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2014

     In addition to introducing the Digital Lab for Manufacturing in Chicago yesterday, President Barack Obama also introduced the American Lightweight Materials Manufacturing Innovation Institute (ALMMII) in Detroit. It addresses the requirements of the government’s Lightweight and Modern Metals Manufacturing Innovation (LM3I) project, and will speed development of lightweight materials across a number of industries including defense, aerospace, automotive, energy and consumer products.

 

     ALMMII, a $148 million high-tech manufacturing research institute set to open this spring in Detroit, is expected to bring 10,000 jobs to the region within the next five years. The $148 million combines $70 million in federal support and $78 million from the consortium partners.

 

     The 60 member group—which pairs leading aluminum, titanium and high strength steel manufacturers with universities and laboratories pioneering technology development and research—is led by the University of Michigan, Ohio-based manufacturing technology non-profit EWI and The Ohio State University.

 

     “Through this initiative, our region will build on its core strengths to become the nation’s technology hub for lightweight materials and manufacturing,” says U-M President Mary Sue Coleman. “Companies from around the country will come here not only because of our technological capabilities, but also because we have the workforce they need to revitalize and transform domestic manufacturing.”

 

     The institute’s efforts will span the entire transportation supply chain, sparking innovations from conception through design, development and production. It’s also believed the institute will contract more than $100 million in R&D projects with partner organizations. Finally, by establishing science, technology and engineering curricula for programs from grade school to graduate school, the institute will help educate the next generation of students so they can become manufacturing operators and engineers.

 

     Most of the 10,000 jobs ALMMII is expected to create will be in the metal stamping, metalworking, machining and casting industries that are dominant in the Midwest, the University of Michigan explains. Furthermore, the institute will aim to add 100 more metal-related engineering professionals per year and 1,000 more skilled trade workers. Within three years, it is expected to offer advanced training to an additional 1,000 current employees per year.

 

     ALMMII is charged with moving cutting-edge lightweight metals out of the research lab and into tomorrow’s cars, trucks, airplanes and ships for both the commercial and military sectors. In making the announcement, President Obama noted that autoworkers in Detroit are already using advanced, lightweight metals to build new cars that use less gas—and that’s just one example of what these materials can do.

 

     “They can help us build lighter armored vehicles for our troops, planes and helicopters that can carry bigger payloads, wind turbines that generate more power at less cost, and prosthetic limbs that help people walk even though they thought they would never walk again,” President Obama said. “We believe there’s going to be incredible demand for these metals, both from the military and the private sector, and we want them to be made right here in America. We want our workers to have those jobs.”

 

     Obviously there’s need for new, lightweight, high-performing metals and alloys that can increase machine performance. Furthermore, any time there is a way to speed product design, development and production, that’s good too. Perhaps most important, however, is the expected creation of 10,000 jobs and the creation of an education and training pipeline to educate and train future workers.

 

     What are your thoughts on either the institute or use of lightweight materials across industries?

     Chicago beat out several other technology “hubs,” including the Massachusetts Institute of Technology and aerospace hub Huntsville, Ala., in a national bid for a digital manufacturing institute. The Digital Lab for Manufacturing will create what President Obama calls a “partnership among world-leading manufacturing experts and cutting-edge software companies” to create interoperability across the supply chain, develop enhanced digital capabilities to design and test new products and reduce costs in manufacturing processes across multiple industries.

 

     Key to Chicago winning the bid was that backers were able to secure significant funding pledges, reports an article in the Chicago Tribune. Indeed, as part of the bidding, the U.S. Defense Department required competitors to at least match its $70 million contribution to the project with private and state funds. Chicago secured more than three times that--$250 million—with $16 million coming from the state and the rest from private sources. White House officials said 41 companies, 23 universities and labs, and other organizations were involved in Chicago’s winning bid. City officials quietly raised private commitments of more than $5 million each from General Electric, Rolls-Royce, Procter & Gamble, Siemens, Lockheed Martin and Dow Chemical Co.

 

     “GE, Rolls-Royce and Procter & Gamble in particular were there right from the start,” says Caralynn Nowinski, the interim executive director of UI Labs, in the Tribune article. “They brought in other partners, like Dow and Siemens, Lockheed Martin and many others. Overall, the digital lab brings together world-class manufacturers and next-generation technology companies.”

 

     A statement from the White House explains that there is a need for the Digital Lab for Manufacturing, which will be managed by University of Illinois-affiliated UI Labs, because this type of “teaching factory” provides a unique opportunity for education and training of students and workers at all levels, while providing the shared assets to help companies—most importantly, small manufacturers—access the cutting-edge capabilities and equipment to design, test and pilot new products and manufacturing processes.

 

     “High-tech products are designed and tested largely within a virtual environment and individually tailored for performance,” the White House statement explains. “Product development no longer begins on a draftsman’s table—where sketches are turned into physical prototypes and tested again and again to get it right. As a result of increasing complexity of manufactured systems, increasing diversity across the supply chain, and the increasing requirement for low-volume production to meet highly customized needs, there is a growing opportunity to expand our capabilities in digital manufacturing and design to drive U.S. manufacturing leadership. We already have a long-standing leadership in software development, with 80 percent of the world’s software produced in the U.S. The integrated design, development and production of highly complex systems (leveraging our existing strength in software) can speed ideas from the lab into commercial production, reduce costs and shorten production lifecycles.”

 

     There are significant challenges to integrate this so-called “digital thread” across different manufactured technologies and across the supply chain, including establishing true interoperability, managing intellectual property interests and maintaining network technology and security, according to the White House statement. But there are significant opportunities as well. Chicago leaders, for example, have mentioned the institute may focus on projects such as producing a faster and cheaper next-generation aircraft engine by speeding the design process among far-flung suppliers and drastically reducing the amount of scrap material associated with small manufacturing runs.

 

     Considering that the Digital Lab will have world-class manufacturing and supply chain expertise to leverage along with the computing and IT knowledge and capabilities of universities and labs, there is enormous potential. It will be interesting to see how the Institute can further develop supply chain capabilities.

     Labor unions have been in the news a fair amount lately but it seems like they are losing their power.

 

     For instance, the United Auto Workers union suffered a major defeat last week when workers at German auto giant Volkswagen’s Tennessee plant rejected its organizing efforts. When all the talk was done, Volkswagen workers voted against joining the union in a final vote of 712 to 626.

 

     Now there are allegations that the vote only turned out the way it did because local politicians were able to sway workers. It turns out local politicians seized many opportunities to warn that a UAW victory would make it harder to attract new jobs to Tennessee and, some even threatened to withhold tax credits that would help VW expand production.

 

     That somewhat reminds me of what happened at Boeing earlier this year. To summarize those events, Boeing had offered to build its 777X jetliner at an existing factory if machinists would approve an eight-year contract extension that, among other clauses, would replace their pension plan with a 401(k)-style retirement savings account. At the same time, the company began actively courting other states offering to host the jet program. Eventually, Boeing considered 54 alternate locations in 22 states for a $10 billion factory that would employ up to 8,500 people. That was not lost on the local machinists union, and those workers ultimately accepted the contract proposal from Boeing.

 

     Talk of unions also surfaces in the on-going discussion about Mike Rowe and Walmart. Rowe, the host of Discovery Channel’s “Dirty Jobs,” is at the center of a controversy because he provided the voice-over for a Walmart ad spotlighting the company’s pledge to bring manufacturing back to the U.S. Ironically, some consumers took Rowe to task for championing what they view as an anti-union company that offers rock-bottom wages, CBS News reports.

 

     Adding fuel to the fire, Rowe later posted on Facebook that he doesn’t care what some people think about his position. A second post by Rowe on Facebook, in which he defends his role in the ad, has drawn more than 14,000 comments.

 

     What’s interesting is that the center of the debate is Walmart’s focus on bringing manufacturing back to the U.S. Last year, Walmart announced that it and Sam’s Club plan to buy an additional $50 billion in U.S. products over the next 10 years. Walmart also held a U.S. manufacturing summit, which gave 500 suppliers the chance to meet with governors or economic development officials from 34 states, as well as two banks and one private equity firm. While at the summit, multiple companies announced domestic manufacturing investments, including GE; Kayser-Roth Corporation, maker of No nonsense legwear; Element Electronics Corp., which plans to open a new flat screen TV factory in Winnsboro, S.C.; legwear company Renfro; and Hampton Products International. In total, suppliers’ initiatives are expected to drive more than $70 million worth of investing in U.S. factory growth and create more than 1,000 domestic jobs.

 

     This is an interesting time. Companies want to hire highly skilled workers, which a union can deliver. On the other hand, faced with the prospect of jobs leaving an area—or jobs never materializing in the first place—workers are willing to make long-term concessions when it comes to wages and other benefits. That will certainly work to companies’ benefit when looking at labor costs. 

 

However, over time, will these decisions ultimately have an impact on product quality, or on loyalty or job satisfaction among employees? What do you think?

     Both labor shortages and initiatives to interest young women in college and university supply chain programs continue to gain attention. So the question then becomes: Why aren’t there more women in supply chain professions—especially in leadership roles?

 

     The problem doesn’t stem from a lack of interest in MBA programs. In a SCM World blog last year, Kevin O’Marah noted that the responses from more than 50 of SCM World’s university partners to a poll showed that three-quarters of supply chain programs saw an increase in female enrolment over the past five years. In fact, the median percentage of female enrolment in supply chain programs was 37 percent in the survey, which shows that supply chain studies isn’t any more or less appealing than other subjects.

 

     However, when SCM World did a manual count of supply chain executives in the Fortune 500, it found only 22 women from 320 companies have a true supply chain function.

 

     An article last week in the Washington Post explains that the problem isn’t attracting women to supply chain professions, it’s keeping them there. The article explains that, according to a new report titled “Athena 2.0 Factor: Accelerating Female Talent in Science, Engineering & Technology” released last week by research think tank Center for Talent Innovation (CTI), U.S. women working in these fields are 45 percent more likely than their male peers to leave the industry within a year.

 

     According to the study findings, that’s because despite the aspirations of women in science, engineering and technology (SET) fields to hold a top job at their company, a sizable proportion of SET senior leaders—31 percent in the U.S, 22 percent in Brazil, 51 percent in China and 57 percent in India--report that a woman would never get a top position at their company, no matter how qualified or high performing she is. Given those numbers, it’s no surprise to further see that 72 percent of women in the U.S., 78 percent of women in Brazil, 68 percent of women in China and 81 percent of women in India in these fields perceive bias in performance evaluations.

 

     Finally, 44 percent of U.S. women also reported feeling as though they were being judged against male leadership standards. That requires them to walk the tricky line between aggressiveness and assertiveness that can often derail women’s careers, the report notes.

 

     “Their intent to leave these companies clearly isn’t because these women are afraid of hard work,” says Laura Sherbin, director of research for CTI. “But they feel stalled in their careers, and this feeling of being stalled turns into a massive lack of hope.”

 

     Despite that discouraging news, there are bright spots in the report. For example, fewer women in this year’s study said they are the only woman on their teams. What’s more, 80 percent or more of women in each country said they love their work. Finally, more than half of U.S. women, as well as even greater majorities in emerging markets, report having ambitions to have an executive job at their company.

 

      So, ultimately, around the world, there is high demand for top SET talent but short supply. Women are central to the solution because they comprise nearly half of the SET talent pipeline worldwide. “The success of our global economy depends on our ability to develop and leverage high-performing women,” says Sylvia Ann Hewlett, founder and president of CTI, in the report.

 

     What I’d like to know, is what do you see? Do you see bias where you work? More importantly, what can be done to change the situation?

     Between all the winter weather creating problems in the U.S. and the winter Olympics, you may have missed the news about the Panama Canal. Work on the Panama Canal expansion project, already nine months behind schedule, was stopped last week after talks to resolve a dispute broke down. The problem is an estimated $1.6 billion in cost overruns and extra financing for the work, which is 70 percent done and due to be finished next year.

 

     The expansion project will double the capacity of the 50-mile canal that carries five to six percent of world commerce, and enable newer, larger ships through the canal. The work stoppage will give authorities time to plan how to proceed on the project, said Panama Canal Authority director Jorge L. Quijano, the New York Times reports.

 

     Many experts say the root of the dispute stems from the consortium’s underestimation of costs when it won the contract in 2009 by submitting the low bid of $3.1 billion for its portion of the work--$1 billion less than Bechtel, the U.S. construction giant bid, the article notes. The PCA and the construction consortium in charge of the project, led by Spain’s Sacyr and including companies from Italy and Belgium, blame each other for the overruns. They had been negotiating how to pay for the unplanned extra costs when talks broke down.

 

     An agreement “is now no longer possible,” Quijano said at the time, adding that the consortium had ordered its employees to stop work, according to the NYT article.

 

     The story, however, continues to unfold. Earlier this week, PCA set a deadline of no more than one week to reach a deal to jump-start the project, Reuters reportsFurthermore, PCA head Quijano warned that failure to reach an agreement would leave no alternative but to complete the project without a consortium led by Spain’s Sacyr.

 

     “I think we have no more than a week, and that is the target we have set,” Quijano said. “If we go beyond that, then we will have no alternative.”

 

     Now, Quijano says he has reached an agreement with the consortium. Nonetheless, whileQuijano told lawmakers in Panama City that an “agreement in principle” was reached and the Sacyr-led group has accepted that it won’t receive additional funds outside the terms of the contract, a written deal still hasn’t been signed—and asking other companies to finish the work remains an option, he said in the Reuters story.

 

     “It’s when you sharpen your pencils that commas start appearing in the wrong places,” Quijano says in a Bloomberg article. “If we have to take the other route, which may be painful, we won’t hesitate.”

 

     Be all that as it may, the Panama Canal isn’t the only canal with an expansion project. In an attempt to attract more ships, and consequently, more revenue to shore up the country’s finances, Egypt has invited 14 consortia to bid for a chance to explain how they would develop the Suez Canal area. The Suez Canal, which is the fastest shipping route between Europe and Asia, brings in around $5 billion a year for the country. The country’s plan is to ultimately develop 76,000 square kilometres around the canal into an international industrial and logistics hub.

 

     What’s more, a shipping route through the Arctic Ocean—while still problematic and costly—is looking more appealing as well. China’s state-owned Cosco Group recently demonstrated it’s possible to ship from Dalian, a port in north-eastern China, to Rotterdam with the help of Russian icebreakers. That route is the fabled Northeast Passage through the Arctic Ocean to the European Union, which dramatically shortens shipping time.

 

     Obviously, there’s a great deal of money at stake in the Panama Canal project. Continuing work in other canals may not influence any decision makers due to the differences in trade routes, but then again, that remains to be seen. However, with Quijano now setting hard deadlines and threatening to proceed with work without the consortium, the situation will now be interesting to watch.

     Two weeks ago, winter weather caused a number of delays in supply chains throughout the southeastern U.S. Now the Southeast, Mid-Atlantic and even Northeast states are experiencing worse weather resulting from a storm the National Weather Service has called “an event of historical proportions,” that is potentially “catastrophic.”

 

     After icing parts of Texas, Louisiana, Mississippi and Alabama, the winter storm moved into Georgia today, dropping a mix of ice and rain that was expected to continue. Heavy ice accumulation from freezing rain is still possible across South Carolina and central North Carolina. Indeed, CNN meteorologists report that up to three-quarters of an inch of ice was expected to accumulate on Atlanta, while up to 10 inches of snow and sleet are expected in Charlotte, North Carolina—making travel treacherous. Six to 8 inches of snow are predicted for Washington, with especially heavy snowfall Thursday morning. Between six and 10 inches of snow are expected in New York from midnight Wednesday into the day Thursday. Making the situation worse, some combination of snow, sleet and rain is expected until Friday morning.

 

     The worst part, however, has been the possibly historic accumulation of ice across the southeastern U.S., resulting in power outages that spread rapidly as afternoon temperatures dropped. The power outages stretched from Louisiana to North Carolina. More than 480,000 customers were without power in the Southeast—and it likely will get worse.

 

     Not surprisingly, nearly 3,000 U.S. flights have been canceled so far, and hundreds more were delayed today, according to flight-tracking website FlightAware.com. The hardest hit airport, again, has been Hartsfield-Jackson International Airport in Atlanta. Nearly 70 percent of the flights there were canceled.

 

     As happened two weeks ago, the weather had a quick impact. UPS announced that with severe winter weather in Georgia, Mississippi, North Carolina, and South Carolina, the company was working to “balance our priorities of employee safety and customer service. We are committed to moving shipments to their final destinations as quickly as possible and are making every effort to deliver to all areas as soon as conditions safely permit.” The company also announced that no pickups, deliveries, UPS On-Call Pickup service, or Customer Center operations were available in the areas hardest hit.

 

     Likewise, FedEx Express reported it experienced substantial flight and sort disruptions due to winter weather, snow and ice at the Memphis hub. Furthermore, the winter storm is expected to produce hazardous conditions in the southern U.S., but the company’s “top priority is the safety and well-being of our team members, as well as providing the highest level of service to our customers,” FedEx notes. The result is that while contingency plans are in place, some service delays and disruptions can be anticipated in AL, AR, GA, LA, MS, NC, SC and TN.

 

     Unlike two weeks ago—and perhaps as a result of lessons learned then—government officials were quick to make plans to deal with the impact of the storm. Companies, government offices and schools all closed in preparation of the storm rather than once it hit. Additionally, people, for the most part, have stayed off the streets and highways—making it possible for streets and highway crews to work.

 

     What I’m interested in though, is what supply chain preparations were made. If your company or supply chain was effected by the storm and resulting disruptions two weeks ago, what steps were taken this week? What changes--if any--were implemented and are now in place?

     For years, demographers have been predicting that this decade would bring a huge surge in the number of baby boomers retiring from the workforce. That’s now happening, and U.S. manufacturing companies are starting to feel the impact. At the same time, an increasing number of companies’ labor problems are made worse because they also see a shortage of skilled workers. 

 

     That means labor is becoming a critical issue for U.S. manufacturers. However an interesting article that ran on IndustryWeek explains how some companies have taken steps to prepare for baby boomers to retire.

 

     For instance, Huntington Ingalls Industries has been forced to deal with high numbers of workers retiring for years. Indeed, the shipbuilder, which makes nuclear aircraft carriers and submarines for the U.S. Navy, faced two big waves of employees retiring. The first wave happened in the 1990s after federal spending cuts forced hiring freezes and layoffs among aerospace and defense manufacturers. The second wave of retirements took place in 2005 after Hurricane Katrina.

 

     “The day after Katrina happened, down at our Gulf Coast facility, basically every employee that could retire said, ‘I’m out of here,’” says Bill Ermatinger, corporate vice president and chief human resources officer at Huntington Ingalls.

 

     To address a suddenly very inexperienced employee mix, Huntington Ingalls’ leadership team responded by making major investments in training. In addition, they began studying the company’s work crews to isolate the factors that made some crews successful and others less so, and they learned that having an effective, well-trained foreman—regardless of that person’s age—was far more critical than having veteran leadership, Ermatinger says. So they began to put greater emphasis on leadership training, and training of foremen in particular, within the company’s overall training mix.

 

     “That was a real eye-opener and game-changer for us,” Ermatinger says. “As a result, we started to put our energy into accelerating the training of our first-line leaders. We’ve concentrated on that, and it’s made it easier to get everyone else onboard and pulling in the same direction.”

 

     Another successful example is that of The Raymond Corporation, which makes warehouse material-handling equipment. The company has seen four percent to five percent of its workforce retire over the last couple years. Furthermore, the company’s leaders expect that pace to continue through the end of this decade, says Steve VanNostrand, executive vice president of human resources at The Raymond Corporation, in the IndustryWeek article. To address that challenge, the company implemented a number of strategies aimed at recruiting, retaining and developing talent via individual career development plans, targeted and situational learning, and cross-functional mentoring.

 

     “Visibility is critical to getting talent coming in the front door, so we’ve been active with community involvement and partnerships—at the high school level, technical colleges, universities and graduate schools,” VanNostrand says.

 

     From there, once a company has attracted the talent, the key challenge is to retain and develop those people, VanNostrand says. At the end of the day, he says, it’s about enhancing the skills that will prepare the company for the future.

 

     “We have a particular focus on accelerating leadership skills to make sure we’ve got that next generation of leaders prepared as we begin to lose our more seasoned people,” VanNostrand says.

 

     That approach seems to be working: The Raymond Corporation has been growing quickly, almost doubling its workforce over the last three years, and it has been able to fill 85 percent of the key positions that have opened up by promoting employees.

 

     Has your company felt an impact as baby boomers continue to retire? If so, what are its strategies for recruiting and retaining employees?

     An increased reliance on mobile devices, the proliferation of insecure software and the growing use of Java are all enterprise security vulnerabilities, and as such, contribute to a growing cyber security risk for supply chains, according to a new study.

 

     That study, the “Cyber Risk Report 2013” from HP, was developed by HP Security Research. I was interested in the findings in general, but a few in particular caught my eye. For instance, while vulnerability research continued to gain attention, the total number of publicly disclosed vulnerabilities decreased by six percent year over year, and the number of high-severity vulnerabilities declined for the fourth consecutive year, decreasing by nine percent.  However, although it’s unquantifiable, the authors note that the decline may actually be an indication that there is a surge in vulnerabilities that aren’t publicly disclosed, but instead, are delivered to the black market for private and/or nefarious consumption.

 

     I was also interested to see that nearly 80 percent of applications reviewed contained vulnerabilities rooted outside their source code. That just goes to show that even expertly coded software can be dangerously vulnerable if misconfigured.

 

     Finally, as has been noted before, mobile technology continues to introduce an opportunity for cyber risk. The HP study found that almost half (46 percent) of mobile applications studied use encryption improperly. Indeed, the HP research shows that mobile developers often fail to use encryption when storing sensitive data on mobile devices, rely on weak algorithms to do so, or misuse stronger encryption capabilities—all of which leaves sensitive data potentially exposed.

 

     “Adversaries today are more adept than ever, and are collaborating more effectively to take advantage of vulnerabilities across an ever-expanding attack surface,” says Jacob West, chief technology officer, Enterprise Security Products, HP. “The industry must band together to proactively share security intelligence and tactics to disrupt malicious activities driven by the growing underground marketplace.”

 

     Toward that end, the study also offers some recommendations on decreasing cyber security risk. For example, organizations and developers alike must stay cognizant of security pitfalls in frameworks and other third-party code, particularly for hybrid mobile development platforms. Secondly, collaboration and threat intelligence sharing among the security industry is vital because it helps companies gain insight into adversary tactics, allowing for more proactive defense, strengthened protections offered in security solutions, and an overall safer environment.

 

     I also was interested to see the report note that amid both growing cyber attacks and demands for secure software, it’s imperative to eliminate opportunities for unintentionally revealing information that may be beneficial to attackers. Indeed, more than half of the applications HP tested exhibited weaknesses in revealing information about the application, its implementation or its users.

 

     One example is the act of logging into an application, says West in an article that ran on BusinessWeek. When a user enters a username and password, it’s possible they type one of them incorrectly, and the resulting error screen tells them so. From the user’s perspective, it’s helpful to know whether they entered the wrong username or the wrong password. But that’s also helpful to attackers, because the message tells them which part they got right. From a security perspective, it’s better if the error screen doesn’t specify which piece was incorrect, West explains.

 

     That’s a great example of an application that shouldn’t provide as much information as it does, says West in the BusinessWeek article. The significance for developers and people operating these software systems is that the information which might have been benign a year or two ago, in terms of what might help create a better user experience, now inadvertently takes on a greater significance for attackers, he says.

 

     What do you think about cyber security? Secondly, is your company changing its strategy?