TBM Take Back Manufacturing . E ssential for Sustainable Supply - - PDF document

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TBM Take Back Manufacturing . E ssential for Sustainable Supply - - PDF document

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1/25/2015 TBM Take Back Manufacturing WWW.SME-TBM.ORG TBM Take Back Manufacturing . E ssential for Sustainable Supply Chains in the future. TBM Take Back Manufacturing WWW.SME-TBM.ORG Take Back Manufacturing . E ssential for Sustainable

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TBM

Take Back Manufacturing

TBM Take Back Manufacturing

WWW.SME-TBM.ORG

…. Essential for Sustainable Supply Chains in the future.

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 have a local expert that can brief us on the latest global trends and sustainable supply chain concepts and how the events that are unfolding will affect us all.
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TBM Take Back Manufacturing

WWW.SME-TBM.ORG … …………………………………………………………………………………..

Nigel Southway C.Eng IEEE . MSc BIM . SME. Author.

Author of CYCLE TIME MANAGMENT ...Fast Track to Time Based Productivity Improvement …. A ground breaking LEAN Thinking text book on the concept and implementation of Business Cycle Time reduction and continuous improvement.. Provides consulting coaching and education on Business Productivity Improvement and Advanced Manufacturing Engineering to all types of business sectors and helps develop a Vision, Strategy and Evolution plan to attack waste, capture productivity improvements, increase profits, and become more competitive in the global market. He is an architect of change for many major organizations across many industrial sectors on improvement and organizational change and is currently coaching, consulting and educating worldwide on Business Improvement Initiatives, Joint Ventures, New Product Introduction Systems, Global Technology Transfer projects and Sustainable Supply Chain Management. Nigel is Society Manufacturing Engineering Toronto Secretary and Past Chair in 2012-2013, holds the SME Presidents Award, and is the leading advocate for the Take Back Manufacturing Forum and the North American Reshoring initiative in Canada.

SME Toronto

WWW.SMETORONTO.CA

Nigel Southway

SME Toronto Secretary/Past Chair 2012/2013

Toronto Chapter

Society of Manufacturing Engineers WWW.SME.ORG

Premier source for manufacturing knowledge, education and networking.
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Vision of the reality The Global Outlook The Future Challenge

TBM Take Back Manufacturing

WWW.SME-TBM.ORG

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 / Directed many organizations in different industry sectors.
www.nigelsouthway

NEXUS

(1992) 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

www.nigelsouthway.com

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INDUSTRY WEEK 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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GLOBALIZED MANUFACTURING

2004 Onward

CANADA MANUFACTURING

10

The future of Manufacturing in Ontario’s economy.

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CANADA MANUFACTURING

11

The future of Manufacturing in Ontario’s economy.

A NORTH AMERICAN PROBLEM

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

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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

TBM Take Back Manufacturing

WWW.SME-TBM.ORG 14 M

TBM

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SORRY!

15

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

TBM Take Back Manufacturing

WWW.SME-TBM.ORG Honest and Factual Provocative Argumentative Mind bending Scary Frustrating Inspiring

TBM…Our Ultimate Goal

16

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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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

20
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21

BNN BUSINESS NEWS NETWORK

What can Canada learn from German Manufacturing?

WHY?..Take Back Manufacturing

FOR OUR KIDS!!

22

TBM Take Back Manufacturing

WWW.SME-TBM.ORG
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23

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

This is NOT a game!!!...

? ? ? ?

GLOBALIZED MANUFACTURING

? ?

We Question its future Sustainability

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Moved Off-shore…..

25

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

26 2009 2010 2011

CANADA

More than 500,000 jobs lost in 6 year period (300,000 Ontario) 25% Reduction (Quantity and Quality) Only 25000 jobs added in Resource Sector

TBM

50% of Manf SME’s lost in Ontario 10% Productivity Loss due to reduced Capacity utilization

Yet ….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
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What happened?

27
  • 1% GDP
28

OUR BIG BROTHER

(US GDP 2010=14000B)

USA

Economists started to follow an almost Religious fanatical view of free market doctrine Washington Consensus
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  • 1% GDP
29

OUR BIG BROTHER

(US GDP 2010=14000B)

USA

Adopted Free Market Ideology… Chased Emerging Markets

Forgot National Economic Controls Used liberalized Trade approach Allowed free flow of capital Removed trade barriers and controls Accepted Out of Balance Trade. Assumed More Service Sector Jobs???? Assumed local exports would grow/balance
  • 4% GDP
Globalized Trade Cumulative Deficit is now 50% 2010 GDP
  • 1% GDP
30 (US GDP 2010=14000B) Significant government deficit and foreign borrowing

USA

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

USA

HUGE ONGOING TRADE IMBALANCE

“Friedman’s folly”

Some experts call this “Wealth transfer”

Global Trade Balance Imbalance

32
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Global Trade Balance Imbalance

33

The Age of Over-Supply

Uncontrolled Trade Balance has allowed emerging economies via corporations almost unlimited access to mature economy consumers (employees). Means… Significant increase in the global labor supply without adequate demand balance. Means… Significant Job loss and release of excess capital and cheap money forcing down interest rates resulting in irresponsible lending and borrowing practices.

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 Productivity + 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

????

Economic Doctrine

Share holders

Moving toward Wealth Inequality?
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(GDP=1350B)
  • 10% GDP

CANADA

  • 1% GDP
  • 2% GDP
Worse than USA numbers!!! Canada/World 35
  • 1% GDP
36 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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37 ? Any ratio far above 1.5 is an issue EAST WEST

TBM

Major UNDER-employment About 12.5% Youth under-employment 20+%

We need jobs!

(Agreed that some skill mix is an issue) ??? It is now VERY obvious that we need a Balanced Economy

(Resources/Services/Manufacturing)

70% of new Grads unable to practice in chosen career 38 Professionals overall ok Engineering NOT so much ok Professional Employment outlook Engineering needs Manufacturing In all forms to thrive
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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) Reduced Investment trends will mean 25% further decline in the next decade
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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 46

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
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Questions?

47

OUR ECONOMY NEEDS MANUFACTURING!

48

Citizen awareness

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49

Are we boiled frogs?

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 CHANGER! A 2nd Chance?

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GLOBALIZED MANUFACTURING

? ?

TBM Positional Paper on the Waste in a Global Supply Chain 52

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

PURE WASTE
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53

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

54 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
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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???

GLOBALIZED MANUFACTURING

? ?

START THINKING LEAN & GREEN

?

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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 57 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 58 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

59

GLOBALIZED MANUFACTURING

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61

Supply Management tools

ERP

PLANNING TOOLS DATA MANAGEMENT COMMUNICATION INTERNET LOGISTICS TECHNOLOGY GLOBAL TRADE Containerization Transit docks Freight Handling Container ships Distribution Systems

Supply chain map

62 Conversion Process Logistics Stage Stage A Single Supply Chain value stream or “element” LEAN Evaluation WASTE? VALUE WASTE? WASTE? Eliminate Or Minimize Suggested Action Optimize… Flexibility Reliability Capability Practices Eliminate Or Minimize Eliminate Or Minimize Each element has 4 main inter-element transactions Only the conversion process 1 out of 4 adds intrinsic value The conversion process may have Non Value adding process steps up to 90%! Total VA/NVA ratio could be as low as 0.1/4= 2.5% Value adding for the whole supply chain element.
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What is Supply Chain Management?

The Council of Supply Chain Management Professionals defines supply chain management as follows: "Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high- performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology." A typical supply chain begins with the ecological, biological, and political regulation of natural resources, followed by the human extraction of raw material, and includes several production links (e.g., component construction, assembly, and merging) before moving on to several layers of storage facilities of ever-decreasing size and increasingly remote geographical locations, and finally reaching the consumer. 63 Many Experts now agree that:- Supply chains have become far more …Efficient! BUT We have strategically managed their ….Utilization ….adversely . Which has reduced their overall …Effectiveness .. With Questionable benefits to the people and eventually the corporations on this planet! 64 Sustainability is NOT anti-business.. Nor a Knee jerk to the Greenpeace Thing! Greenpeace is the leading independent campaigning
  • rganization that uses peaceful protest and creative
communication to expose global environmental problems and to promote solutions that are essential to a green and peaceful future. But in our hearts and in our minds we know they have a point!
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65 66

Global Warming

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Air Pollution

67

WASTE

68
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69

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

When Interest rates are “normalized” we will have a “High cost of Inventory trap” Cost Drivers
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CHINA/ASIA Canada USA 71

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 72

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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We have “Run the Numbers”

73

USED BALANCED SOURCING MODELS

Every Engineer should understand business costing and economics!!!

LEAN Review of Trading Models

TBM

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
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75 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 Material DIRECT OVER HEAD LOCAL 2015+ TBM 5% IMAGINE IF WE IMPROVED Productivity BY 5%? Tipping Point RESHORE ADVANTAGE! 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, 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

COMBINED OPERATIONS

Take Back Manufacturing

TBM

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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

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 82
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GLOBALIZED MANUFACTURING

? ?

START THINKING LEAN & GREEN

90 70 10 50 30 40 20 60 80 % LABOR CONTENT WORST LCC PERFORMER BEST LCC PERFORMER

OFFSHORE VERSUS LOCAL MANUFACTURING BY % LABOR CONTENT

(SINGLE LEVEL COMPONENT) OFFSHORE OFFSHORE MIGRATE PRODUCTS TO THIS ZONE VIA PROCESS: INNOVATION SIMPLIFICATION AUTOMATION TO REDUCE LABOR CONTENT TYPICAL EXAMPLE 84 Material Content LOCAL Tipping Point
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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 TYPICAL EXAMPLE 85 Material Content LOCAL Tipping Point 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 MOVE MORE PRODUCTS TO THIS ZONE VIA AUTOMATION AND PROCESS INNOVATION PLUS SIMPLIFICATION TO REMOVE LABOR CONTENT TYPICAL EXAMPLE 86 Material Content LOCAL
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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 !!!

THE GAME CHANGER!

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

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

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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 !!!

TBM

  • 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

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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!

CANADA / US $ EXCHANGE

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

We did not earn it with Productivity growth!

4% Prod Growth 2%
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95

CANADA / US $ EXCHANGE

(Appreciated) 75 cent $ 0.5 1.0 100 cent $ 1985 1990 2000 2010 86 cent $ 2015

?

Purchase Price Parity 81 Cent $ 4% Prod Growth

Impact of Poor Economic footprint (Auto sector)

  • Canada (Ontario) at 0.95 dollar

$76/hour

  • US North

$85/hour

  • US Mid West

$67/hour

  • US South

$49/hour

  • Mexico

$18.5/hour

96 At a 0.81 dollar and a competitive business environment would be at $55/hour

Reshoring will force some geographical location changes

Loaded Factory labor rates
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Many Factors will determine Reshoring

(Resource & Product Transfers)

97 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 Quality performance Labor cost differential Energy footprint Technology trends 98
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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 ? Current

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

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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

M IMPROVE Balance IMPROVE POLICY IMPROVE & Mobilize
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TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

M IMPROVE POLICY

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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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. 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
Consider a change to the policy making process Hold a Policy Blitz process!! 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!
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TBM Take Back Manufacturing

WWW.SME-TBM.ORG

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

TBM

TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

M

?

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TBM

North-American Manufacturing Prosperity for all.

TBM – The 3 Parallel Imperatives

Educators

  • Education must better serve its citizens
  • Ensure it is value adding to the economy
  • Re-Balance Education versus Training
  • Integrated Industrial Learning System
Reconsider the dubious logic of a focus on the global sell-off of Education to Foreign students

TBM

North-American Manufacturing Prosperity for all.

TBM – The 3 Parallel Imperatives

Educators

  • Education must better serve its citizens
  • Ensure it is value adding to the economy
  • Re-Balance Education versus Training
  • Integrated Industrial Learning System
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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

?

?

?

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. High School Current Environment Future IILS Environment Education Institution Education Institution Work Term Work Term Education Institution ? ?

?

High School Education institution Industrial Integrated Learning Contract Work Term Education institution Work Term Career!
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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. High School Current Environment Future IILS Environment Education Institution Education Institution Work Term Work Term Education Institution ? ?

?

High School Education institution Industrial Integrated Learning Contract Work Term Education institution Work Term Career! Provide education and hope they get a job? Put into an industry and follow a career and receive focused learning!
  • Integrated & Scalable Career Pathway
Apprentice Journeyperson Technician Technologist Engineer
  • Industry driven Skills and Education Development Progression
  • Pool From The Best, the Brightest And The Most Talented
  • Become The Learning/Occupation Destination Of Choice for High School Students
  • Must also support the re-training of the existing mature work-force!!
  • All 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. (Integrated support from All Governments and Educators )
  • 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 !

Integrated Industrial Learning System

TBM

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TBM

North-American Manufacturing Prosperity for all.

Industry

TBM – The 3 Parallel Imperatives

Educators Government

M

?

Let’s Mobilize!!! & Let’s WIN!!!

TBM

TBM – The 3 Parallel Imperatives

Educators

Industry

North-American Manufacturing Prosperity for all.

Supply Chain Strategy Productivity Improvements + Local Community Engagement

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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 RUN THE NUMBERS!!! 118

Balanced Source Landed Cost Comparison

Material OFFSHORE 2015 OH DIRECT Material DIRECT OVER HEAD LOCAL 2015+ +TBM 5%+ + + + + + +

Local Advantage? NAFTA

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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. 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. RUN THE NUMBERS!!!
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AME LEAN World Conference 2013 and Ontario Government Report

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!!!
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Suggested Local Region Checklist

1. Work with Industry associations to fully understand these requirements……… 2. Put industry where the people live who need the jobs! 3. Where possible encourage the leverage of existing local resources and supply chains 4. Make the rebuilding of small to large manufacturing facilities “easy and red tape free”. 5. Fix the high cost of energy! 6. Look at “manufacturing friendly” local taxes and tariffs 7. Ensure local legislations ( Safety/Human Resources/Environmental) are “business friendly”. 8. Ensure transportation logistics and infrastructure are competitive! 9. Encourage import avoidance as well as export enhancement!!!
  • 10. Integrate/leverage existing clustered Industrial learning systems to provide a powerful workforce.
  • 11. Encourage and help change the “Image” of manufacturing
  • 12. Become competitive with other NAFTA jurisdictions…… they are NOW our main competitors!!
123

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!!!
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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 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

NAFTA

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….

126

….. And Smelly!

M And…. Highly unstable as a career!

?

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127

TBM

EXCITE the NEXT GENERATION

Change ….

The Image of Manufacturing

Let’s Make Manufacturing

129

TBM

EXCITE the NEXT GENERATION

Change ….

The Image of Manufacturing

Let’s Make Manufacturing

Via… Student days at Trade shows Student Chapters Plant open days JOB Fairs Key public events
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130

TBM

EXCITE the NEXT GENERATION

Change ….

The Image of Manufacturing

Let’s Make Manufacturing

Via… Student days at Trade shows Student Chapters Plant open days JOB Fairs Key public events

TBM Take Back Manufacturing

WWW.SME-TBM.ORG

Exciting TBM events in 2015 … Looking for your support!

Our Take Back Manufacturing Forum has an exciting new venue for 2015… We have decided to hold our 2015 monthly meetings at the Sheridan college Brampton campus and we will invite our usual membership and any visitors as well as the student body including past students both for Sheridan and affiliated campuses. This way we intend to spread the TBM word and the exciting event topics that we are planning to hold to all those interested, including the next generation of manufacturing professionals and entrepreneurs. We want to provide a conduit for both Professionals and Students to:- Review topics of interest in engineering and manufacturing technology. Experience real life manufacturing engineering professional environments. Study and share in a professional debate on the future socio-technical environment and current economic issues. We thank you all for your past support at the SME/TBM events over the past years, and we hope you will continue to attend at this new venue to support TBM and enjoy the networking that will now be able to include the students that are key to our future quest to restore our manufacturing sectors for our economic prosperity... We wish to thank the Sheridan team for their future hospitality and support for TBM and these events. We will keep you advised and event details will soon be posted at www.sme-tbm.org Contact me direct if you have suggestions for the good of TBM. If anyone would like to provide a talk or arrange a specialty information session please let me know. Call me at 905 464 5517 or email at nsouthway@bell.net Nigel Southway TBM Advocate

Brampton

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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

Suggested Local Region Checklist

1. Work with Industry associations to fully understand these requirements……… 2. Put industry where the people live who need the jobs! 3. Where possible encourage the leverage of existing local resources and supply chains 4. Make the rebuilding of small to large manufacturing facilities “easy and red tape free”. 5. Fix the high cost of energy! 6. Look at “manufacturing friendly” local taxes and tariffs 7. Ensure local legislations ( Safety/Human Resources/Environmental) are “business friendly”. 8. Ensure transportation logistics and infrastructure are competitive! 9. Encourage import avoidance as well as export enhancement!!!
  • 10. Integrate/leverage existing clustered Industrial learning systems to provide a powerful workforce.
  • 11. Encourage and help change the “Image” of manufacturing
  • 12. Become competitive with other NAFTA jurisdictions…… they are NOW our main competitors!!
133
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134

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 135

Take Back Manufacturing

FOR OUR KIDS!!!

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

TBM

Toronto Chapter
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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

END

137