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‘China Is No Longer Cheap’

By: Tony Deligio 2. September 2015

For the past 11 years, China was a second home for Scott Huff and he racked up frequent flyer miles as his company, Innovate Manufacturing, grew to four factories and an engineering services office there. Huff and Innovate’s focus going forward, however, has shifted to the U.S. where the company is opening a new injection and blow molding facility in Knoxville, Tenn.

 

In his September column, my editor, Jim Callari, wrote about the reshoring phenomenon, a topic I also tackled last March. China itself has been in the news these days, thanks to a flagging economy with particular weakness in manufacturing. The timing of those struggles and Innovate’s announcement was not lost on Huff, who also cautioned against counting on China’s imminent demise.

 

“These are interesting times,” Huff said, “but as I tell people all the time, nothing is a good or as bad as it appears to be. Things have changed, and China is under a lot of cost pressures. The cost of living in China has outpaced the growth of salaries in the last 11 years, and the cost of employing people in China has gone up substantially.”

 

As a result, Huff noted that labor intensive work, formerly a strong suit of China, was increasingly shifting elsewhere. For Innovate, which specializes in large reusable hydration products (picture sideline water jugs), labor costs were just one factor that pushed it to bring some manufacturing back to the states. Another big one was air—or rather the cost to ship it.

 

“If there are more than 8 ounces of air in that bottle, it better be very labor intensive to make it outside of the U.S.,” Huff said. Power costs also played a role, with Huff estimating that utilities in China are double what Innovate will pay in Tennessee. Finally, proximity to customers was key, with Knoxville a truck drive away from all the major population centers east of the Mississippi River.

 

Will companies still invest in China? Of course, the country has a lot to offer, not the least of which being a billion plus consumers. The reasons companies invest there, however, are changing.

 

“China is no longer cheap,” Huff said. “China is very capable, but the market is getting very competitive.”

Innovate's new Knoxville, Tenn. production facility.

Innovate Manufacturing Knoxville, Tenn.

IoT, Security and a Digital Emergency Stop Button

By: Tony Deligio 18. August 2015

In the September issue, Plastics Technology will address the potential impact of the so-called Internet of Things (IoT) on the plastics industry. Interviews with analysts, equipment suppliers and processors revealed that the question of securing data and networks, whilst simultaneously making them accessible, remains an issue for IoT in plastics, and elsewhere, going forward.

 

One version of IoT, which is favored in North America, prominently features the Cloud, leveraging its powerful storage and computing capabilities, while another version is built on local networks and a common language, with its adherents including Europe, where many plastics machinery OEMs reside.

 

A European Thing
Sonny Morneault, VP of Sales for the North American operations of injection molding machine, automation and auxiliary supplier Wittmann Battenfeld, noted that opposition to the Cloud at his company, which is headquartered in Austria. “Maybe it’s a European thing,” Morneault said. “They’re much more protective of their private information and their data and they don’t have the confidence level that the Cloud is a secure place…and as we see in the news all the time, it really isn’t.”

 

High-profile hacks of Cloud-based servers are regularly in the news, but whether or not that reflects empirical evidence of an increase in attacks or their sensationalistic appeal to media organizations could be debated.

 

In a bid for clarity, internet security company CloudPassage, which certainly has a dog in this particular fight, undertook an experiment in 2013 to try to determine Cloud security. Setting up six servers running Microsoft and Linux systems, it posted a $5000 challenge to hackers to break in. Ultimately, it took the winner only four hours to hack in, according to Bloomberg, a less-than-reassuring result for IoT security skeptics. Industry experts, however, point out that many of the high-profile cloud hacks, like the Apple iCloud attack of celebrity accounts, aren’t actually cloud hacks.

 

Conrad Bessemer, president of auxiliary equipment supplier Novatec, acknowledged customer concerns around security as his company launches a predictive maintenance program that partially relies on the Cloud, but insisted the network infrastructure is secure and regardless, the data his company collects, would be of no interest/use to a hacker, assuming they could make any sense of it.

 

“Security is an issue when you connect anything to the Internet,” Bessemer allowed. “Now, a lot of people are highly concerned about someone else seeing their production data, and quite frankly, I think that that's silly. We all have different ways of measuring, and if somebody saw someone else's production data, I doubt they could come to any rational conclusion with it.” In any case, Novatec’s technology records machine metrics like vibrations, versus production metrics like throughput, nullifying any potential security concerns.

 

Biplab Pal, CTO of Prophecy Sensorlytics, which is partnering with Novatec to bring the “machine wearable” technology to plastics, likewise does not see a risk. “Let’s assume the worst case, there is data breach in our server, which is also very unlikely, since we’re using only Rackspace or Amazon, the most protected Cloud servers,” Pal said. “It’s nearly impossible that someone breaks into a Rackspace or Amazon server; but even if they do, they’re not going to control your process, they’re not going to steal process secrets, because there is no control and there are no process secrets to have.”

 

Convincing IT
Despite such assurances from industry, Paul Grekowicz, VP of marketing and product development at auxiliary equipment supplier ACS Group, noted that convincing a company to make its machines accessible, even via a one-to-one secure port, can be difficult.

 

“Convincing the IT people to actually let you through your firewall, is usually the biggest challenge,” Grekowicz said. “Typically the gatekeeper is going to be IT, and it’s just having an agreement up front with them that this is exactly what we’re going to do.”

 

Phil Dunn, molding supervisor at automotive supplier ITW Seat Components, admitted he had to have some “discussions” with his IT team when he proposed bringing in Wittmann Battenfeld’s fully networked machines, which allow remote access by technicians, but any concerns were addressed as the company is currently adding its eighth web-enabled cell.

 

“Our plant manager didn’t seem to think that it would be an issue because you actually have to approve the connection,” Dunn said, “they can’t just come on and connect. You have to actually prompt it on the screen itself, click yes or no, in order for them to access the software inside the system; they can’t just go on and automatically start messing around.”

 

Remote Access Versus Remote Control
Remote access of machines—using connectivity to check in on production, machine settings—is altogether different from remote control—logging into a machine and directly controlling production—and while the latter is technically feasible, it may never be a reality, according to IoT consultant Ralph Rio.

 

“There are some evangelists that advocate [remote control], who say you can do it,” Rio said, “but in my head, I visualize that big red emergency “stop” button. You aren’t going to put that on the Internet, and if that's not going on the Internet, there are a whole lot of other things that you might as well not put on the Internet, too, while you're at it.”

 

Formerly a control engineer, Rio sees no scenario where he’d be OK with full control being web enabled, and not just over security concerns.

 

“It boils down to not just the possibility of potential security issues but also a service interruption,” Rio said, noting that an interruption in web service could have catastrophic consequences. “Take it to a refinery; you're dealing with boiling oil and when something goes bad it shows up on the nightly news, so you have to be really careful with this stuff.”

emergency stop button

Passing of a True Pioneer in Plastics

By: Tony Deligio 11. August 2015

I pretty much knew I was missing my flight when I turned my rental car out of Blackwell Plastics’ factory in Houston’s Third Ward that late afternoon in February 2010, but after such a great tour, I really didn’t care. 

 

My host that day was L.D. Blackwell, whose enthusiasm for plastics, after 71 years working in it, and life, with 85 years under his belt, was infectious. My other guide, Jeff Applegate, who was then president of Blackwell but has since left the company, knew my schedule and had been gently nudging L.D. to wrap up his tour but to no avail. I learned today that L.D. passed away on August 9 at the age of 89.

 

Over the decades, many part designs crossed over L.D.’s desk, with many of those coming from would-be inventors hoping the new, emerging material class of plastics could help make their napkin-sketch doodle a mass-produced reality. All those parts and products had a story, and L.D. shared many of them with me that day, retelling the development of everything from the first weed eater to an innovative wine opener (one of which I still have) and even components on the first heart bypass pump (the University of Houston medical center’s sprawling campus is just minutes from Blackwell).

 

The inventor that jumpstarted it all for L.D. was his father, L.A. Blackwell, whose concept of a slip cork insert for fishing became the father and son team’s first product, with L.D. deciding early on to switch it from wood to plastic while he was still a teenager. The only interruption in his plastics manufacturing career—a two year stint in the Air Force during World War II.

 

I wound up meeting L.D. and learning Blackwell’s story almost by accident. Attending the Society of Plastics Engineers annual Polyolefin Conference in Houston that year, I struck up a conversation with Applegate over lunch, who convinced me to take an afternoon to visit Blackwell, largely on the basis of his description of L.D.

 

I pulled into the rental car return at George Bush Intercontinental Airport around the time my plane backed away from its gate, thinking less about my missed flight and more about the incredible history just shared with me. Despite the extra night in Houston, I’m grateful I got the chance to tell L.D.’s story and know he will be missed in plastics and the Houston community (pictured below, L.D. in he and his father's shop, photo courtesy Blackwell Plastics.) 

L.D. Blackwell

Processors Will Win Machinery Suppliers' IoT Race to Connect Equipment

By: Tony Deligio 5. August 2015

In September, Plastics Technology will take an in-depth look at how the Internet of Things (IoT) is impacting processors at the level of auxiliary equipment; a technology sector that can lag behind advances made by primary processing machines, but in the case of IoT, it is very much at the forefront, and with good cause, according to Ralph Rio, research director for enterprise software at consultancy ARC Advisory Group.

 

“In a networked environment, change occurs quickly; making the gap between "first" and "everyone else" grow rapidly.”

 

That insight from a report Rio posted in July entitled “Industrial IoT Enables New Revenue Sources for Equipment Manufacturers”. As the title suggests, the report highlighted how makers of equipment can capitalize on IoT through areas like:

 

  • Predictive maintenance: using data analytics to assess machine condition assign maintenance prior to failure.
  • Closed-loop product lifecycle management (PLM): Assessing new product performance in a working environment with customers to optimize design.
  • Consumables: Tracking inventory of consumables (think toner in a printer) and proactively selling replacements to customers.

 

All three of these advances, in addition to creating new revenue streams for equipment OEMs, will greatly benefit processors, making them more efficient with that increased productivity likely outstripping any nominal incremental costs.

 

For a huge conglomerate like GE, Rio has seen a two-pronged approach to IoT, which could become a model for other equipment manufacturers, including those in plastics. “GE is creating a platform that businesses can use to sell condition monitoring services to their customers,” Rio explained, “so there's a monthly, quarterly, or annual charge for doing condition monitoring.”

 

GE is also using IoT to develop better products in the first place, according to Rio. “OEMs can also do data collection and feed that into the development organization,” Rio said. “This is now real operating data, versus some initial prototypes of the new products that they had made. So it's an opportunity to get real operating data and include that into the design cycle, develop better product and use that as a competitive advantage to grow market share.”

 

Key phrase there for processors: “better product.” Hype? For sure, the “T” word is being thrown around, as is “Fourth Industrial Revolution”, but despite the buzz, real advances are coming for plastics processors (graphic courtesy GE).

GE Internet of Things IoT

Magazine Or e-Newsletter; Tablet Or Desktop; Digital Or Analog

By: Tony Deligio 15. July 2015

 

You’re probably over 50; you likely bought capital equipment in 2014; and you consulted a printed trade publication before doing so.

 

Those results culled from the 5th annual “Media Usage in Manufacturing 2015” survey conducted by Gardner Research, the market intelligence division of Plastics Technology’s publisher, Gardner Business Media Inc.

 

Completed in the first quarter of 2015, the survey elicited responses from a pool of 2,288 respondents composed primarily of executives, managers and engineers at companies engaged in durable goods manufacturing.

 

Investigating the demographic characteristics and media usage trends of today’s manufacturing technology buyer, the survey specifically examined business-to-business industrial marketing and media usage, covering topics such as: buying cycle behavior, search, mobile, media usage, social media and vendor selection.

 

More than 92% of the respondents, who come from the automotive, metalworking, plastics, composites and finishing markets, indicated they are directly involved in the purchase of machine, software, hardware, materials or tooling.

 

Segment Demographics
The respondents, like the manufacturing industry, skewed older, with only 14% aged 21 to 40, with the remaining 86% were 51-plus (65%) or 41 to 50 (21%) years old. In terms of markets served, 42% indicated they were contract manufacturers, with the top sectors including:

 

Automotive (42%)
Aerospace (38%)
Consumer products (30%)
Defense (30%)
Medical (29%)
Oil/gas/energy (27%)
Heavy equipment (23%)
Electronics (21%)

 

Among the respondents, 57% reported purchasing capital equipment in 2014, with the No. 1 research tool being the supplier’s website (77%), followed trade magazine/publication website (44%), and tradeshows (40%).

 

Push vs. Pull Marketing
The survey also identifies trends in push and pull media, where “push” is defined as:

Media that introduces a prospect to information and products they do not know they need.

While “pull” covers:

Media provides prospects with information they know they need but are not sure where to find it.

 

The goal being to, “Build brand identity early with push media…then use pull media to support that brand and harvest its benefits”.

 

Push media includes trade magazines and e newsletters, while push media can include trade magazines and e newsletters, as well as industry websites, tradeshows, webinars and blogs.

 

Key Findings
In the buying cycle, which consists of awareness, research, consideration, vendor selection, and product purchase, the survey found that:

 

The majority of manufacturing purchases (64%) are influenced by at least 3 people
Nearly 70% look for products or services at least once a week.

 

In terms of media used when manufacturing professionals are on the lookout for products and services:

 

Websites and trade magazines are the two most accessed and effective information resources for manufacturing professionals
Trade magazines remain the leading push media

 

Social media usage for business was on the rise, with 48.9% saying they use platforms like LinkedIn for work, up nearly 12% from 2014 (44%), marking four straight years of increased adoption.

LinkedIn and YouTube continue to be the most useful social media sites for manufacturing buyers
Overall perception of social media as a business tool remained flat with a below average rating of 2.64.

 

In terms of search:

Manufacturers are significantly more likely to select search returns featuring brands they recognize (93%) to brands they are not familiar with (31%)
When reviewing search engine returns, manufacturing professionals favor technical articles and known brands over images, ads and videos.

 

New Media As A Complement to Old Media

 

Commenting on media usage trends, Rick Kline, Jr. group publisher & vice president of Gardner Business Media noted:

 

Looking back over the five year survey history, it is clear that manufacturing professionals are incorporating new forms of media in their research and buy cycle. However, adoption of newer media is being used as a complement to, not as a replacement for, traditional media forms. As a result, a marketing mix integrating multiple media remains the most impactful means to reaching today’s active, evolving technology buyer as they progress from awareness to vendor selection.




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