GAINING BUSINESS: 2012 GEORGIA MANUFACTURING SURVEY SHOWS MORE FIRMS BENEFITING FROM IN-SOURCING THAN LOSING FROM OUTSOURCING The 2012 Georgia Manufacturing Survey provides some welcome good news for Georgia companies. For the first time since researchers began tracking the statistic, more Georgia manufacturers have been benefiting from in-sourcing-production work coming to them from outside the state - than have been losing work to other states and countries. Nearly 16% of the companies responding to the survey said work had been transferred to them from outside Georgia, compared to slightly more than 14 percent that lost work to out-of-state facilities. The percentage of companies receiving work from facilities outside Georgia grew from just 11 percent the first year the question was asked in 2005, while the percentage of companies losing work fell from slightly more than 17%. "We have finally seen a crossing of the lines so that more companies are benefiting from in-sourcing than are losing to outsourcing," said Jan Youtie, director of policy research services in the Enterprise Innovation Institute at the Georgia Institute of Technology."It's not a huge difference at this point, but it is a positive and consistent trend for the manufacturing community." The in-sourced work most commonly came from other facilities in the United States, though a growing percentage of companies reported production transferred to them from outside the United States. The percentage of companies benefitting from this "on-shoring" trend grew to 4.3% from 2. 6% in 2005. "This may be about the total cost of manufacturing," said Youtie, who also holds a faculty position in the Georgia Tech School of Public Policy."Companies are taking a hard look at aspects of production they formerly assumed were cheaper overseas. There are costs involved in outsourcing that may not have been considered before, such as logistics and regulatory issues.Rising foreign labor costs may be another factor." Technology-driven companies and those that compete on the basis of innovation are more likely than other firms to benefit from in-sourcing.Larger companies are somewhat more likely to receive work from outside the state than are smaller firms. In some cases, companies both gained work from outside Georgia and lost work to outside facilities. "The growing need for new technology has also created an interesting convergence between different sectors in Georgia's manufacturing industry," said Adam Beckerman, partner-in-charge of the manufacturing and distribution group at Habif, Arogeti & Wynne, LLP. "For example, a piece of robotic equipment that is being used to attach car doors at an automotive production plant happens to be the same equipment that is being used to hold chickens at a nearby food production facility.In coming years, we will see more of these multi-purpose technologies and pieces of equipment having a positive impact on various sectors of the manufacturing industry." The Georgia Manufacturing Survey is conducted every two or three years to assess the use of modern manufacturing technology, practices and techniques by Georgia industry. It was conducted by Georgia Tech researchers in collaboration with Kennesaw State University, the Georgia Department of Labor, and the Atlanta accounting firm Habif, Arogeti and Wynne, LLP, a Georgia-based tax, accounting and business advisory firm. The 2012 survey was conducted from February to May of 2012, and received responses from 528 companies that had 10 or more employees. The survey also asked about a broad range of competitiveness and productivity issues, and focused on current and planned technology use. More than half of the respondents reported using enterprise resource planning, computeraided design and preventive-predictive maintenance technology. Inventoryfocused technologies such as bar-code readers and radio-frequency identification (RFID) systems led the list of future priorities, with 21% of companies planning to purchase readers and 18% planning RFID investments. While industrial robots have captured public attention, they aren't high on the shopping lists of Georgia companies.About 13% of the firms surveyed use robots now, but only 5% say they plan to add them. About 9% of companies employ advanced materials in their manufacturing, while approximately 6 percent use additive manufacturing - technology for building parts directly from computer-aided design systems. Although concerns are raised about the role of technology in reducing manufacturing employment, the Georgia Manufacturing Survey did not find a strong relationship between technology adoption and employment decline. Manufacturers using production technologies and techniques were more than 40% more likely to have added employment rather than to have reduced employment.A model that controls for sales, capital, industry, year of establishment and other factors found that greater technology use is positively associated with higher employment, noted Phil Shapira, co-director of the survey and a professor in Georgia Tech's School of Public Policy and a professor of innovation, management and policy at the University of Manchester in the United Kingdom. "One caveat is that the model does not represent manufacturers that went out of business due to technological or other factors," he said. "That said, job losses related to technology substitution may have been offset by employment gains due to greater competitiveness." Though many companies responding to the 2010 survey said they were interested in sustainability, that didn't translate into dramatic action in the 2012 survey. For instance, only 8% of Georgia manufacturers have produced an emissions inventory or carbon footprint of their facilities. "We saw that companies followed through on plans for waste elimination and efforts to reduce pollution, but we didn't see an increase in the re-use of materials, remanufacturing, less shipping or more use of renewable energy," Youtie said. "The basic entry points for sustainability are there, but some areas haven't seen much progress." As in past years, the study compared profitability of companies with different competitive strategies. The return on sales for companies competing on the basis on innovative products, processes or services was twice that of companies competing on the basis of low price. Innovative companies also pay higher wages than companies using other strategies. "We see that science-based industries are more likely to prioritize innovation as a strategy," explained Shapira."Industries such as food and apparel are less likely to compete that way. No group has a large percentage of firms competing on innovation, though companies in any industry can use innovation." Seventeen percent of Georgia manufacturers chose low price as their primary competitive strategy, compared to less than 10 % that compete through innovation or the use of new technology.The most popular competitive strategy was high quality. Other survey findings included: Half of Georgia manufacturers reported export sales, and 23% of respondents reported that their exports increase d in 2011 over 2009 levels. Profits of Georgia manufacturers generally declined between 2010 and 2012, but the profitability difference between companies competing through innovation and those competing on the basis of low price remained. When Georgia manufacturers conduct research and development activities, they compared well with manufacturers across the country. However, only a third of Georgia manufacturers conducted R&D in-house, and only 4% used public loans or grants to pay for R&D. Less than 20% of companies used R&D tax credits available through state and federal sources. The results show the challenges facing Georgia manufacturers. "Innovation, advanced technology and sustainability play crucial roles in helping manufacturers achieve competitiveness and maintain it for the future," the authors wrote. "Manufacturers increasingly must operate using efficient and productive technologies, and with finite resources and greater awareness of environmental impacts." TD ECONOMICS REPORT HERALDS REVIVAL OF AMERICAN MANUFACTURING SECTOR THROUGH REDUCED OFFSHORING OF JOBS PORTLAND, ME and CHERRY HILL, NJ-TD Economics-an affiliate of TD Bank-released a special report crediting the revival of the U.S. manufacturing sector as a key driver in the economic recovery, largely due to a slowdown in offshoring activity. This slowdown has kept some of the jobs in the United States that used to be rapidly offshored, especially ones in relatively capital-intensive industries such as computers and electronics; machinery; fabricated metals and plastics and rubber, accounting for about one-quarter of the 200,000 manufacturing jobs added over the last 12 months. The report indicates that since the trough occurring in January of 2010, the manufacturing sector has added nearly 500,000 jobs, in part due to the deceleration of shipping jobs overseas. The drivers behind the deceleration result from a unique combination of dynamic global and domestic conditions. On the global scale, offshore wages have risen rapidly, while an appreciating renminbi and volatile transportation rates have weakened offshoring's cost advantages. Domestically, existing intellectual property protection, flexibility arising from tighter supply chains, a trend toward mass-customization and access to natural gas energy from shale formations have begun to tip the manufacturing scales back in the favor of the United States. "Even though manufacturing has shed jobs in the past two months, it does not detract from the remarkable upswing that has been underway since the Great Recession ended," says Michael Dolega, the TD Economist who authored the study. "This resurgence has bucked a trend that has been in place for more than a decade allowing manufacturing jobs to be a key driver of the economic recovery. We believe that capital-intensive manufacturing industries will lead this onshoring trend, while labor-intensive industries such as apparel and textiles will remain, or perhaps be pushed even further, offshore." The report cautions that en masse industry onshoring isn't likely to occur, nor will the trend replace the nearly six million jobs lost to offshoring since the peak in the mid-2000s. Also of note is that new manufacturing jobs will require less labor-intensive, but more high-skill, highly-productive positions in which the United States has a competitive advantage. SOCIETY OF MANUFACTURING ENGINEERS RECEIVES U.S. DEPARTMENT OF ENERGY GRANT TO FOCUS ON ENERGY CONSERVATION DEARBORN, MI-The Society of Manufacturing Engineers (SME) has been granted $292,000 from the U.S. Department of Energy to partner SME Student Chapters with existing Industrial Assessment Centers (IAC) at universities nationwide. IAC assessments focus on industrial energy conservation techniques through energy audits and assessments of manufacturers. This grant broadens the program to assess manufacturing processes for energy savings. Starting this year, SME will partner with six universities, incrementally expanding the program over the next three and a half years. In total, SME will partner with all 24 IACs participating in the DOE program, providing invaluable hands-on industry experience for future manufacturing professionals. "SME's student members are the future manufacturing workforce, and engaging them with the IACs across the country will provide them with critical skills and training while producing real cost savings for small to mid-sized manufacturers." Says Joe LaRussa, director of membership."This program typifies how SME, industry and government can collaborate to strengthen manufacturing as a critical component of the U.S. economy." University-based IACs across the country provide students with critical skills and training to conduct energy assessments in a broad range of facilities.SME faculty advisors will work directly with IAC directors to guide the students during the assessment process. Since 1981, the IACs have performed nearly 15,000 assessments containing more than 117,000 recommendations.Industry assessments have resulted in energy savings of saved 530 trillion Btu (British thermal units) or more than $5.6 billion. More information on Industrial Assessment Centers can be found on their website. COMING EVENTS JANUARY 21-24 AUTOMATE 2013 Association for Advancing Automation Chicago, IL (734) 994-6088 firstname.lastname@example.org www.automate2013.com/ BUSINESS NEWS MAPLE GROVE, MN-CARL ZEISS announces a new entrustment agreement to support Dunwoody College of Technology, located in Minneapolis, MN, with two ZEISS coordinate measuring machines (CMMs) and CALYPSO metrology software. Two of Dunwoody's programs-Engineering Drafting & Design and Machine Tool Technology-are using these CMMs, which are designed for measurement in the workshop and production, to improve the students' manufacturing and quality inspection skills by using the latest measurement technology. BERWYN, PA-AMETEK INC. has acquired MICRO-POISE MEASUREMENT SYSTEMS, a provider of integrated test and measurement solutions for the tire industry, from American Industrial Partners, a private equity firm, for approximately $170 million in cash. Micro- Poise is headquartered in Streetsboro, OH, and has additional manufacturing operations in Troy, MI; Beijing, China; and Lübeck, Germany.It has estimated 2012 sales of approximately $125 million. ASSOCIATION NEWS RICHMOND, VA-THE COMMONWEALTH CENTER FOR ADVANCED MANUFACTURING (CCAM) announced it will add three additional companies to its growing list of industry members: Buehler, Cool Clean Technologies and GF AgieCharmilles. Each company brings key advanced manufacturing equipment to CCAM that will support the center's research and development efforts. CCAM is a collaborative research center that brings global manufacturing companies together with Virginia's top research universities and CCAM's own expert engineers and scientists.Working together under one roof on challenges common to advanced manufacturing, CCAM accelerates the transfer of research discovery and innovation to commercial, production-line use. Headquartered in Lake Bluff, IL, Buehler is the world's leading supplier of materials preparation and analysis equipment, consumable supplies and application solutions for manufacturers.The company is outfitting CCAM's materials preparation lab with key equipment to support research projects and to build relationships with CCAM's other industry members. Cool Clean Technologies uses recycled CO2to provide precision cleaning, machine cooling and materials extraction solutions to manufacturers worldwide. The Minneapolis-based company's solutions are used across a wide range of industries, including medical, fiber optics, fuels, aviation, solar, electronics and other manufacturing sectors, and they will play key roles in CCAM research projects. GF AgieCharmilles, a Switzerland-based company operating in more than 50 countries, provides machines, automation solutions and services to the tool and mold making industry and to manufacturers of precision components. Its products range from electric discharge machines, high-performance milling machines and 3D laser surface texturing machines to services, spare parts and automation solutions. GF AgieCharmilles is providing a die-sinking EDM unit for CCAM's machining cell. "On September 11th, CCAM took possession of its state-of-the-art research facility," says David R. Lohr, president and executive director of CCAM. "Buehler, Cool Clean Technologies and GF AgieCharmilles will play a critical role in providing the equipment that will allow our industry and university members to leverage this new research center to turn research into business advantages and we look forward to a lasting and beneficial relationship." Existing CCAM industry members include Aerojet, Canon Virginia, Chromalloy, Mitutoyo America Corporation, Newport News Shipbuilding, Rolls-Royce, Sandvik Coromant, Siemens and Sulzer Metco.University members include the University of Virginia, Virginia State University and Virginia Tech. CCAM recently completed construction of its new, state-of-the-art, 60,000 square-foot facility in Prince George County, VA., just south of Richmond. The building features computational and engineering research labs in addition to high bay production space for commercial scale equipment and other tools required to explore CCAM's research focus areas - surface engineering and manufacturing systems. AME PROUDLY HONORS 2012 HALL OF FAME INDUCTEES CHICAGO-THE ASSOCIATION OF MANUFACTURING EXCELLENCE (AME) named four 2012 Hall of Fame inductees at its annual conference this week. In a ceremony held at its annual Internal Excellence Inside Conference, the honor recognizes individuals who have distinguished themselves in the manufacturing community in a manner that is consistent with AME's mission to inspire a commitment to enterprise excellence through shared learning and access to best practices. This year's honorees are: • Daniel Ariens, president and CEO of the Ariens Company- Mr. Ariens has been a strong proponent of lean manufacturing principles, even when the company was experiencing a downturn as a result of weather-related problems. He created a culture of continuous improvement that has resulted in the creation of world-class manufacturing facilities by lean standards. • Dr. Patricia Gabow, M.D., CEO of Denver Health. Under her direction, Denver Health has experienced a financial benefit of more than $135 million through improvement actions. Most importantly, it has transformed the health system and delivery quality for the patients it serves. Dr. Gabow attributes this lean health care initiative to saving at least 213 lives in 2011 alone. • Dr. Jeffrey Liker, PhD., professor of industrial and operations engineering at the University of Michigan and principle of Optiprise, Inc. Dr. Liker has authored or co-authored over 70 articles and book chapters and eight books. He is author of the international best-seller, The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer. • Dr. John Toussaint, M.D., CEO emeritus of ThedaCare and CEO of the ThedaCare Center for Heathcare Value. During his tenure at ThedaCare, Dr. Toussaint applied the Toyota Production System to health care, which led to such results as zero medication reconciliation errors upon admission for more than three years in a row and dramatically improved staff productivity and satisfaction. Millions of dollars of waste reduction have resulted in ThedaCare consistently being one of the lowest-priced health care organizations in Wisconsin, while at the same time more than doubling operating income over five years. Paul Kuchuris, AME president, said, "Our Awards and Hall of Fame Council Members work hard every year to honor the individuals who really are our industry's thought leaders, those that take pride in their ability to influence positive change and encourage the adoption of continuous improvement practices. I think this year is no different as we have four very talented and skilled people entering our Hall of Fame." OBERKOCHEN, GERMANY-In July 2012, CARL ZEISS opened a new assembly and demo center for Industrial Metrology in Ban- galore, India. "The opening of this new center enables us to manufacturer our coordinate measuring machines (CMM) directly on site for a market with major potential. We can react more quickly to the needs of our customers and will be able to expand our market position," says Dr. Rainer Ohnheiser, president and CEO of Carl Zeiss Industrial Measuring Technology. The Tech Center there allows Industrial Metrology to offer its customers additional services such as demos, training, contract programming, contract measurements and a service hotline. RALEIGH, NC- INSPECTIONXPERT CORP., a provider of inspection reporting software, today announced that it has signed a distribution partnership contract with K2D-KEYTODATA GmbH, a provider of CAD software and digital design communication solutions. K2D will support InspectionXpert Corp. in expanding a European reseller network to sell the InspectionXpert product line and provide service and support to customers in Europe. GLOUCESTERSHIRE, UK- RENISHAW'S assembly facility at Woodchester in Gloucestershire has been named as the UK's Best Electronics & Electrical Plant at the prestigious Best Factory Awards 2012, held on Sept. 28th in London. The honor was achieved against strong competition from global brands, with Renishaw receiving the title ahead of Sony UK Technology Centre and Siemens MR Magnet Technology. The judges, led by Cranfield University's Institute of Management, noted Renishaw's "unerring commitment to in-house manufacture," which it considers essential to ensure quality and delivery, and to support product development timescales. According to the award citation, "the combination of astute supply chain management, strategic operations planning and class-leading automated technology makes this stand-out OEM a worthy winner of the Best Electronics & Electrical Plant prize." BUFFALO GROVE, IL-LEICA MICROSYSTEMS, a microscope and image analysis technology solutions company, announces a strategic transition in its market representation for industrial, forensic, and educational microscopy and imaging sales and service in Florida.Effective Nov. 3, 2012, Leica Microsystems' industrial and microscopy customers should contact Vashaw Scientific for all sales and service related issues in Florida. As of the effective date, Micro Optics of Florida will no longer be representing Leica Microsystems as a regional dealer. JAKARTA, INDONESIA-SATO GROUP is pleased to announce the establishment of PT. SATO NAGATOMI, a new company formed as a joint venture between SATO Group and PT. Indonagatomi in Jakarta, Indonesia.Operations began in October, 2012. PT. Indonagatomi has been selling SATO products including barcode printers and hand labelers in Indonesia for many years, and this business will now shift to PT. SATO Nagatomi. With five sales branches located in the heart of Jakarta, PT. SATO Nagatomi is capable of serving a vast number of customers throughout the region.
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