Wal-Mart's Made in America Pledge and Plastics

By: Tony Deligio 27. August 2014

For the outsized influence it exerts on manufacturers the world over, there’s one important thing to remember about Wal-Mart, a basic fact stated by company President CEO Doug McMillon during that company’s second U.S. Manufacturing Summit held in Denver.


“We don’t make anything,” McMillon, pictured above, said. “We can’t provide value to customers on great items like these and others without having a strong collaborative relationship with you.”


The “you” referred to the more than 200 component part suppliers and contract manufacturers that had come to Denver for the second iteration of the summit, hailing from 42 states and Puerto Rico.


The “these” referred to the array of U.S. made merchandise stacked around the stage—easily recognizable brands and products as ready props to substantiate the retailer’s January 2013 pledge to source an additional $50 billion in U.S. products over the next decade.


It was that pledge that launched the inaugural U.S. Manufacturing Summit held in Orlando last year. The event is meant to serve as a matchmaking mixer between brand owners and U.S. manufacturers, giving the Procter & Gamble’s of the world a face and a name for a U.S. option to manufacture its various brands.


Setting the stage
In the minutes before the event began, workers from the Denver Convention Center and Wal-Mart representatives scurried around the auditorium stage, rearranging the product props that ranged from plastic bins and coolers to tires, TVs and light bulbs, with household names like Crest, L’Oreal, Good Year, and John Deere represented.


As I settled into my seat accompanied by a media handler, a Wal-Mart representative rushed past, saying aloud the instructions relayed to him on his headset: “Candles with the Old Spice and Connect 4 with the games.”


With every product positioned, a video, preceded by Toby Keith’s “Made In America” playing on the loudspeakers, launched the proceedings. On the large screen above the center of the stage, a camera panned across an abandoned factory, while a narrator intoned, “It’s time to get back to what America does best.”


Theatrical to be sure, but the summit, which also featured a exposition hall for manufacturers to pitch their skills to reshoring-inclined brand owners, was very much a practical exercise in connecting companies.


Michael Araten, president of K’NEX Brands, which includes injection molder, The Rodon Group, sat on a panel with Jim Stephen, executive chairman of Weber-Stephen Products LLC, maker of the iconic Weber grills.


Just during their brief time back stage, Araten had already pitched Rodon’s molding capabilities to an interested Stephen for wheels and other plastic elements of the company’s barbecues. Araten himself was on the lookout for new suppliers.


“I’m looking for toy motors and I hope I find them tomorrow,” Araten noted. Earlier in the event, a Wal-mart executive encouraged attendees to interact with people around them, noting that the person sitting next to them could supply “the key thermoplastic compound” needed for a new product.


Lincoln Logs, Made in the U.S.A. again
Araten also helped lay out the challenge faced by brandowners looking to reshore production that had been shipped overseas years ago. He announced that for the first time in 60 years, production of Lincoln Logs would return to the U.S., a move made possible with Wal-Mart’s help.

“I want to thank Wal-Mart for doing what it is doing here, which is connecting people,” Araten said. Without events like the one in Denver, Araten explained that K’NEX had resorted to the “pick and shovel work of little Google searches” as it tried to reshore production, with mixed results.


“It took us four tries to find factories that could not only do it and achieve the quality,” Araten said of Lincoln Log production, “but do it in the high volume you need to fulfill the scale of places like Wal-Mart.”


And that last comment is indeed part of the challenge. Wal-Mart, and its vendors, are cold-calling U.S. manufacturers at a time when many have been greatly diminished by a decade of offshoring driven in part by a lower-costs-at-all-costs mentality. To its credit, the retailer gets that and is trying to help U.S. industry regain its footing.  


Always low prices
“Yes we want to offer a value,” McMillon said, noting the retailer’s mentality is to run a low margin on high volume, adding that it wants its suppliers to “have a like mind about that.”


But, McMillon noted, that’s no longer the entire bottom line. “We want you to be able to make money, and we want you to invest in your business for the long term,” McMillon said. “We want you to innovate, to invest in R&D and create the next new item for next year or years beyond so it’s important that we have that kind of open, trustful dialogue as we do it together.”


On the innovation front, Wal-Mart’s U.S. Manufacturing Innovation Fund issued $4 million in grants to seven research and development institutions to “create new processes, ideas, and jobs that will foster America’s growing manufacturing footprint.”


Oregon State University has been chosen for one of the first seven grants from the Walmart U.S. Manufacturing Innovation Fund created by Walmart and The Walmart Foundation to help accelerate manufacturing in the United States.


Among these was Oregon State University, which received a $590,000 grant for the development of innovations in injection molding; and Indiana University-Purdue University Indianapolis (IUPUI), which received a $291,202 grant to support its “Optimal Plastic Injection Molding Tooling Design and Production through Advanced Additive Manufacturing,” research project.


‘Stronger economy for everyone’
McMillon sees the summit in Denver, and its overall Made in the U.S.A. push of the last several years, as seizing on an important occasion. “In the U.S., we believe this window of time, these last few years and the years to come, create a great opportunity for us to lean in, do things more aggressively and differently than we would have before and convene groups like this one to create together the situation where U.S. manufacturing can grow and be successful and create an even stronger economy for everyone.”


To pass time in the car, my eldest daughter often counts Wal-Mart trucks. We spend a fair amount of time on the main north/south interstate by our house, and there is a Wal-Mart distribution center 25 miles north on that same highway, so on longer drives, it’s not hard for her to reach some pretty big numbers.


Since the summit, it’s been reassuring for me to visualize those trucks being filled with more and more U.S. made goods (many of the plastics heavy) and see more and more “Made in the U.S.A.” stickers on Wal-mart’s shelves. Hopefully it’s a trend other retailers and brand owners emulate. (Pictured below from left: Walmart U.S. Chief Merchandising & Marketing Officer Duncan Mac Naughton, Michael Araten of K’NEX and Jim Stephens of Weber Stephens). 

‘There are no unskilled jobs here anymore’

By: Tony Deligio 20. August 2014

Completed in conjunction with the Manufacturing Institute, the study, which was conducted between August 2013 and January 2014, surveyed more than 300 manufacturing executives hailing from companies with an average annual revenue of $100 million.


Cervinka’s quote highlights the predicament those manufacturers currently find themselves in. The jobs they need to fill are becoming more and more complex while the pool of people who can do them becomes more and more shallow.


The survey found that 80% of manufacturers reported a moderate to severe shortage in finding highly skilled workers, while at the same time, skilled and highly skilled roles make up 80% of their workforce.


As these companies face a labor shortfall, many are simultaneously attempting to boost production. According to the report, more than 50% of companies reported plans to increase U.S. based production by at least 5% in the next five years. In general, the U.S. manufacturing sector has enjoyed an annual growth rate of 7.7% between 2009 and 2011, reaching its highest level ever at more than $5.4 trillion in 2011, according to the U.S. Bureau of Economic Analysis – Manufacturing Industry Data. Productivity in the U.S. has jumped nearly 20% from 2001 to 2011, increasing is every year save two—2008 and 2009—according to U.S. Bureau of Labor Statistics cited by Accenture.


That’s despite the very real, and detrimental, impact of too few skilled workers. According to the report, 62% of respondents saw an increase in production downtime of 5% or more, while 66% reported cycle time increases of 5% or more.


Survey participants are actively working to address the gap, however, with almost 10% spending more than $5,000 annually per employee on skills training, with the average respondent spending about $1,000 annually per employee for skills training.


The report also identified some best practices companies are deploying to address the skills shortfall.


Digital learning experiences—“Embracing digital technologies to offer learning experiences anytime, anywhere.”


Combine formal and informal training—“All of the leading companies we interviewed had some form of established relationships with local community colleges or vocational technical programs.”


Use a certification approach to skills building—“Not only do employers gain confidence that their employees are able to perform at a given level of skill, employees gain confidence in their own abilities as they acquire new skills certifications.”


The bottom line is the gap is actually impacting companies’ bottom lines, with the report finding that earnings were reduced up to 11% annually due to increased production costs and revenue losses due to skills shortages. The problem will only get worse, with the U.S. Department of Labor stating the average age of manufacturing labor was 44.1 years in 2011.


In our September issue, Plastics Technology will see how some plastics processors are attempting to bridge the gap. Does your company have a contingency plan?



Is a robotic revolution underway in China?

By: Tony Deligio 13. August 2014

China was the second largest destination for industrial robots in 2012, with sales in the People’s Republic increasing an average of 25%/year from 2005 to 2012, according to the International Federation of Robotics 2013 World Robotics report.


Guangzhou, the epicenter of much of China’s plastics processing, is planning to build two to three “robot industrial development zones”, according to a China Daily article, appropriately headlined: Guangzhou to invest in robots.


In that article, a government official stated that more than 80% of manufacturing operations in Guangzhou would be using industrial robots by 2020, reflecting a period of “explosive growth.” Yi Ming, deputy director of the Guangzhou commission of economy and trade, added that at 30% demand growth, the capital of Guangdong Province was outpacing China’s overall interest in robotics.


Western suppliers look East
As a I researched an article on robotics within plastics processing for a special Industrial Automation supplement produced by PT’s publisher, Gardner Business Media, China emerged as a recurring theme.


My interview with Helen Ke Feng, global industry segment manager, plastics and rubber, at ABB was delayed as she traveled throughout Asia, spending two weeks in the region, noting that the her biggest demand growth came from the Chinese market.


Jean-Michele Renaudeau, managing director of Sepro, said his company is closely watching China. “We are optimistic about the future of Sepro in China,” Renaudeau said, adding that since salaries have been volatile, and increasing, a one-time investment in a robot can allow Chinese processors to stabilize production cost.


Beyond that, the Chinese market, like any market, sees the repeatability benefits that robotics can bring to a process. “Even in an emerging country like China,” Renaudeau said, “you see the exact same tendencies. There is a clear trend towards more robots because automation is the key for productivity, it is the key for quality.”


Jim Swim, business manager at custom automation supplier CBW, has seen interest in his company’s systems flow both ways: U.S. shops automating to meet increased production requirements due to reshored work, and Chinese molders automating to increase quality and lower costs as labor prices increase.


“It used to be that China just had to throw a lot of labor at a project,” Swim said, “but they’ve had to evolve into more automation.” When I visited CBW, one of the cells on its production floor was going through final testing before shipment to China. Swim said CBW has sent a few cells to China over the years, with the vast majority of its projects still in the U.S., and more to come if China doesn’t automate.


“The markets that have been used for China, like packaging, that used to be so much more cost effective,” Swim explained, “are not as cost effective anymore.”


At Chinaplas earlier this year in Shanghai, I asked Werner Wittmann, founder of what is now Wittmann Battenfeld, about the Chinese automation market. Wittmann was an early mover in China, adding production there in 2005. Over the last 8 years, Wittmann said that as labor costs rise in the country, there is greater pressure to automate. Today, there’s a focus on higher automation technology, with a switch from pneumatically driven to servodriven systems.


In March, one month prior to Chinaplas, German robot manufacturer KUKA Roboter GmbH opened a brand-new, 20,000 square meter production facility in Shanghai, with an annual capacity for up to 5000 robots. At the time, Till Reuter, CEO of KUKA AG, noted:


China is the world’s largest and fastest-growing robot market. We have a longstanding partnership with many renowned Chinese customers. In order to accommodate continued growth, we have now significantly increased our capacity in Shanghai.


An expectation for reliability
KUKA’s systems, just like ABB’s, Sepro’s, CBW’s, and Wittmann’s, will be priced to reflect their value. Today, Chinese processors have little choice but to pony up, with 90% of the robots purchased in China imported in, according to Guangzhou’s Ming. The government is hoping to address that with greater domestic supply, as noted in the China Daily article, but Sepro’s Renaudeau, for one, is still optimistic about the long-term prospects for Western robotics suppliers opportunities in China.


“There is a clear demand or expectation for reliability; it's a new philosophy for the Chinese market,” Renaudeau said. “The Chinese market will be very similar to the U.S. or European markets within a few years. You cannot afford to have molding machines or robots that are not being served, with the absolute guarantee that you have a partner that will be there.”

Processor gives employees the time, resources to “go back to school” at work

By: Tony Deligio 12. August 2014

Extruder Charter NEX Films, created by the combination of Charter Films and NEX Performance Films (read the June 2014 Onsite about the company), picked up on how important training was over a decade ago as Charter Films, according to Eric Smith, general manager. Plastics processing requires consistency—same material formula run with the same machine settings and the same inspection—but that repeatability is often lacking when it comes to training.


“Historically, training was done by another operator,” Smith says, “and depending on who the trainer was and the message you received on that specific day, the consistency becomes a little bit questionable. The other thing is: how do you make sure you get the message on how to do things across to people in the correct way, because over time, things can get lost in translation between individuals.”


The University is founded
For the sake of consistency, and to make its training more regimented, then Charter Films instituted its Charter University over a decade ago. As part of the June OnSite, Jim Callari highlighted the Charter NEX University (CNU) initiative. I spoke with Smith about the program as I researched a feature on workforce development for the our upcoming September issue.


The company, which buys German-made Windmoeller & Hoelscher lines,  started CNU with a focus on the high-tech machines, according to Smith.


“The idea that you’re going to take a 400-page manual and put it in front of somebody’s who come in to operate your line and train them that way just isn’t very productive,” Smith explains. Charter NEX’s solution was to break down specific components of the machine and the process and then post training modules, consisting of images, text and videos, to the company’s internal Intranet. At the end of each module, employees complete a test based on its content, to ensure the operator has seen and absorbed the lesson.


The program has evolved from integrating new workers to showing existing employees a potential career path within the company, and what knowledge they’ll need to advance down the road of promotion.


“CNU has laid out directly what employees need to do get to that next step in their job progression,” Smith says. “So it is a really a great development tool as well, in terms of saying, ‘We want our operators and our employees to grow, and here is the path they need to follow to do that.’ The sky’s the limit based on what you can do in terms of showing proficiency in developing these skills. There really was the opportunity to have people grow as quickly as they wanted to or could demonstrate.”


Living, breathing document
An overriding goal of CNU is to be continuously adapting, Smith explains, not only updating as process technology evolves, but also adding new topics, including ones outside shopfloor machinery.


“Now CNU is beyond just the training on pieces of equipment,” Smith said, noting that there are currently modules covering everything from health benefits to an employee’s 401K. “It goes beyond just the training. You’ve got a group of people who are asking, ‘What are the next topics for this living, breathing document? What is the next module that we think will be a valuable tool for the people that work in our facilities?’”


Giving employees the time, resources to learn
Another key to the program’s success: allotting time for employees to “hit the books” during their workday, with each employee provided with the time to do this development work while they’re on their shift, according to Smith.


“Employees have the ability to sit down and work through that module in the half hour or 45 minutes it takes to go through it,” Smith says, “and all of that development occurs while they’re on their shift, which shows the commitment of the company to say, ‘This is important to us, and we will provide that time for you to be able to do that while you’re here.’”


One recurring theme that came up again and again as I spoke with processors about the “skills gap” facing the U.S. manufacturing industry, was the need to look within a company’s own walls for new talent. If it’s hard to find (or pay them if you do) qualified process techs outside your company, commit to building your own in house, like Charter NEX has.


“There can be so many questions with regards to a sophisticated piece of equipment when you have somebody who really has no blown film manufacturing experience,” Smith explains “and being able to get that direct time to ask questions and have them answered—really allowing the opportunity for that development—I think that’s pretty unique in terms of a manufacturing operation.”

Former Hoover vacuum injection molding plant on the block

By: Tony Deligio 6. August 2014

How the 423,435-ft2 former Hoover vacuum plant in El Paso came to be for sale is easier to answer. Back in March, TTI Floor Care, a Ohio-headquartered subsidiary of Hong Kong based Techtronic Industries Co. Ltd, announced it would close the El Paso plant, as well as a 274,295-ft2  operation across the border, as part of a “strategic” decision.


TTI came to own the facility, which boasts 150 Van Dorn injection molding machines ranging from 85 to 1,100 tons, back in 2007, when it bought the iconic brand of vacuums from Whirlpool for $107 million. Shortly thereafter, TTI created its floor care group, which consisted of Hoover, Dirt Devil and Vax (the company has since acquired the Oreck brand), headquartering it out of Glenwillow, Ohio, and promptly closing Hoover’s North Canton, Ohio production plant as part of an August 2007 “Strategic Repositioning Plan.” At the time, TTI said it would relocate manufacturing to Texas, Mexico and China.


On July 31, Los Angeles investment firm Hackman Capital Partners partnered with auction companies, BidItUp Auctions Worldwide and Maynards, to acquire the former Hoover properties. The price for the facilities and equipment, which were appraised for tax purposes at $12.2 million and $11.2 million, respectively, was not disclosed.


Steven Mattes, CEO of Mattes Diversified Industries, which owns Biditup, says his company is currently “fielding inquiries and entertaining potential buyers for the entire facility,” even offering financing or leasing, but if a single buyer doesn’t emerge, the company will conduct a “piecemeal auction” sometime this October.


Mattes is hopeful on the basis of the machines, noting that “market demand for the iconic Van Dorn  injection molding equipment remains very strong worldwide.” Adding to Mattes’ optimism are  his views that the used machinery markets are depleted of inventory while new equipment currently comes with “extended delivery dates.”


In addition to the Van Dorn’s, the plants also includes a “complete” CNC mold repair shop, as well as closed loop water chilling systems, nine 10-ton cranes, 120 granulators, and a complete material handling system, including resin silos.


Despite the consolidation of some U.S. operations, TTI, somewhat paradoxically, has been investing in the states as well. Last year it announced plans to hire more than 200 new electrical engineers, mechanical engineers, technicians and industrial designers nationwide over the next three years, and on July 8, it submitted the winning bid of $17.25 million for Oreck, including its Cookeville, Tenn. plant. At the auction, Simon Lawson, CEO of TTI Floor Care North America, said his company intends on maintaining production at that facility, saying the company feels it offers the business “a significant advantage.”


Further muddying the waters, particularly at a time when many companies are bringing production back to the U.S. and Mexico, is the fact that for the entire TTI Group, which includes popular power tool brands like Milwaukee and Ryobi, 73% of its sales come from the U.S.


Regardless of what happens to Hoover’s Texas plants, things are looking up for its former North Canton, Ohio operation. Back in 2011, Suarez Corporation Industries reshored production of its EdenPure heater to the facility.

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