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May 5, 2008

Pella, Iowa Celebrates

It's great to have pride in our heritage and in America, there is such diversity of origins that a rich tradition in many communities is a celebration of their founders and the culture they brought with them.

Dutch settlers in America are a part of this wonderful American tradition. We all pretty much know from high school history that the Dutch had one of the world's most valuable pieces of real estate--now known as Manhattan--but lost it to the English. Some may have heard about the Dutch tradition in Holland, Michigan where many settlers from the Netherlands went to live. But how many of you knew that Pella, Iowa has a legacy of Dutch settlers that is celebrated every year at this time, when the tulips bloom?

The accompanying picture is from the tulip festival in Pella, Iowa and shows in the background the Tulip Toren, or Tulip Gate. Mary Vermeer Andringa, a native of Pella and the chief executive officer at Vermeer Corporation there, told me about this festival a few days ago. Her family has Dutch roots as you might have guessed with names like Vermeer and Andringa. Mary's family and friends were in town to see the parades, enjoy the children's programs, concerts, auto shows and of course the tulips. I understand there are 30,000 tulips in Pella. Vermeer Corporation -- manufacturer of a wide range of industrial equipment -- alone plants 12,000 tulips on their own corporate campus. The tulip is one of the most beautiful flowers of the year, not least because it blooms early when we need some cheer after the long, grey winter. Some day I've got to make it to Pella at this time of the year to take in this floral spendor.

For more images of Pella, Iowa's tulip festival just click here and get ready for their 2009 festival from May 7-9. And kudos to the Vermeer Corporation for helping to make their town special with support for this festival and their own magnificent plantings.

By the way, if you are a fan of tulips ...

Continue reading "Pella, Iowa Celebrates"

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April 24, 2008

Tennessee Innovators

Innovation can be elusive. What is it exactly and how can a community nurture and encourage it? One thing is certain: innovation is the foundation of successful manufacturing and those firms that devise new processes and products are more competitive over the long-term.

The business and civic community in Chattanooga, Tennessee has hit on the right formula for identifying what innovation is within their metro region and--better yet--how to recognize and encourage it. More towns should follow their lead.

Every year at this time, the Chattanooga Area Chamber of Commerce announces the winner of the Kreusi Award for Innovation at its Spirit of Innovation Awards Luncheon. This year's local winner was TR Automation; here's a good synopsis from the local Chamber of Commerce about why TR Automation was selected.

Chamber President and CEO Tom Edd Wilson presented the Kruesi Award to Jerry Tyman Jr., TR Automation general manager, for developing a revolutionary approach to robotic work station manufacturing.

Called SuperCell, the innovation boosts productivity because the robot or robot group is working 95 percent of the time. The advance—particularly applicable to the automotive and aerospace industries—reduces floor space, improves the quality of parts manufactured and achieves a 30 percent reduction in production costs. TR Automation was selected from seven finalists, including Accurate Automation Corporation, Andersen Flaps, Inc., Astec Industries, Inc., Cleveland Tubing, Inc., EnWaste Recovery Systems and Transcard. All of these companies exhibited their innovations at the Convention Center event

The Chattanooga awards program always draws top speakers and a very large turnout of the regional business community. Tennessee Governor Bredesen spoke and Roger Staubach gave the keynote address.

Full disclosure requires that I let you know that I've been honored to be a Kreusi Award judge for the last several years. Chattanooga has drawn a wide range of judges from manufacturing and business to evaluate the nominees. It's a hard choice, because there are so many excellent examples of successful innovation in the region.

Other candidates included Astec, which has developed a new method to make asphalt that reduces fuel use by 14 percent and reduces emissions as well. If used in the New York metro region, for example, it would save nearly 19 million gallons of diesel used in conventional asphalt making. Accurate Automation was another finalist, which has developed and implemented an unmanned ocean racer with artificial intelligence. This craft can be operated remotely and serves as a patrol boat that can thwart terrorist attacks on ships and oil platforms.

Congratulations to the Kreusi family for supporting this initiative and to the Chattanooga business community for finding a way to shine a light on those firms that are thinking outside of the box and creating new generations of products and processes.

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April 16, 2008

One Year Ago

Just a year ago today, the shots of a crazed student brought down 32 aspiring students and faculty at Virginia Tech. Then the madman took his own life.

Since then and more recently, the headlines about this Virginia Tech tragedy have centered mostly on who was to blame for this and compensation for the families who lost sons, husbands, daughters. Some of the families have put donations to incredible use, like the Cloyds who use those contributions to repair dilapidated houses in the poorest sections of Appalachia. Stories like this are truly inspiring.

Yet the huge Hokie Spirit that impressed the nation immediately after the shootings seems to have dissipated and many of the students are saddened by that loss, as the editor of their student newspaper reports in an article.

This is a poignant day for our family because our daughter, who is now a sophomore there, lived in the dorm and on the same floor where the first two students were gunned down. A girl a few doors away never came back from German class. And the girl whose family is rebuilding homes in Appalachia, Austin Cloyd, was in her 8 am communications class only to go on next to the fateful French class that took her life. To top it all off, April 16 is our daughter's birthday.

This year, like last, she doesn't see anything to celebrate on her birthday. She often talks about how short life is and this viewpoint influences her young life. That her grandmother lived to be 94 doesn't count in her mathematics of longevity. There will be a number of solemn memorials today on the campus and classes are canceled. It's a Day of Remembrance. Even though April 16, 2007 is long gone, its aftermath lives on with many students like my daughter. It's good to pause today and remember those who fell as well as those who carry on with the kind of memories they never thought they'd acquire in a bucolic college setting.

Posted by Bill Canis at 8:40 AM | 1 comment; click here to read it or submit your own!
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April 9, 2008

The North American Marketplace

To listen to Senators Obama and Clinton, one would think that the North American Free Trade Agreement (NAFTA) was like a meteor hitting U.S. manufacturing. Now, these otherwise smart officials know better. In fact one of their leaders, Congressman Rahm Emanuel and the Chairman of House Democratic Caucus said

NAFTA is not the main reason workers today are hurting.

Congressman Emanuel is right about NAFTA of course and the senators are dead wrong. A recent survey The Manufacturing Industry conducted with Deloitte of manufacturers in the U.S., Canada and Mexico showed this fact clearly. Our survey showed that 49 percent of companies had found NAFTA to help their competitiveness; 10 percent said it hurt and the remaining 41 percent said it had no impact one way or the other.

Several recent articles, which are reality checks for Senators Obama and Clinton, discuss what NAFTA has wrought. In today's Business Section of the Washington Post, an article by Michael Fletcher, Don't Blame NAFTA for Downturn, Many Economists Say lays out the fallacies. Most interestingly, he concludes his article on the right note with a quote from a professor at American University who sagely notes that

NAFTA is not the issue. That debate is finished. What the candidates should be debating now is the future of North America. That requires them to look forward, not backwards to NAFTA.

Please, candidates, deal with the real issues facing America's future.

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April 4, 2008

The Weatherman Has It Right

It's a rainy, gray day in Washington, DC and by most accounts it's been a cool spring thus far. Mostly I turned to the weather page to see how long the rain would last today and if I still needed an umbrella for the commute to work.

But it was almost like the sun was shining when I turned to the weather page in The Examiner newspaper to see a very short column by local weatherman, Topper Shutt, with local Channel 9 News.

I couldn't find a direct link to his little column, so it follows. Mr. Shutt gave us a nice fresh breath of air by pointing out this important book by Bjorn Lomborg:

I read three books while I was on vacation [last week]. One book really made a lasting impression on me. it is entitled 'Cool It' by Bjorn Lomborg. I don't want to give it away, but he doesn't dispute global warming is occurring but rather how we should attack that issued from an economical viewpoint.

Lomborg also prioritizes what world issues are most pressing and what actions would give us the highest return from our investment, in terms of lives saved and dollars.

It is refreshing to learn about a new perspective on this highly charged issue. I try and remind our viewers that climate is always in a state of flux and yes, the world has warmed over the last 25 years but claiming that Katrina is a product of global warming is absurd.

We have had much stronger hurricanes hit the United States in the past, the Labor Day or Keys hurricane of 1935 and Camille in 1969 to name just two. There is much more development now on our shores. Anyway, check it out. It's a quick and informative read.

By the way, it's supposed to be rainy in DC through Saturday, although the sun came out today with this column. Thank you, Mr. Shutt. And if you'd like to comment on Mr. Shutt's good sense, here's a link to his blog whichi is on the same topic today.

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March 3, 2008

North American Free Trade Agreement

We take for granted all the benefits of international trade and what they continue to bring to the American economy. Right now, the exports of thousands of U.S. manufacturers--large and small--are helping to offset the economic bad news stemming from the housing and credit sectors. That's right. U.S. exports have risen so much in the past few years that they are boosting the economy, just when we need it most. Those exports go all over the world, but especially to our largest trading partners, which include Canada and Mexico.

So it's more than a little unsettling to see Senators Clinton and Obama jumping on NAFTA--the North American Free Trade Agreement--as if it were a truly bad thing for the U.S. economy and calling for it to be reopened and renegotiated. I guess they don't recognize a good trade agreement for America when they see it. There's been lots of misinformation spewed about NAFTA for a long time and it's surprising to see these well-informed legislators buying into the bashing at this time. One of Vice Presidennt Al Gore's greatest moments was his debate long ago with Ross Perot where Mr. Gore forcefully and effectively demolished the untruths about NAFTA being circulated by Mr. Perot and his allies.

Why are these two Democratic candidates for president so off track? I'm not the only one to ask that question. In Sunday's Washington Post, Sebastian Mallaby really laid out the case for how dangerous this anti-trade juggernaut has become. Mr. Mallaby's article really zoned in on the facts in his last paragraph:

The pity is that the Democrats didn't have to go this way. It's not that difficult to explain that U.S. manufacturing output has gone up, not down. It simply isn't true that production has been shifted en masse to Mexico or even China. Manufacturing employment has fallen not because of trade but because of technological progress....

The steady rise in manufacturing output that Mr. Mallaby refers to is presented in the accompanying graph. To see the chart in a larger format, please click here.

Long before NAFTA surfaced as a campaign issue, The Manufacturing Institute launched a survey of manufacturers in the United States, Canada and Mexico to gauge their views on how competitive our big market is compared to those in Europe and Asia. This report is nearing completion and will be made public later this spring. It appears that our survey of manufacturers will give all the presidential candidats something to think about and for those finding fault with NAFTA, there will need to be some serious back-peddling.

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February 15, 2008

Manufacturing Summit in Illinois

Yesterday, the Illinois Manufacturers Association (IMA) joined with other area business groups to hold a Manufacturers Summit at the College of DuPage outside of Chicago. By all accounts it was a terrific success in focusing on the workforce needs of the greater Chicago manufacturing community and developing a plan to ensure a pipeline of skilled men and women in the future.

Ron Bullock, chairman of Bison Gear & Engineering in St. Charles, Illinois, is the newly-elected chairman of IMA and he gave the keynote address to the audience. He struck a note that is important to the future of U.S. manufacturing. Namely, that the success of manufacturing depends on its alliances and partnerships with community colleges and technical colleges that attract and train the next wave of skilled workers for manufacturing.

The College of DuPage is at the center of this competitiveness drive. It offers 140 hours of classroom training for young men and women, leading to certification in 4 distinct career areas by the MSSC--the Manufacturing Skills Standards Council. Students who master the coursework and obtain the coveted MSSC certification will participate in a job fair afterwards, so the connection between training and obtaining a good job is real and tangible.

The Summit also announced the formation of a Manufacturing Council in Illinois that will create business champions--executives who will speak publicly about the needs of skilled manufacturing workers and the linkage with the nation's community colleges. The Council will also find ways to deepen the connection between manufacturers in northern Illinois and other community colleges. The College of DuPage has set the pace and tone for what needs to be done. Now we hope others will see how important this direction is the future standard of living and economy of Illinois.

Next week we will bring you more about this important convocation. In the meantime, kudos to IMA, the College of DuPage and Mr. Bullock for launching it.

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February 11, 2008

Global Value Chain: Financing

Our fourth and final installment about our new report --Forging New Partnerships--i s about how companies can effectively pay for their expansions and worker training programs. As our report notes:

Doing business in the global value chain increases the level of complexity in all aspects of the company, including financing. The environment for securing capital to finance operations and growth is no longer as easy as filling out a loan application or placing a call to your neighborhood banker. Small and medium manufacturers (SMMs) should look to a wider range of financing sources to grow.

Our partner for this report was RSM McGladrey, a global accounting, tax and business consulting firm headquartered in Minnesota. A survey they conducted among their manufacturing clients last year showed that one of the leading barriers to pursuing international growth is the inability to obtain suitable financing. As the global value chain expands, this need will only intensify. The same survey showed that the top three reasons for not participating in government programs that can assist SMMs with financing are:

294 companies were unfamiliar with the government financing programs;

196 were not interested in them and

187 were unsure how to get started.

One of the reasons for writing Forging New Partnerships is to better educate SMMs about some of the financing options open to them. It also profiles three companies that have found ways to utilize some of these resources.

Bison Gear & Engineering in Illinois has used industrial revenue bonds to build a new plant and tapped a Small Business Innovation Research (SBIR) grant from the National Science Foundation to conduct research on new motor technology. Pacific Plastics in California harnessed state grants for worker training and has applied for a federal Trade Adjustment Assistance grant that is being piloted in the innovation corridor in California. Al-jon in Iowa turned to investment partners to grow his business, not only with cash, but also with the know-how of applying it wisely to lean manufacturing and redesign of its service delivery.

This wraps up our blog discussion of how manufacturers are dealing with new challenges in the value chain. We always welcome comments and questions and, if you'd like to read Forging New Partnerships, it's available for free on our website. Just click the link above and it will take you to it.

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February 7, 2008

Global Value Chain: Skilled Workforce

This blog series looks at our latest publication, Forging New Partnerships, which takes a close look at how the manufacturing supply chain is changing and the implications for small and medium firms. Through recent blogs, we've already looked at staying ahead with innovation and lean manufacturing and finding new markets, especially overseas. Today, we focus on the book's analysis of the workforce challenge that is a growing concern because half of all manufacturing workers will retire in the decade ahead--over 7 million men and women.

This is particularly challenging for SMMs--small and medium manufacturers. They don't have the large inhouse training and recruitment units that large manufacturers have. The tangled series of challenges the SMMs face include:

attracting new entry-level and skilled workers;

training existing workers so they can deliver on the innovation and global business priorities;

replacing the knowledge that skilled workers take with them when their retire; and

handling the competition when customers, competitors and even smaller companies try to attract an SMMs skilled workers.

Developing partnerships to meet these workforce goals is particularly important for SMMs, as it is these partners who can help them solve these challenges. One successful SMM in Minnesota provides 100 hours of training a year for every employee and devotes more than 5 percent of payroll to this purpose year in and year out. Some of the partnering that can help SMMs fill their employee pipeline include:

establishing internships for high school and community college students;

participating in job fairs with other local employers;

publicizing their industry in local publications, with a toll free number or email connection for applicants; and

working with manufacturers in the state to get skills back into high schools, just as a "Get Real" program is doing in California.

Forging New Partnerships has many examples from SMMs who are succeeding in building unique pipelines and it includes, on page 44, a Human Capital Success Matrix showing SMMs how they can evolve their workforce pipeline, step by step. Check it out!

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February 6, 2008

To Infinity..... and Beyond

Disney's Buzz Lightyear has been an enduring character since his debut in Toy Story. One reason for his appeal: he believes in himself and that he can actually become a true space ranger. He's also a hi-tech figure in an age when technology has us all riveted. Some even say he was inspired by astronaut Buzz Aldrin.

Buzz wouldn't believe all the technological changes since he first hit the screen, and many of us real live adults are trying to keep pace with YouTube, MySpace and Facebook. Keeping up with where young people find their information and interact with each other is moving at lightyear speeds.

Still, Buzz is a very aspirational figure and so is Dream It. Do It., the premier careers and economic development website which is geared to show young people about careers in manufacturing. And Dream It. Do It. has just stepped into this new world of social networking. This week, Dream It. Do It. (DIDI) has been relaunched on an updated 2.0 platform. Morover, it includes all the major social networking sites. Click on DIDI's website above and see how easy it is to migrate straight to any three of these sites where our sons, daughters and grandchildren flock daily.

If you haven't been following DIDI since it was launched in Kansas City a few years ago, it's worth a look. It is operating in ten cities and regions now, from Puget Sound in the northwest to the newest site, the whole state of Virginia. Communities embracing Dream It. Do It. are commiting themselves to a transformation whereby they will reach out to young people in their cities and towns to demonstrate why getting a skilled education can be a good career move. The focus on human capital strategies is increasingly one of the most important economic development tools and will only increase in importance in the decade ahead as fully half of the U.S. manufacturing workforce reaches retirement age and has to be replaced.

Dream It. Do It. communities are giving themselves an incredible advantage over others because they have the commitment to educate their young people in careers AND the foresight to work with local schools, community colleges, universities, technical schools and community officials to meet these goals.

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February 1, 2008

R&D Spending Pays Off in Minneapolis

Yesterday we blogged about innovation and how staying ahead of that curve is important for manufacturers. That's true whether your company is large, medium or small.

Minnesota-based Tennant Co. has learned that lesson and has found a route to successful U.S. manufacturing through increased spending on R&D. Tennant manufactures industrial floor cleaners and, like many manufacturers, it has faced rising and cheaper competition from overseas. One option Tennant had and discarded was to move its production abroad.

According to a recent article in the Wall Street Journal and the Pioneer Press, the option its management took was to boost R&D spending to outwit the competition with signifcantly different products that would give it an edge:

In 2007, Tennant's R&D spending was an estimated $23 million, the company says, up 38 percent from 2003. About 10 percent of that went toward developing breakthrough products.

Tennant brought in a new director of the research group, whose background was in aerospace and defense contracting. He and the team brought a new focus on improving technology rather than just durability. Engineers were encouraged to visit trade shows unrelated to their specialities to cross fertilize new ideas and that approach,, along with its new financial suport for R&D, worked for Tennant. To find out more about how this Midwest manufacturer developed new carpet scrubbers and other essential products for keeping factories, schools, malls and other large spaces clean, check out this very insightful article.

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January 31, 2008

Global Value Chain: Innovation

Last week we inaugurated this blog series on what the global value chain means for today's manufacturers, especially the small and medium companies. Our latest publication, Forging New Partnerships, takes an indepth look at it.

A while back I met with a large group of manufacturers in Colorado Springs, Colo. They had been hammered by the tech drop off at the start of this decade and wanted to make sure it didn't happen to them again. After prioritizing all their interests, finding a way to stay ahead of the innovation curve came out as the top area that they felt would ensure a more competitive future for them. So it's no surprise that in today's manufacturing value chain--where large OEMs expect their suppliers to contribute more in the way of new products and processes--Forging New Partnerships focuses on how small and medium manufacturers (SMMs) can keep their innovation edge.

From our interviews and a special SMM roundtable we held last fall, some of the innovation best practices emerged:

A better informed team of employees who know the stakes if new products are not produced correctly

A system of employee rewards for those who innovate, both in terms of cash bonuses to companywide recognition

Better informed customers who may need to understand why they need to share risks and costs for new product development

A high-tech college partner that can help SMMs think through and even develop their new innovation mandates. One California SMM has turned to local colleges for a "compute to compete" partnership.

Forging New Partnerships provides SMMs with a range of innovation options that they should consider now, from mastering lean manufacturing--including the Toyota Production System; developing new products and tailoring current products to new markets; harnessing federal and state programs by tapping grants and advisory services--such as the NIST Manufacturing Extension Partnership; and seeing the strong future for sustainable manufacturing and reducing the energy and environmental impact of products and processes. All of these are different paths to innovation; Forging New Partnerships highlights how many of today's SMMs are following these pathways to build a strong business model.

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January 24, 2008

The Candidates on the Economy

It's American as apple pie that issues in presidential elections blossom overnight and seize the campaigns, completly rejiggering the outlook. It's that way this year as the economy has soared to the number one, if not only, issue on the minds of candidates this month. There's good reason for this shift of course, with a possible recession looming.

Yesterday the New America Foundation sponsored a very interesting and informative discussion, wtih the economic advisers to four candidates: Barack Obama, John Edwards, John McCain and Hillary Clinton. Mike Huckabee's economist had hoped to be there, but had to cancel at the last moment. New America's program title was -- As the Economy Screams: Perspectives and Proposals from the Presidental Campaigns.

The campaign economists are all distinguished in their own right:

Austan Goolsbee (for Obama) is a professor of economics at the University of Chicago's School of Business;

Leo Hindery (for Edwards) is managing director at InterMedia Partners;

Kevin Hassett (for McCain) is director of economic policy studies at the American Enterprise Institute, AEI;

Gary Gensler (for Clinton) is a former undersecretary of the U.S. Treasury Department and Goldman Sachs executive.

So what did they say?

Continue reading "The Candidates on the Economy"

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January 23, 2008

Global Value Chain at Work in Minnesota

In our latest publication, Forging New Partnerships: How to Thrive in Today's Global Value Chain, we highlight small and medium manufacturers who are expanding their business model into overseas markets.

One of the most clearcut case studies in our book is that of E.J Ajax, a metal stamping company outside of Minneapolis. With 50 employees, the company is not shy about pursuing business opportunities abroad. One of Ajax's customers makes rice and vegetable steamers and Ajax supplies a sophisticated metal part for those appliances.

When his customer decided to move its production of these products to Asia, it didn't at first look good for Ajax to hold on to this business. But Erick Ajax explains in Forging New Partnerships that he was committed to keeping this business and in following his customer to Asia. He succeed in convincing them that he was still the right supplier and so he maintained his contract with the appliance maker.

Best of all is this: the appliance maker sold 100,000 rice and vegetable steamers when they were made in the United States. Now, with an Asian market that is more interested in such products, they sell 700,000 units. And Erick Ajax outside of Minneapolis is now supplying seven times the number of metal components that he did before.

Erick Ajax and his company have found the way to survive in the global marketplace and even thrive. Following customers as they locate production abroad to serve foreign markets is one way to do it.

Posted by Bill Canis at 8:23 AM | 1 comment; click here to read it or submit your own!
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January 22, 2008

Global Value Chain: Exporting

Last week we began our blog series about the manufacturing value chain, based on The Manufacturing Institute's newest publication, Forging New Partnerships: How to Thrive in Today's Global Value Chain.

Forging New Partnerships focuses on four areas where many small and medium manufacturers (SMMs) can improve their performance within the manufacturing supply chain: exporting and global trade; staying ahead of the innovation curve; attracting new, skilled workers and financing options.

Becoming engaged in international trade is perhaps one of the largest of all business hurdles for SMMs. It seems formidable, especially when companies have the big U.S. market to operate in. But that's leaving a lot of the growth markets overseas out and why let overseas competitors harvest all that business?

Our new report looks at some of these challenges that inhibit broader SMM engagement in trade. According to Industry Week, two-thirds of SMMs export less than 10 percent of their production and nearly 30 percent export nothing. U.S. manufacturers can do a lot better than that, especially with the U.S. dollar making U.S. exports very, very competitive.

What are the opportunities to grow overseas sales? The report gives a great range of ways to succeed, based largely on what has worked for other SMMs who have plunged into the international market:

know how to exploit your stratetic advantage

have a proactive commitment and mindset about pursuing international opportunities

tailor products for the international market

develop a partnership with an overseas representative

invest in personal relationships abroad and understand and adapt to local cultures and business ways

leverage relationships with existing multinatinal customers as initial sources of exports.

Highlighting this chapter are excellent sidebars about Schloss Engineered Equipment in Colorado, Power Curbers Inc. in North Carolina and Allmand Bros. Inc. in Nebraska. Check out pages 16 to 24 for this discussion by clicking on the report title above.

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January 16, 2008

Global Supply Chain: Manufacturing Risks, Rewards

All manufacturers are part of a supply chain. The latest publication of The Manufacturing Institute and RSM McGladrey looks into this important component of today's interconnected business relationships.

Many small and medium manufacturers build product for larger manufacturers who, in turn, sell to a final customer. Looking at the supply chain from the large company perspective, its many suppliers provide essential products without which they can't complete finished products. Small, medium and large manufacturers are all together and the more successful the communication within a supply chain, the better it performs.

But manufacturing supply chains are changing with the advent of a global marketplace. Large U.S. companies can find suppliers around the world. Similarly, smaller companies can follow their large customers as they set up operations to supply burgeoning markets such as China and India and they can diversify their own business by becoming to European and Asian companies. A decade ago these kind of opportunities were rarer.

Forging New Partnerships: How to Thrive in Today's Global Value Chain is a new report designed for executives who run small and medium manufacturing firms (SMMs). This is the first of several blog entries that will discuss this new report and its implications for the future competitiveness of manufacturers, both large and small.

Globalization and greater competition in the supply chain are actually morphing the traditional system into a value chain. What's the difference between these two? As our report notes:

The old supply chain connected assembled and/or transformed components into a final product and sold it to the end consumer. It was a vertically organized structure with mainly components flowing through the supply chain while product design, pricing and service were dictated and managed by the final producer. Primary responsibility for innovation and value creation resided with the Original Equipment Manufacturer. (OEM)

Today, manufacturers are part of a new value chain that is a more complex matrix of interdependent corporate relationships and the workforce that makes them succeed. Innovation and value are created at all levels of the chain and in collaboration with external partners. In the new value chain, SMMs are more than just "build-to-print" suppliers. They are integral partners that help create the new technologies, products, services and business models that are vital for success, here and abroad.

In the days ahead, we'll loook at the four chief elements of this value chain: innovation, exporting and global sales opportunities, workforce and financing.

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November 28, 2007

Gatorade

Today's papers report that the inventor of Gatorade has passed away. Dr. Robert Cade invented the now-famous sports drink in 1965 to help football athletes at the University of Florida replace carbohydrates and electrolytes lost through sweat during training. Everyone is interested in the innovation process and the creation of this multi-billion industry is a good insight into how new products are born.

It doesn't always take a huge research budget to innovate. The need for Gatorade was identified when Gators football coach Dwayne Douglas asked Cade, "why don't football players wee-wee after a game?" Dr. Cade, who was a professor of internal medicine at UF, jumped on that question with some of his researchers and learaned that a football player can lose up to 18 pounds -- up to 95 percent of it water -- in a typical three-hour game.

With about $43 in supplies, Dr. Cade and his team developed a brew that replaced the water and minerals lost by players, but their first step on this road to innovation didn't meet with a lot of success. Dr. Cade said sometime ago in an interview that it tasted like toilet bowl cleaner. After adding some sweeteners, the coach tried it out on freshmen because he didn't want to hurt the varsity players.

Eventually the drink became a standard part of the Gators' playbook and caught the attention of others after the 1967 Orange Bowl, where UF defeated Georgia Tech. The GT coach remarked that they lost that game because "we didn't have Gatorade....that made the difference." After that, the sports drink was commercialized and has become a popular beverage around the world, a development that Dr. Cade never envisioned when he created his first concoction. Inventions can be like that: one good thing leads to another.

Our condolences to the Cade family on losing a man who is one of American's true innovators.

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November 17, 2007

Part 2--The Surprising Outlook in Idaho

I just returned from a business trip to Idaho where I had the distinct honor to address the 61st annual meeting of the Associated Taxpayers of Idaho, an audience comprised of probably one third business leaders and two-thirds legislative leaders.

While I was in Boise, I had the good fortune to visit the Amalgamated Sugar Company facility just north of town in Nampa. From afar, you can see this plant and its white cylindrical drying towers which have been landmarks here since World War II. If you looked just superficially at this plant, you'd think not much had changed in the past sixty years. And that of course is where you would be dead wrong. And you would have little understanding of how over 200,000 acres of sugar beets are processed at this facility every years--veritable mountains of big white-fleshed sugar beets.

Inside, technology and innovation are afoot as they are at most successful manufacturing facilities. Plant manager Kent Quinney, like many of the employees, has been there for well over a decade because it pays a very good salary and the work is challenging and rewarding. What struck me in my two and a half hours at the plant that much that used to be back-breaking work is now mechanized by machines and even robots. A case in point is a high-speed packaging line where 50 lb bags of finished sugar are handled. Previously one man could fill two, 50 lb. paper bags in a minute. Now, a new high speed packager fills 28 polybags in the same time. That's a great picture of productivity if ever there was one.

It's hard to describe the technology at work in the plant. It's way over my head and I could never do it justice in the same way Kent Quinney explained it. But they are inventing new ways to get more out of each sugar beet and have identified new byproducts that are popular in Japan and Europe, leading to export markets for this staple crop that is used in thousands of ways in baking, candy-making and food processing. Engineers are needed to keep this big operation underway. Large centrifuges are used in the final stages and it is truly magic to watch the yellowed sugar be literally spun white right before your eyes.

While in Boise, I also visited the Darigold milk processing plant. This facility is super clean as you can imagine and the 200,000 gallons of milk that are brought in each day in stainless steel tanker trucks are eventually sent out the door in plastic milk jugs. They plant also processes soy for beverages and it was that line that was underway when I was there, boxing up three large gallon packages for special sale at Costco.

Every batch of milk that is unloaded is sampled for purity and then a similar sample is sent on to company headquarters, in dry ice, for a retest. This is only the start of meticulous testing of the milk product. It's done over and over again in this plant as the milk is separated, cleaned, processed, pasteurized and packaged. After a batch of milk is finished, the plant uses multiple chemicals to clean the pipes and stainless steel tanks so that there will be no remnants of the previous milk left in the system.

The Darigold facility is heavily regulated--the Food & Drug Administration, EPA, state EPA, clients who have product made there visit frequently, OSHA, etc. While it is different in this way from the sugar beet facility, they are the same in that they have harnessed high-tech innovations to provide customers with the lowest-priced, highest quality known anywhere. And they have helped build food processing into the largest sector of U.S. manufacturing.

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November 16, 2007

The Surprising Outlook in Idaho--Part 1

It has been twenty years since I was in this state in the upper northwest and I was not prepared for what I found here, as the keynote speaker for the 61st meeting of the Associated Taxpayers of Idaho (ATI). The ATI meeting was a unique mix of state legislators and business people and Gov. "Butch" Otter joined the ATI meeting for lunch and as the featured luncheon speaker. All in all, an impressive assemblage of men and women interested in the future of this state.

I wasn't prepared to find a state economy that is red hot and one of the top growth economies in the United States. Idaho ranks first in so many important measurements of growth, innovation and entrepreneurialism, that it is hard to know where to start:

It's first in the nation with its investment in manufacturing.

It is first in the nation in the number of patents issued on a per capita basis.

And it's only 5th among the states that show a high start-up rate among new businesses.

It's the #2 state in terms of non-agricultural employment growth and has the fifth lowest cost of doing business.

Its exports have increased by 55 percent, ranking it 7th in the nation.

And it has greater percentage of workers in "high-tech" than even California.

Did you know all this was going on up here?

A state known for great skiing and potatoes has become a LOT more. West of the state of Missouri, only three states obtain as much as 12-13 percent of the state economy from manufacturing and those three are Texas, Kansas and--you guessed it--Idaho. I had the distinct pleasure to visit two of the states major food processing plants while I was here. The Amalgamated Sugar facility in Nampa, just north of Boise. And the Dairlygold milk processing plant in Boise.

Did you know that food processing and manufacturing is the largest single sector in U.S. manufacturing? Bigger than autos. Bigger than chemicals. Bigger than electronics. And Idaho has a commanding lead in many ways within this industry and is carefully laying the basis for further growth within this sector. Hewlett Packard is here and Micron Technologies was born and raised here. But the blog entry that I'll finish up with tomorrow looks at food manufacturing and the amazing things going on with simple products like milk and sugar beets.

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September 13, 2007

Some Short-Sighted Cities

Manufacturing takes place all around the United States, in every state and in many cities. For many places, manufacturing was the economic staple for decades and provided the jobs and tax revenue that fired the growth of the cities. Even New York City at one time had a vibrant manufacturing base and there are still many things made in the Big Apple today.

Manufacturing:

These patterns are already in place and so the projections to 2030 are based on today's realities. Take a look at Dr. Duesterberg's article and the UN data it is based on. It all has implications for the future strength of US manufacturing and the need for the skilled workers to operate increasingly hi-tech facilities.

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August 29, 2007

A High Five for Greenpeace's Founder

Dr. Patrick Moore is a co-founder of Greenpeace. He lives in Vancouver, British Columbia and is now the chairman and chief scientist of Greenspirit Strategies Ltd. Having helped found one of the more vocal environmental advocacy groups, it is worth noting that Dr. Moore has penned a most noteworthy essay that some may find surprising in its direction.

I certainly was surprised.

In an essay in today's Vancouver Sun -- entitled An Inconvenient Fact -- Dr. Moore takes issue with some of Hollywood's would-be environmentalists over their short-sighted posture toward our sustainable, renewable forests. Dr. Moore specifically takes issue with Leonardo DiCaprio's latest film, 11th Hour and about the nonsense in that film, he says:

DiCaprio's movie, The 11th Hour, is another example of anti-forestry scare tactics, this time said to be "brilliant and terrifying" by James Christopher of the London Times. Maybe so, but instead of surrendering to the terror, keep in mind that there are solutions to the challenges of climate, and our forests are among them.

It is reassuring to see Dr. Moore's advocacy on this issue and his statement that there are, in fact, solutions to rising greenhouse gases.

To address climate change, we must use more wood, not less. Using wood sends a signal to the marketplace to grow more trees and to produce more wood.

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August 13, 2007

Affordable Health Care?

Health care costs are on everyone's mind almost all the time and with good reason. For those with health care insurance and employers, the costs continue to rise. For those Americans without insurance, costs can often be overwhelming for any type of care.

To listen to some of the presidential hopefuls in both parties, the only solution is to turn health care management over to the Federal government. Advocates of that path would have to explain how Medicare is already in that space and hardly a model of efficiency and low cost. So it was truly refreshing to read the recent opinion piece by Webster Golinkin, president and CEO of Rediclinic, showing how private clinics are already making a major beachhead in cutting costs and delivering quality care.

Over 400 private clinics operate throughout the United States today and more are on the way if opponents don't derail them. These clinics, or convenient care centers, are indeed convenient, housed in shopping malls, Wal-Marts and drug stores where lots of people come and go. Staffed by qualified nurse practitioners, the clinics treat common ailments such as strep throat and ear infections, deferring more serious care to doctors and hospitals. The cost for most of these visits, which include a prescription that can often be filled 20 feet away at a pharmacy, ranges from $40 to $70 generally, well below what a physician or emergency room would charge for the same visit.

When my children were younger, from time to time they'd get ear infections. The prescription was always the same--amoxicillin, which cured the ear ache. But every time they came down with one, we had to first get an appointment with the pediatrician, sometimes waiting several days. It struck my wife and me as crazy that for such a common illness, the procedures for care were time consuming and difficult, not to mention expensive. Clinics cut through that inefficiency.

Unfortunately, some would like to slow this progress with expensive permitting requirements, limitations on the number of nurse practitioners who can work in a clinic and even bans on advertising. These steps would roll back one of the great promises for controlling today's costs and making affordable health care available to a wide cross section of Americans, even those without health insurance.

This is not the first time we have blogged on this topic, which is so sensible that many manufacturers have had their own nurse practitioners on staff for many years to cut their own costs and speed health care delivery. Click here to read about it.

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August 11, 2007

Cummins Partners for Energy-Efficient Engines

There have been a lot of headlines in recent weeks about the congressional energy bills, with their many provisions focused on energy efficiency and lack of attention in spurring new sources of oil and gas for our industrial economy.

While the headlines have been focused on the legislation, energy efficiency itself has taken steps forward in many ways at the level where it counts: in the plants and homes across the country. Unlike some issues Congress deals with that can be dealt with and "solved", energy efficiency is a process and, within manufacturing, it's one that does not really ever end. New products and ways to make things are being invented all the time that raise the bar on what manufacturers can do. And in many instances, federal support can be important in meeting these higher targets of efficiency.

We had a really good example of that just this week when it was announced that Cummins Inc., a manufacturer of diesel engines in Columbus, Indiana, had been selected for a US Energy Department grant to demonstrate ways to increase the fuel efficiency of light weight diesel engines by 10.5 percent. Cummins will partner with BP and DaimlerChrysler on this research.

Further research and work on diesel technology leads directly to greater energy efficiency and lower greenhouse gas emissions becasue diesel fuel itself has better fuel economy than gasoline and emits much lower greenhouse gas. Some say that a diesel engine will get 40 percent more mileage per gallon and emit only 70 percent as much GHG when compared with a gasoline combustion engine.

Cummins is a good candidate for this kind of research because their business line is diesel engines. Their diverse line of engines has proven to be a good balance this year, leading them to record second quarter revenues and strong earnings, despite a major pullback in orders in the North American heavy-duty engine market.

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August 10, 2007

Memo to Senator Dorgan

Earlier today, the NAM Blogger hit the nail on the head when he took a real time look at corporate tax rates around the world. Aside from Japan--hardly the economic poster child for growth--the United States has the highest corporate tax rates in the industrial world. Moreover, OECD countries have been slashing rates so that the OECD average is about ten points BELOW the United States. In a competitive global marketplace, that's not a good spot to be in.

In 2003, The Manufacturing Institute and the Manufacturers Alliance/MAPI released its first report on five structural costs--including corporate taxes--that were making U.S. manufacturing less competitive. It showed that US manufacturers bore an additional 22.4 percent in structural costs than our nine major trading partners. That report was hand delivered to Senator Dorgan's office.

Last year, we updated our report and found that the gap had widened, with US manufacturers now carrying a 31.7 percent higher burden than competitors in Canada, Japan, Germany and other major manufacturing nations. Senator Dorgan's office received a copy of that report, too, as did all members of Congress.

Next time you hear a politician lament the shifting of jobs and production abroad, remember the lack of interest among some legislators in making U.S. manufacturing stronger by helping companies get a handle on costs. For The Escalating Cost Crisis and its predecessor, click here.

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August 7, 2007

More Exploration of the Red Planet

It's amazing that the Mars Rovers, which landed over four years ago, are still transmitting data back to earth about the Martian surface. After all, these two robots had a 90 day life expectancy but they have outperformed in a truly hostile environment for well beyond their inventors' wildest expectations.

Next spring, just as presidential primary races are crowing a front runner, the Rovers will be joined by the Phoenix Mars Lander, which was launched from Earth just a few days ago. If all goes according to plans, it will be the first man-made vehicle to touch down in the far northern climes of Mars, in an area like our Arctic Circle. There, it will drill into ancient ice and dust--expected to be as hard as concrete--scoop up samples, mix them and bake them and measure the quantity of water and the types of organic matter that might be preserved in it. This dirt-digging machine will also measure the atmosphere thanks to new technology invented in Canada. (In fact this is a joint mission between NASA and the Canadian Space Agency).

The Phoenix Mars Lander was designed and built by Lockheed Martin, one of our nation's pre-eminent space and aerospace manufacturers. Catch that word "manufacturers?" The only countries that can send something as sophisticated as this Lander to a far-off planet and have it transmit back incredible volumes of data are countries that excel in manufacturing, like the U.S. and Canada. Some NAM members have built components for these robots, including ACE Clearwater Enterprises in Torrance, California which has parts on the Rovers. Imagine a job where what you built is used in space exploration?! That has to be one of the coolest careers today's men and women could ever imagine.

The picture above shows Lockheed scientists working on the Phoenix Lander.

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July 29, 2007

Ocean Marvel

If you drive a car, ride a bus or plane, use an elevator, or have typed on a keyboard to get to this blog, then you probably have taken all those things for granted. That's the way of today's America--we have more than any civilization in history and yet we take for granted--and sometimes seem to punish--those who give us the wherewithal for all this bounty.

You realize how poorly we understand how our energy got to us when you a read a story about today's exploration for oil and natural gas at the bottom of the oceans.

Reporters Russell Gold and Ana Campoy brilliantly captured this world of oil and gas exploration that most of us never see in an article recently in the Wall Street Journal and in other newspapers. I'm including a link to one of the articles. It profiles The Independence Hub, floating in the deepest water of any offshore platform. It will pull up a billion cubic feet of natural gas every day! This one platform will produce enough energy to heat nearly 5 million U.S. homes.

The reporters want to tell us how the biggest rigs are used less as smaller reservoirs of gas and aging fields can best be tapped by underwater well heads. Moreover, by having the wellhead gear on the seafloor, it's out of the way of hurricanes.

Unfortunately the link above does not include the graphics and map that accompanied the WSJ piece on July 26. For me, they were as interesting as the analysis that went with it. Here's what was in the graphics--

The map shows the Gulf of Mexico overlaid with a grid that shows where some of the most interesting oil and gas drilling it taking place, tiny specks not far from the delta of the Mississippi River. The illustration show one of the floating rigs that operates there--who knew these gargantuan steel structures could float?!!--and the spaghetti of umbilical cords that carry orders, chemicals and electricity down two miles to the well heads on the sea floor. Here are the steps shown in this very effective drawing by Erik Brynildsen:

Step 1: The Platform. Operators monitor production and send orders to the wellhead. If you've been on an offshore platform, you know this is much bigger than a lego block.

Step 2: 125 miles of "umbilicals" carry orders, electricity and chemicals down to wellheads. Computers monitor all of this activity and ten different fields feed into the Independence Hub.

Step 3: Modular wellheads or "trees" regulate flow and pressure with valves and chemicals injected into the well. How do they get these well heads atop the pipelines when it is two miles down from the ocean's surface? I have trouble getting a horseshoe on a metal pole from twenty feet. I can't imagine the engineering skill to not only match up the wellheads, let alone the drilling that goes below the sea floor to the deposits of oil and gas. Could you do this?

Step 4: Flow Lines. They send production from wells through centralized manifolds and up to the platform.

Step 5: It handles separation of gas from water, sand, etc. brought up from the sea bed. In other words, natural gas does not just flow up ready to get burned in your oven. It's got to be transformed, clean up and sent onward to customers like you and me.

Step 6: The gas is sent on to the mainland via pipeline, also running along the bottom of the seabed.

Who takes all this for granted? Most of us who have never seen it. And then there's those members of Congress who not only take all this for granted, but they want to penalize those companies that have the brains and bucks to get all this done.

By the way, if you wondered why I mentioned the keyboard in the beginning, it is because it is made from plastics and of course they are made from chemicals that originate from natural gas feedstocks. There's another story there, and if you want to know how we are driving U.S. manufacturing abroad because of our short-sighted natural gas policies, read The Manufacturing Institute's newest report on that topic--The Hidden Backbone of U.S. Manufacturing-- by clicking here.

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June 24, 2007

$3.5 Billion in Regulatory Costs in Manufacturing

The cost of regulation is often cited as one of the structural costs that affect U.S. competitiveness. A unit of the Virginia General Assembly recently surveyed manufacturers in that state and has issued a report on the Impact of Manufacturing Regulations.

The General Assembly's report concludes that the cost for environmental, economic, workforce and tax compliance costs were $3.49 billion in 2005 alone in Virginia. Brett Vassey, President and CEO of the Virginia Manufacturers Association commended his legislators as perhaps being the first state legislature to develop an accurate picture of the true costs of regulation.

Regulatory costs are no stranger to manufacturers anywhere. NAM and The Manufacturing Institute have shown in recent studies how structural costs are rising faster here than in some of our major trading competitors. The Escalating Cost Crisis that we issued last year shows how U.S. manufacturing is saddled with 31.7 percent higher structural costs than nine major trade competitors like Canada, Germany, France, Japan and China.

Congratulations to VMA and the Virginia legislature for being cognizant of how these costs can affect manufacturing. Imagine if the US Congress would issue such a report on the regulatory impact on manufacturing?! Would that day ever dawn?

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June 15, 2007

Panting for Justice

Readers of this blog and, by now, of just about every paper in the country, will know all about the $65 million law suit over a pair of misplaced pants at a dry cleaner. The case was brought by an administrative law judge in Washington, DC who is charged of course, in his job as a judge, with using good judgment on the bench. We are not the only ones who questioned his abilities after doggedly pursuing this case against a local small business owned by Korean immigrants.

The case is an excellent example of runaway legal mania and costs that affect all Americans. It's estimated that excess litigation in the United States costs our economy upwards of $865 billion a year! This has a huge impact on our nation's competitiveness and Mr. Pearson's case is a good summary of why we need legal reform in the United States.

So it was truly refreshing to read today's headline:

Pants Lawsuit Could Cost D.C. Judge His $100,000 Job.

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Beam Me Up, Scotty!

Today's news, straight from a Chicago suburb, is that a baby monitor is picking up live coverage of the NASA space mission! This interesting AP story notes that:

Since Sunday, one of the two channels on Natalie Meilinger's baby monitor has been picking up black-and-white video from inside the space shuttle Atlantis. The other still lets her keep an eye on her baby.

Elementary school teacher Natalie Meilinger said that she has become addicted to the coverage and "can't wait to see what's next." She's brought in a clip of it to show her students and co-workers. This is not exactly what we had in mind when we recommended that there be a better understanding of technology in the schools, but--who knows--maybe one of her students will be inspired to study hard and become an astronaut or scientist. Click here to read this story and move to Palatine, Illinois if you'd like to see similar coverage at home.

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The Cuomo Fund

The headline in today's paper sounded innocent: Hopkins to Give $1m for Financial Aid Awareness. Goodness knows, young people in this country need better instruction on how the financial marketplace works, from credit cards to mortgages to balancing a checkbook. (They need similar advice about how to select their careers, but that's another story). So Johns Hopkins University's plan sounds good.

Reading further, the storyline gets more complicated. Maryland-based Johns Hopkins is taking this step as a result of an agreement with New York attorney general Andrew Cuomo who conducted a nationwide investigation of the student loan industry and found some alleged irregularities at some campuses, including Hopkins. Mr. Cuomo testified about this investigation a few weeks ago. Rather than dispute Cuomo's standing to even bring such a suit against a Maryland university, Hopkins has thrown in the the towel and, according to the article, agreed to:

give $562,500 each to Cuomo's fund for educating students and families about financial aid and a similar effort headed by Maryland attorney general Douglas Gansler.

While lauding the end product, I wonder about the process that produced it. Does anyone else think it's good for state AGs to be conducting nationwide campaigns? Isn't their first and foremost responsibility to enforce the laws of their home states?

Moreover, what about this: the money goes into "Cuomo's fund". I can't find any specific information about this fund. Does Mr. Cuomo control it? How much of the money goes for administrative overhead and how much directly to students? What independent fiduciary rules are in place? Is it partisan with only allies of Mr. Cuomo in charge? What benchmarks are in place to ensure that it is a result-oriented program? Most of all, is it right for any attorney general to use his or her legal clout to direct university money into a pet project? That really caught my attention. What do you think about this?

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R&D Goes Global

Manufacturing research and development is taking on a global nature just like the rest of manufacturing. With only 5 percent of the world's population in the United States, any manufacturer who declines to participate in the growing prosperity abroad is missing out on major market developments, to say the least.

Products used in this country are not always the ones that sell in China, Brazil or South Africa so researching and developing and thereby localizing the product is one challenge to operating abroad. There is a lot of talent in these countries, too, as education levels rise and mushrooming middle class populations grow. Nevertheless, it's still an appropriate topic for a hearing by the U.S. House Committee on Science and Technology. Here's what chairman Gordon said:

This Committee has been working hard to address one of the country’s most pressing issues, U.S. competitiveness,” said Committee Chairman Bart Gordon (D-TN). “As is widely recognized, our competitiveness and high standard of living is derived largely from our technological superiority. But almost on a daily basis we read announcements that more high-tech jobs are being offshored to developing countries.

the United States remains a commanding R&D presence in the world, although China especially is becoming more attractive when future investments are considered. When UNCTAD asked non-U.S. multinationals from around the world what their preferred location was for new R&D projects abroad, the United States was listed second most often. China was mentioned most often, and India was listed third most often, followed by Japan and the United Kingdom.10 The survey demonstrates that the United States is a preferred location for R&D among multinationals headquartered in other developed and emerging countries.

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June 13, 2007

Whose Privacy?

The panel appointed by Virginia governor Kaine to look into the massacre of students at Virginia Tech on April 16 is uncovering some unusual facts.

In today's papers, we learn that current privacy laws prohibit the panel from examining the dead assassin's medical records. They can't confirm what kind of psychiatric care he had, if any. Former Pennsylvania governor and former Homeland Security Department Secretary Tom Ridge, a member of the investigation, says:

It’s really rather remarkable we’re talking about a deceased individual responsible for all kinds of carnage and we are still encumbered by law.

Let's hope this panel tells us all what state and federal laws are so poorly written that they even protect an assassin like this after his death. My daughter was a freshman on the floor where two kids were shot and we owe it to them and students across the country to get to the bottom of this tragedy and seek to prevent another one.

As one parent of a deceased student said, the privacy of his son was breached on that aweful day and he can't fathom how a law could protect a deceased criminal. Who passed these laws? We'd all like to know.

For today's article, click here.

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June 12, 2007

Manufacturers Team Up with U.S. Energy Department

Watch a video highlight from the NAM-U.S. Dept. of Energy press conference featuring NAM President John Engler.

Earlier today, NAM President John Engler and U.S. Energy Department Secretary Samuel Bodman signed an agreement between the two organizations that will facilitate greater cooperation on industrial energy efficiency.

It's certainly appropriate to move forward in partnership, since manufacturers use a third of all the energy consumed in the United States. The "energy intensity" of manufacturing has been declining for 30 years as the product mix changes and the efficiency of products and processes improves. Manufacturers know a lot about efficiency already as we learned when The Manufacturing Institute joined with the Alliance to Save Energy a while back and published Efficiency and Innovation in U.S. Manufacturing Energy Use.

The Memorandum of Understanding supports a variety of activities which aim to assist manufacturing facilities to initiate and implement energy management programs, adopt clean energy efficient technologies, and to achieve continual energy efficiency and intensity reduction improvements.

The Department of Energy has a lot of very effective programs already underway and this partnership with NAM will help broadcast them more widely. For example, the Energy Department last year initiated a series of energy savings assessments which identified more than $300 million in energy savings just in industrial process heating and steam systems. If this fairly limited assessment can be rolled out to all of industry, the savings will leap.

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June 11, 2007

Pulling the Curtain Back on The New Deal

Like many Americans, we learned about the Great Depression in high school and college. Most perplexing about that era was why it lasted as long as it did. After all, recessions today might limp on for a few months, but back then something was very different.

From a political point of view, it was even more perplexing to me about how FDR could get re-elected in 1936 as the depression just worsened. It was even bad in 1940 when he ran for his unprecedented third term. Clearly the man had charm. Had the mantra then been, "It's the economy, stupid," he would have been tossed from office in '36 or '40.

Now some new light is shed on these important questions about American history and the functioning of our economy. Amity Shlaes, a former Wall Street Journal editorial writer and economic commentator, has published The Forgotten Man, which is a long overdue exploration of the New Deal and the real, forgotten people behind the U.S. economy in those years.

She spoke at the Heritage Foundation about her book last week, and I was drawn to her remarks because of the lingering questions I have always had about that era. It's clear that all the New Deal programs that gushed out of the Roosevelt administration did not have much of an impact on the economy. Ms. Shlaes writes that they in fact hindered the recovery that would have taken place otherwise. Make no mistake, she carries no brief for President Hoover either, but his errors of judgment in those days have been well described. Not so for the New Deal.

Ms. Shlaes looks at men and women who made a difference during the depression, but who had little to do with the New Deal. Her keen analysis shows that it was the economy itself that was the forgotten man of the 1930s, as FDR and his deputies strove to make social policy with little or no understanding about the economy. One of their goals was to nationalize government spending--often through the giant Public Works Administration--which was at that time mostly in the purview of the states. New Dealers didn't understand the economy, so they ignored it.

You'll have to read this book to see its full power. As reviewer Arnold Kling commented:

I would have thought that 1929 should have looked pretty good to people living in the depths of the Depression. But one of the many interesting lessons of Amity Shlaes' new history of the Great Depression and Franklin Roosevelt's New Deal is that many Americans, both inside and outside the Roosevelt Administration, thought of prosperity as an aberration. Instead, they saw hard times as the new norm.

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