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The Four Pillars of Manufacturing Effectiveness
____________________________________________________________________________________________Bill CanisBill Canis
The Manufacturing InstituteThe Manufacturing Institute
October 15, 2008October 15, 2008
The Manufacturing InstituteThe Manufacturing Institute
ChairmanChairman: : Robert RatliffRobert Ratliff, founder and retired , founder and retired chairman, CEO and president, AGCO Inc.chairman, CEO and president, AGCO Inc.
TrusteesTrustees: Caterpillar, Dow Chemical, General Electric, : Caterpillar, Dow Chemical, General Electric, Procter & GambleProcter & Gamble
MissionMission: as the NAM’s nonprofit arm, strengthen the : as the NAM’s nonprofit arm, strengthen the manufacturing economy by--manufacturing economy by--• Increasing the knowledge of and respect for our industry; Increasing the knowledge of and respect for our industry; • Creating and implementing human capital strategies.Creating and implementing human capital strategies.
The Four Pillars of The Four Pillars of
Manufacturing EffectivenessManufacturing Effectiveness
1.1. Implementing innovation, including leanImplementing innovation, including lean
2.2. Using available financial resourcesUsing available financial resources
3.3. Attracting skilled workersAttracting skilled workers
4.4. Competing in the international Competing in the international marketplacemarketplace
The The Manufacturing FoundationManufacturing Foundation of the U.S. Economy of the U.S. Economy
• Engine of economic growthEngine of economic growth• ProductivityProductivity• Total compensationTotal compensation• InnovationInnovation• Contribution to international trade Contribution to international trade
Nothing's Made in America Any More?
0
200
400
600
800
1,000
1,200
1,400
1,600
1929 1940 1951 1962 1973 1984 1995 2006
Quantitiy Index (1929 = 100)
ManufacturingProduction
GDP
Manufacturing:Manufacturing:An Engine of GrowthAn Engine of Growth
-4% -2% 0% 2% 4% 6% 8% 10% 12% 14%
Professional and business services Information
Finance and insurance Manufacturing
Real estate and rental and leasing Retail trade
Educational services, health care, and socialassistance
Transportation and warehousing Wholesale trade
Government Arts, entertainment, recreation, accommodation,
and food services Agriculture, forestry, fishing, and hunting
Utilities Other services, except government
Mining Construction
Contribution to GDP Growth (2001-2006)
0
1
2
3
4
5
2003 2004 2005 2006 2007 2008
Q4/Q4 Percent Change
Manufacturing
GDP
Source: Commerce Department, Federal Reserve, NAM forecast
GDP and Manufacturing Output
Manufacturing:Manufacturing:
ProductivityProductivity Powerhouse
0%
1%
2%
3%
4%
5%
1970s 1980s 1990s 2000-2006
Av
era
ge
An
nu
al P
erc
en
t C
ha
ng
e
Manufacturing Non-farm Business
Manufacturing: Manufacturing: Better CompensationBetter Compensation
0
10000
20000
30000
40000
50000
60000
70000
Manufacturing Rest of Workforce
20
05
An
nu
al
co
mp
en
sa
tio
n
(pe
r fu
ll-t
ime
wo
rke
r)
Benefits
Wages
Manufacturing: Jobs MultiplierManufacturing: Jobs Multiplier
Mfg
OtherSectors
0
5
10
15
20
25
Number of Jobs
Nu
mb
er
of
Jo
bs
(in
Mill
ion
s)
FIRE 4%
Const 4%
Mining 2%
Other 5%
Ag 8%
TCU 9%
Services 30%
Trade 37%
}
Manufacturing: U.S. Industrial R&D Manufacturing: U.S. Industrial R&D Outpaces Global RivalsOutpaces Global Rivals
137
100
72
16 6
56
21
43
7
0
20
40
60
80
100
120
140
160
180
200
UnitedStates
E.U. Japan Korea Canada
Bill
ion
s o
f P
PP
Do
llars Other
Manufacturing
Source: National Science Foundation
Manufacturing: Strong Contributor to Manufacturing: Strong Contributor to International TradeInternational Trade
0%
10%
20%
30%
40%
50%
1989 1993 1997 2001 2005
Tra
de
Sh
are
of
Gro
ss O
utp
ut
Manufacturing
U.S. Economy
Rest of Economy
The Four Pillars of The Four Pillars of
Manufacturing EffectivenessManufacturing Effectiveness
1.1. Implementing innovation, including leanImplementing innovation, including lean
2.2. Using available financial resourcesUsing available financial resources
3.3. Attracting skilled workersAttracting skilled workers
4.4. Competing in the international Competing in the international marketplacemarketplace
The Four Pillars of The Four Pillars of Manufacturing EffectivenessManufacturing Effectiveness
1. 1. Implementing innovation, Implementing innovation, including leanincluding lean
48%
39%
27%
9%
4%
3%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Large-CompanyPlants
SMM Plants
Percent of Respondents
Lean
Lean and Six Sigma
Toyota ProductionSystem (TPS)
Lean DisparityLean Disparity
Source: Industry Week
Best Practices – InnovationBest Practices – Innovation
Require Require leanlean of your suppliers – of your suppliers – Supplier Partnership Improvement Supplier Partnership Improvement Plan (SPIP)Plan (SPIP)
Get the Get the front endfront end right – ensure right – ensure customer requirements before customer requirements before starting productionstarting production
Develop a Develop a cultureculture of innovation of innovation
The Four Pillars of The Four Pillars of Manufacturing EffectivenessManufacturing Effectiveness
2. 2. Using available financial resourcesUsing available financial resources
Best Practices: FinancingBest Practices: Financing
Best Practices - FinancingBest Practices - Financing Utilize Utilize local, state and federal governmentlocal, state and federal government financing financing
and tax programsand tax programs Protect your receivables through Protect your receivables through letters of creditletters of credit or or
credit insurancecredit insurance Establish relationships with accountants and lawyers in Establish relationships with accountants and lawyers in
the destination country, who will then introduce you to the destination country, who will then introduce you to the the foreign banksforeign banks
Consider Consider outside investorsoutside investors not only as a capital resource not only as a capital resource but for deep industry and international expertisebut for deep industry and international expertise
The Four Pillars of The Four Pillars of Manufacturing EffectivenessManufacturing Effectiveness
3. 3. Attracting skilled workersAttracting skilled workers
Five major challenges Five major challenges to the future manufacturing workforceto the future manufacturing workforce
1.1. accelerating technologyaccelerating technology2.2. retirementsretirements3.3. poor K-12 educationpoor K-12 education4.4. college or bustcollege or bust5.5. industry imageindustry image
College or BustCollege or Bust
0% 10% 20% 30% 40% 50% 60% 70%
Will Enter a 4-year college
Will enter anassociate degree
program oradvancedtraining
Will lack the skillsneeded for
employment ordrop out of high
school
Where the Jobs Are…
Where 9th graders areheaded
Best Practices - WorkforceBest Practices - Workforce
Invest 3% or more of Invest 3% or more of payroll intopayroll into trainingtraining Team upTeam up with other manufacturers, government and with other manufacturers, government and
education to develop needed training programseducation to develop needed training programs Establish Establish internshipsinternships Start your own local Start your own local Dream It. Do It.Dream It. Do It. manufacturing manufacturing
careers campaign careers campaign (www.dreamit-doit.com)(www.dreamit-doit.com)
•Dream It. Do It., San Antonio, TX•Dream It. Do It., Springfield, MO•Dream It. Do It., So Central Pennsylvania•Dream It. Do It., Minnesota•Dream It. Do It., Jamestown, New York•Dream It. Do It., Milwaukee, WI
•Dream It. Do It., Kansas City•Dream It. Do It., Nebraska•Dream It. Do It., Northeast Ohio•Dream It. Do It., Southwest Virginia•Dream It. Do It., Seattle/Puget Sound•Dream It. Do It., North Central Texas•Dream It. Do It., Southeast Indiana•Dream It. Do It., Will County, Illinois•Dream It. Do It., Greater Phoenix•Dream It. Do It., Virginia-State•Dream It. Do It., Conexus-Indiana State
Dream It. Do It. Campaigns Dream It. Do It. Prospects
The Four Pillars of The Four Pillars of Manufacturing EffectivenessManufacturing Effectiveness
4. 4. Competing in the international Competing in the international marketplacemarketplace
29%
64%
31%
61%
0%
10%
20%
30%
40%
50%
60%
70%
Import less than10%
No Imports Export less than10%
No exports
Pe
rce
nt
of
Re
sp
on
de
nts
Lagging Global Activity Lagging Global Activity of Small and Medium Manufacturersof Small and Medium Manufacturers
Source: Industry Week
Best Practices – Global CompetitionBest Practices – Global Competition
CustomizeCustomize Follow major customers Follow major customers abroadabroad Use international standards to Use international standards to drive drive
continuous improvementcontinuous improvement Utilize Utilize state and federalstate and federal export assistance export assistance
The Four Pillars of The Four Pillars of
Manufacturing EffectivenessManufacturing Effectiveness
1.1. Implementing innovation, including leanImplementing innovation, including lean
2.2. Using available financial resourcesUsing available financial resources
3.3. Attracting skilled workersAttracting skilled workers
4.4. Competing in the international Competing in the international marketplacemarketplace
Thank You
Bill CanisBill Canis
The Manufacturing InstituteThe Manufacturing Institute
[email protected]@nam.org
202.637.3109202.637.3109