)

TBM Take Back Manufacturing

WWW.SME-TBM.ORG

So what’s next?

50

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

THE GAME CHANGERS!

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51

Global Change is taking place at an Exponential Rate!!

Globalization is Enabling Change (Positively and Negatively)… Religious/Ethnic pressures Higher Expectations to share wealth Cultural Mobility National boundaries (Much Migration) Technology (Supply Chains) Market and Commerce (unbalanced) Economics (unplanned) Politics Age of Disruption Ecological Sustainability Issues Age of Over-Supply 52

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53

Global Warming

???? Climate Change ????

Air Pollution

54

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WASTE

55

Water…. A “Thirsty” Resource!!

A Car takes 39,090 gallons of water to make Plus 2,000 gallons for the Tires Pair of Jeans takes around 1,800 gallons of water to grow enough cotton to produce just one pair. Cotton T-Shirt… 400 gallons of water to grow the cotton required for an ordinary cotton shirt. Single Board of Lumber takes 5.4 gallons of water to grow enough wood for one lumber board. Barrel of Beer…(32 gallons of booze), takes 1,500 gallons of water. To-Go Latte…takes 53 gallons to make every latte, grow coffee, sugar, plastic lid, the sleeve and the cup itself. . . Individual Bottled Water This irony shouldn't be lost on anyone: it takes 1.85 gallons of water to manufacture the plastic for the 500ml bottle of water.

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57

North Americans Water Consumption

1.5 Olympic swimming pools per year per person 24,000 pints of beer a week per person 13.5 showers a day per person

The Planet Earth has a relatively new virus

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The Planet Earth has a relatively new virus

This Destructive virus is multiplying at an exponential rate
Infiltrates all ecosystems and habitats
Destroys forests and attacks all forms of life
Increases pollution levels in rivers and oceans
Has a negative impact on the air quality
May be responsible for adverse weather changes
The virus is “mutating” to further enhance the danger
Its called …Man!

Hopefully it will mutate into a benign state before it destroys the whole planet! .

The Planet Earth has a relatively new virus

This Destructive virus is multiplying at an exponential rate
Infiltrates all ecosystems and habitats
Destroys forests and attacks all forms of life
Increases pollution levels in rivers and oceans
Has a negative impact on the air quality
May be responsible for adverse weather changes
The virus is “mutating” to further enhance the danger
Its called …Man!

Hopefully it will mutate into a benign state before it destroys the whole planet! .

Its called …Man! It likes to live now ………and pay later! Hopefully it will mutate into a benign state before it destroys the whole planet!

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The Planet Earth has a relatively new virus

This Destructive virus is multiplying at an exponential rate
Infiltrates all ecosystems and habitats
Destroys forests and attacks all forms of life
Increases pollution levels in rivers and oceans
Has a negative impact on the air quality
May be responsible for adverse weather changes
The virus is “mutating” to further enhance the danger
Its called …Man!

Hopefully it will mutate into a benign state before it destroys the whole planet! .

Its called …Man! It likes to live now ………and pay later! Hopefully it will mutate into a benign state before it destroys the whole planet!

SUSTAINABILITY

62

Or how to become Lean and Green

On a Global level

Best achieved via National Self Determination

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GLOBALIZED MANUFACTURING

? ?

TBM Positional Paper on the Waste in a Global Supply Chain

GLOBALIZED MANUFACTURING

? ?

TBM Positional Paper on the Waste in a Global Supply Chain

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GLOBALIZED MANUFACTURING

? ?

TBM Positional Paper on the Waste in a Global Supply Chain

GLOBALIZED MANUFACTURING

? ?

TBM Positional Paper on the Waste in a Global Supply Chain

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67

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

PURE WASTE 68

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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69

INSANITY

70

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GLOBALIZED MANUFACTURING

? ?

START THINKING LEAN & GREEN

?

72

GLOBAL SUPPLY CHAIN Localized TRADE Bloc

LEAN Review of Trading Models

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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 73 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 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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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 75 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 76 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 77 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

TBM

Mexico 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 78 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

TBM

NAFTA

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Mexico 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 79 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% CHINA/ASIA Canada USA 80

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

FUTURE Localized TRADE Bloc

Other Trade Blocs Other Trade Blocs Other Trade Blocs

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CHINA/ASIA Canada USA 81

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

Other Trade Blocs Other Trade Blocs Other Trade Blocs Canada USA 82

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

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GLOBALIZED MANUFACTURING

? ? ?

GLOBALIZED MANUFACTURING

?

We Question its future Sustainability

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COMBINED OPERATIONS

Take Back Manufacturing

TBM

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

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We have “Run the Numbers”

87

USED BALANCED SOURCING MODELS

Every Engineer should understand business costing and economics!!!

LEAN Review of Trading Models

TBM

88 Material DIRECT OVER HEAD OH

Balanced Source Landed Cost Comparison

LOCAL Material OFFSHORE Transportation Other Duty Inventory costs Support costs COPQ Material OFFSHORE 2015 DIRECT OH DIRECT 10% 20% 30% + + + + + + 2012 2011 Tipping Point RESHORE

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LOCAL BEST OFF-SHORE WORST OFF-SHORE

?

Boston Consulting Group (BCG)……

Predict BALANCED LANDED COST parity by 2015 in most sectors

The REAL Costs to Manufacture OFF-SHORE will be projected to rise. OFFSHORE LOCAL

BALANCED SOURCING

Validated 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

The REAL Costs to Manufacture OFF-SHORE will be projected to rise. Due to: Exchange, tariffs, Labor wage inflation, Product Quality Cost escalation Transportation costs, Customer location Inventory costs, Ease of doing business, Plus…Many Other hidden drivers…. OFFSHORE LOCAL

BALANCED SOURCING

Validated Cost Trade-off Models … LOCAL versus Off-shore

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LOCAL BEST OFF-SHORE WORST OFF-SHORE

?

Boston Consulting Group (BCG)……

Predict BALANCED LANDED COST parity by 2015 in most sectors

The REAL Costs to Manufacture OFF-SHORE will be projected to rise. Due to: Exchange, tariffs, Labor wage inflation, Product Quality Cost escalation Transportation costs, Customer location Inventory costs, Ease of doing business, Plus…Many Other hidden drivers…. OFFSHORE LOCAL

BALANCED SOURCING

Validated Cost Trade-off Models … LOCAL versus Off-shore

Reshoring Tipping point

Product $ labor versus Cubic Volume USA Economy

$ Lab Product Cubic Volume Offshore Onshore Tipping Point 2012 I Phone Fridge

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Reshoring Tipping point

Product $ labor versus Cubic Volume USA Economy

$ Lab Product Cubic Volume Offshore Onshore Tipping Point 2015 I Phone Fridge

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

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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 !!!

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

TBM

Industrialization Outlook…….

96 A significant politically driven movement away from over-reliance on global “over trading” ….. avoiding wealth dilution Move toward sustainable National Economic Sovereignty, based on “localized” balanced trade, a value adding industrial environment , and more sustainable products. Improved National Management of currencies, capital, resources, waste, Ecological issues and citizen welfare.

A move more toward nation state managed economies… and Away from the failed and wasteful Free Market ideology

NAFTA and other trade blocs

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Reshoring to Canada?

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 !!!

TBM

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

……..but not sure about Canada!

98

CANADA / US $ EXCHANGE

(Appreciated) 75 cent $ 0.5 1.0 100 cent $ 1985 1990 2000 2010 75 cent $ 2015

?

Purchase Price Parity 81 Cent $ 4% Prod Growth Mis-management period We did not earn the par dollar so its rise has done a lot of damage already.. A 75 Cent $ is mostly good news, but very late, It won’t help those with significant material supply chain not now in Canada due to past offshore practices.. 2% Productivity Growth

?

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Impact of Poor Economic footprint (Auto sector)

Canada (Ontario) at

$76/hour $65/Hour $60/Hour

US North

$85/hour

US Mid West

$67/hour

US South

$49/hour

Mexico

$18.5/hour

99

Reshoring will force some geographical location changes

Loaded Factory direct costs 0.95 Cdn $ 0.81 Cdn $ 0.75 Cdn $ NAFTA Scenario Other International trade deals will increase pressure Non Competitive Wage rates Employment taxation Energy Safety costs Government incentives Competitive Corporate taxation Process productivity Output quality Canada Declining Capital Investment (70% LESS) Reduced Investment trends will mean 25% further decline in the next decade

The best environment for Reshoring /Balanced Sourcing

TBM Take Back Manufacturing

WWW.SME-TBM.ORG

Strong Government industrial policy National commitment Right valued exchange rate Higher interest rates Mid to high oil prices Low energy footprint NAFTA friendly borders Refocus on industrial learning CI rebirth within industry ? CANADA ? Scorecard ?

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TBM Take Back Manufacturing

WWW.SME-TBM.ORG

IT WILL BE A CHALLENGE FOR CANADA BUT SOME MANUFACTURING CAN RETURN BUT ONLY IF WE TAKE IT BACK

Based on a decline in Resource sectors its our best plan B

Many Factors will determine Reshoring

(Resource & Product Transfers)

102 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 Right sized Loonie!????? The Globalization Purist!

Our Inability to Understand And Take Action!!!

M Close proximity to customer IP protection issues Ease of doing business Quality performance Labor cost differential Energy footprint Technology trends

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But….Are WE Ready???

TBM

M

?

TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

SLIDE 53

5/5/2016 53

TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

IMPROVE POLICY Hold a Policy Blitz process!! IMPROVE Balance Integrated Industrial Learning system Balance Education/Training/Experience Focus on local population Ensure Learning is economically viable IMPROVE & Mobilize Supply Chain Strategy

+

Productivity Improvements + Local Community Engagement

TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

IMPROVE POLICY Hold a Policy Blitz process!! IMPROVE Balance Integrated Industrial Learning system Balance Education/Training/Experience Focus on local population Ensure Learning is economically viable IMPROVE & Mobilize Supply Chain Strategy

+

Productivity Improvements + Local Community Engagement

Provide MORE support for Manufacturing
Embrace Waste-Free Forms of Globalization
Focused Industrialization POLICY and PLANS
Avoid duplicated policy and support organizations

SLIDE 54

5/5/2016 54

TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

IMPROVE POLICY Hold a Policy Blitz process!! IMPROVE Balance Integrated Industrial Learning system Balance Education/Training/Experience Focus on local population Ensure Learning is economically viable IMPROVE & Mobilize Supply Chain Strategy

+

Productivity Improvements + Local Community Engagement

Provide MORE support for Manufacturing
Embrace Waste-Free Forms of Globalization
Focused Industrialization POLICY and PLANS
Avoid duplicated policy and support organizations

In Ontario alone we have 18 different policy groups feeding off the public trough Issuing independent reports without integrated review and closure. Put them all in one room!.. Come out with one plan! 108

Our Biggest Threat….. Unresponsive National Governments

SLIDE 55

5/5/2016 55

TBM Take Back Manufacturing

WWW.SME-TBM.ORG

IT NEEDS … A DELIBERATE ACT OF NATIONAL & REGIONAL LEADERSHIP AND PLANNING.

TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

IMPROVE POLICY Hold a Policy Blitz process!! IMPROVE Balance Integrated Industrial Learning system Balance Education/Training/Experience Focus on local population Ensure Learning is economically viable IMPROVE & Mobilize Supply Chain Strategy

+

Productivity Improvements + Local Community Engagement

SLIDE 56

5/5/2016 56

Take Back Manufacturing (TBM) Will demand the availability Of a future manufacturing workforce that Is well-educated, well-trained with industry experience. High School

Current Environment

Education Institution Education Institution Work Term Work Term Education Institution

?

Only 20% are STEM students (Science, Technology, Engineering and Math) International score….. 14/18 in Literacy 19/21 in Numeracy 14/18 in Problem Solving

?

C-

A failing Grade!!!!

Learning systems

Integrated Industrial Learning System

112 Take Back Manufacturing (TBM) Will demand the availability Of a future manufacturing workforce that Is well-educated, well-trained with industry experience.

Future IILS Environment

High School Education institution Industrial Integrated Learning Contract Work Term Education institution Work Term Career! High School Education Institution Education Institution Work Term Work Term Education Institution

?

Current Environment

SLIDE 57

5/5/2016 57

Integrated Industrial Learning System

113 Take Back Manufacturing (TBM) Will demand the availability Of a future manufacturing workforce that Is well-educated, well-trained with industry experience.

Future IILS Environment

High School Education institution Industrial Integrated Learning Contract Work Term Education institution Work Term Career! Provide education and hope they get a job? High School Education Institution Education Institution Work Term Work Term Education Institution

?

Current Environment

Put into an industry and follow a career and receive focused learning! Remove educational and association silos

TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

IMPROVE POLICY Hold a Policy Blitz process!! IMPROVE Balance Integrated Industrial Learning system Balance Education/Training/Experience Focus on local population Ensure Learning is economically viable IMPROVE & Mobilize Supply Chain Strategy

+

Productivity Improvements + Local Community Engagement

SLIDE 58

5/5/2016 58

TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

IMPROVE POLICY Hold a Policy Blitz process!! IMPROVE Balance Integrated Industrial Learning system Balance Education/Training/Experience Focus on local population Ensure Learning is economically viable IMPROVE & Mobilize Supply Chain Strategy

+

Productivity Improvements + Local Community Engagement

TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

IMPROVE POLICY Hold a Policy Blitz process!! IMPROVE Balance Integrated Industrial Learning system Balance Education/Training/Experience Focus on local population Ensure Learning is economically viable IMPROVE & Mobilize Supply Chain Strategy

+

Productivity Improvements + Local Community Engagement

SLIDE 59

5/5/2016 59

TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

IMPROVE POLICY Hold a Policy Blitz process!! IMPROVE Balance Integrated Industrial Learning system Balance Education/Training/Experience Focus on local population Ensure Learning is economically viable IMPROVE & Mobilize Supply Chain Strategy

+

Productivity Improvements + Local Community Engagement

TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

IMPROVE POLICY Hold a Policy Blitz process!! IMPROVE Balance Integrated Industrial Learning system Balance Education/Training/Experience Focus on local population Ensure Learning is economically viable IMPROVE & Mobilize Supply Chain Strategy

+

Productivity Improvements + Local Community Engagement

SLIDE 60

5/5/2016 60

TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

IMPROVE POLICY Hold a Policy Blitz process!! IMPROVE Balance Integrated Industrial Learning system Balance Education/Training/Experience Focus on local population Ensure Learning is economically viable IMPROVE & Mobilize Supply Chain Strategy

+

Productivity Improvements + Local Community Engagement

TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

IMPROVE POLICY Hold a Policy Blitz process!! IMPROVE Balance Integrated Industrial Learning system Balance Education/Training/Experience Focus on local population Ensure Learning is economically viable IMPROVE & Mobilize Supply Chain Strategy

+

Productivity Improvements + Local Community Engagement

SLIDE 61

5/5/2016 61

TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

IMPROVE POLICY Hold a Policy Blitz process!! IMPROVE Balance Integrated Industrial Learning system Balance Education/Training/Experience Focus on local population Ensure Learning is economically viable IMPROVE & Mobilize Supply Chain Strategy

+

Productivity Improvements + Local Community Engagement

Industry Game-plan Checklist

Supply Chain Strategy… Reduce intrinsic waste

Run a Balanced Sourcing model…Include all cost factors … Rethink Sourcing plans within NAFTA…. US/Canada/Mexico Develop shorter supply chains where possible (NAFTA + Global) Strategize manufacturing closer to the trade bloc customer with partnerships and focused supply. Strategize manufacturing closer to the trade bloc supply (including primary resources).. Rebuild and Invest in strong local supply cluster relationships

Productivity Improvements… In all aspects of the business

Re-invent business wide LEAN Thinking and a business Continuous Improvement culture Gain an aptitude for all forms of INNOVATION and commercialization tools Integrated Business systems … Ensure you have a future “Integration plan”. New process technology and capital reinvestment… Flexible Automation/Rapid Technologies. Participate in integrated Learning system to develop/retain/stabilize/mobilize your workforce.

Local Community Engagement ….. Work on the image

Encourage local government to provide “business easy” infrastructure and costs Ensure engagement in applicable grants/saving programs and subsidies available to industry. Plan to minimize exposure to high energy and infrastructure costs Participate in local sustainable environment goals Re-Engineer and improve the local Manufacturing Image and value for every-one RUN THE NUMBERS!!!

SLIDE 62

5/5/2016 62

Industry Game-plan Checklist

Supply Chain Strategy… Reduce intrinsic waste

Run a Balanced Sourcing model…Include all cost factors … Rethink Sourcing plans within NAFTA…. US/Canada/Mexico Develop shorter supply chains where possible (NAFTA + Global) Strategize manufacturing closer to the trade bloc customer with partnerships and focused supply. Strategize manufacturing closer to the trade bloc supply (including primary resources).. Rebuild and Invest in strong local supply cluster relationships

Productivity Improvements… In all aspects of the business

Re-invent business wide LEAN Thinking and a business Continuous Improvement culture Gain an aptitude for all forms of INNOVATION and commercialization tools Integrated Business systems … Ensure you have a future “Integration plan”. New process technology and capital reinvestment… Flexible Automation/Rapid Technologies. Participate in integrated Learning system to develop/retain/stabilize/mobilize your workforce.

Local Community Engagement ….. Work on the image

Encourage local government to provide “business easy” infrastructure and costs Ensure engagement in applicable grants/saving programs and subsidies available to industry. Plan to minimize exposure to high energy and infrastructure costs Participate in local sustainable environment goals Re-Engineer and improve the local Manufacturing Image and value for every-one RUN THE NUMBERS!!!

Industry Game-plan Checklist

Supply Chain Strategy… Reduce intrinsic waste

Run a Balanced Sourcing model…Include all cost factors … Rethink Sourcing plans within NAFTA…. US/Canada/Mexico Develop shorter supply chains where possible (NAFTA + Global) Strategize manufacturing closer to the trade bloc customer with partnerships and focused supply. Strategize manufacturing closer to the trade bloc supply (including primary resources).. Rebuild and Invest in strong local supply cluster relationships

Productivity Improvements… In all aspects of the business

Re-invent business wide LEAN Thinking and a business Continuous Improvement culture Gain an aptitude for all forms of INNOVATION and commercialization tools Integrated Business systems … Ensure you have a future “Integration plan”. New process technology and capital reinvestment… Flexible Automation/Rapid Technologies. Participate in integrated Learning system to develop/retain/stabilize/mobilize your workforce.

Local Community Engagement ….. Work on the image

Encourage local government to provide “business easy” infrastructure and costs Ensure engagement in applicable grants/saving programs and subsidies available to industry. Plan to minimize exposure to high energy and infrastructure costs Participate in local sustainable environment goals Re-Engineer and improve the local Manufacturing Image and value for every-one RUN THE NUMBERS!!!

SLIDE 63

5/5/2016 63

Industry Game-plan Checklist

Supply Chain Strategy… Reduce intrinsic waste

Run a Balanced Sourcing model…Include all cost factors … Rethink Sourcing plans within NAFTA…. US/Canada/Mexico Develop shorter supply chains where possible (NAFTA + Global) Strategize manufacturing closer to the trade bloc customer with partnerships and focused supply. Strategize manufacturing closer to the trade bloc supply (including primary resources).. Rebuild and Invest in strong local supply cluster relationships

Productivity Improvements… In all aspects of the business

Re-invent business wide LEAN Thinking and a business Continuous Improvement culture Gain an aptitude for all forms of INNOVATION and commercialization tools Integrated Business systems … Ensure you have a future “Integration plan”. New process technology and capital reinvestment… Flexible Automation/Rapid Technologies. Participate in integrated Learning system to develop/retain/stabilize/mobilize your workforce.

Local Community Engagement ….. Work on the image

Encourage local government to provide “business easy” infrastructure and costs Ensure engagement in applicable grants/saving programs and subsidies available to industry. Plan to minimize exposure to high energy and infrastructure costs Participate in local sustainable environment goals Re-Engineer and improve the local Manufacturing Image and value for every-one RUN THE NUMBERS!!! Our recent TBM survey of Manufacturers established… 68% said they must focus on Continuous Improvement 60% said were planning to pursue a LEAN Implementation

Industry Game-plan Checklist

Supply Chain Strategy… Reduce intrinsic waste

Run a Balanced Sourcing model…Include all cost factors … Rethink Sourcing plans within NAFTA…. US/Canada/Mexico Develop shorter supply chains where possible (NAFTA + Global) Strategize manufacturing closer to the trade bloc customer with partnerships and focused supply. Strategize manufacturing closer to the trade bloc supply (including primary resources).. Rebuild and Invest in strong local supply cluster relationships

Productivity Improvements… In all aspects of the business

Re-invent business wide LEAN Thinking and a business Continuous Improvement culture Gain an aptitude for all forms of INNOVATION and commercialization tools Integrated Business systems … Ensure you have a future “Integration plan”. New process technology and capital reinvestment… Flexible Automation/Rapid Technologies. Participate in integrated Learning system to develop/retain/stabilize/mobilize your workforce.

Local Community Engagement ….. Work on the image

Encourage local government to provide “business easy” infrastructure and costs Ensure engagement in applicable grants/saving programs and subsidies available to industry. Plan to minimize exposure to high energy and infrastructure costs Participate in local sustainable environment goals Re-Engineer and improve the local Manufacturing Image and value for every-one RUN THE NUMBERS!!!

Apply new technologies to traditional sectors to innovate new products The use of Disruptive technologies such as Additive 3D printing in both Plastic and Metal can provide many industries with both Rapid prototyping and hi performance tooling strategies to re-life traditional industries and breed new industries.

SLIDE 64

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127

Global Change is taking place at an Exponential Rate!!

Globalization is Enabling Change (Positively and Negatively)… Religious/Ethnic pressures Higher Expectations to share wealth Cultural Mobility National boundaries (Much Migration) Technology (Supply Chains) Market and Commerce (unbalanced) Economics (unplanned) Politics Age of Disruption Ecological Sustainability Issues Age of Over-Supply 128

The 5 Advanced Technologies Driving Disruptive Innovation

3D Printing

SLIDE 65

5/5/2016 65

Industry Game-plan Checklist

Supply Chain Strategy… Reduce intrinsic waste

Run a Balanced Sourcing model…Include all cost factors … Rethink Sourcing plans within NAFTA…. US/Canada/Mexico Develop shorter supply chains where possible (NAFTA + Global) Strategize manufacturing closer to the trade bloc customer with partnerships and focused supply. Strategize manufacturing closer to the trade bloc supply (including primary resources).. Rebuild and Invest in strong local supply cluster relationships

Productivity Improvements… In all aspects of the business

Re-invent business wide LEAN Thinking and a business Continuous Improvement culture Gain an aptitude for all forms of INNOVATION and commercialization tools Integrated Business systems … Ensure you have a future “Integration plan”. New process technology and capital reinvestment… Flexible Automation/Rapid Technologies. Participate in integrated Learning system to develop/retain/stabilize/mobilize your workforce.

Local Community Engagement ….. Work on the image

Encourage local government to provide “business easy” infrastructure and costs Ensure engagement in applicable grants/saving programs and subsidies available to industry. Plan to minimize exposure to high energy and infrastructure costs Participate in local sustainable environment goals Re-Engineer and improve the local Manufacturing Image and value for every-one RUN THE NUMBERS!!!

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….

130

….. And Smelly!

M And…. Highly unstable as a career!

?

SLIDE 66

5/5/2016 66

131

TBM

EXCITE the NEXT GENERATION

Change ….

The Image of Manufacturing

Let’s Make Manufacturing TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

IMPROVE POLICY Hold a Policy Blitz process!! IMPROVE Balance Integrated Industrial Learning system Balance Education/Training/Experience Focus on local population Ensure Learning is economically viable IMPROVE & Mobilize Supply Chain Strategy

+

Productivity Improvements + Local Community Engagement

SLIDE 67

5/5/2016 67

133

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!

Toronto Chapter

134

Take Back Manufacturing

FOR OUR KIDS!!!

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

TBM

Toronto Chapter

SLIDE 68

5/5/2016 68

Questions for a friendly vote with a show of hands?

135

Questions for a friendly vote with a show of hands?

1. How many agree Canada needs a strong manufacturing base?
2. How many believe TBM is a realistic initiative?
3. How many believe government must focus on Industrial Policy
4. How many would like to be kept informed on TBM and would like

to participate in the TBM journey?

5. How many give the “thumbs up” for TBM!!!

136

SLIDE 69

5/5/2016 69

Questions for a friendly vote with a show of hands?

1. How many agree Canada needs a strong manufacturing base?
2. How many believe TBM is a realistic initiative?
3. How many believe government must focus on Industrial Policy
4. How many would like to be kept informed on TBM and would like

to participate in the TBM journey?

5. How many give the “thumbs up” for TBM!!!

137

Questions?

138 KEEP ASKING…. WHY?…

SLIDE 70

5/5/2016 70

END

139