3D printing: The newest market disrupter?

3D printing was in the “popular press” a few weeks back when there was a dust-up about plans to publish specifications online for the manufacturing of firearms using 3D technology.

Of course, that news hit the streets because of the hot-button issues of access to guns, the lack of ability to trace a firearm manufactured via 3D printing, plus concerns about avoiding detection in security screenings due to the composition of the pieces and parts (in this case, polymer materials).

But 3D printing should be receiving more press generally. It may well be the latest market disrupter because of its promise to fundamentally change the way parts and components are designed, sourced and made.

3D printing technologies – both polymer and metal – have been emerging for some time now, and unlike some other technologies, they have already found a highly receptive commercial audience. That’s because 3D printing technology can be used with great efficiency to manufacture production components for applications that are experiencing some of the hottest market demand – like medical instrumentation as well as aerospace, automation and defense products.

One the baseline benefits of 3D printing is that it can reduce lead times dramatically on custom-designed components. Importantly, 3D printing requires no upfront tooling investment, saving both time and dollars for purchasers.  On top of that, there are no minimum order requirements, which is a great boon for companies that may be testing a new design and need only a few prototypes to start.

Considering all of these benefits, 3D printing offers customers the flexibility to innovate rapidly with virtually no limitations on design geometries or other parameters. Small minimum orders (even for regular production runs) enable keeping reduced inventories along with the ability to rely on just-in-time manufacturing.

The question is, which industry segments will be impacted most by the rise of 3D printing? I can see ripple effects that potentially go well-beyond the mortal danger faced by tool and die shops.  How many suppliers are going to need to revisit their capabilities in order to support smaller production runs and über-short lead-times?

And on the plus side, what sort of growth will we see in companies that invest in 3D printing capabilities?  Most likely we’ll be seeing startup operations that simply weren’t around before.

One thing’s for sure – it will be very interesting to look back on this segment five years hence to take stock of the evolution and how quickly it came about.  Some market forecasts have the sector growing at more than 25% per year to exceed $30 billion in value by that time.

Like some other rosy predictions in other emerging markets that ultimately came up short, will those predictions turn out to be too bullish?

Manufacturing in America: It is poised for a comeback?

American Made Movie (Documentary)On Labor Day weekend, the documentary film American Made Movie opened in theatres in key cities across the country.  And for a change, this film doesn’t chronicle the decline of American manufacturing, but instead its potential for rebirth.

Directors Vincent Vittorio and Nathan McGill have produced a film that’s both realistic and optimistic – two words that aren’t often used in conjunction with one another when the topic is manufacturing.

The directors don’t shy away from the facts:  U.S. manufacturing jobs shrinking from ~$17 million to just ~$12 million in the past 20 years due to technology, global competitiveness and outsourcing.

But there are signs of recovery.  At least the anectodal evidence for it is strong.

In August, Wal-Mart organized a manufacturers’ summit which was attended by ~1,500 people including U.S. and foreign-based companies, Department of Commerce and Federal Reserve officials, and eight state governors.

At this meeting, Wal-Mart affirmed its commitment to buy $50 billion in additional American-made products over the next 10 years.  GE, Element and other companies also announced plans to boost domestic manufacturing activities.

These developments aren’t merely patriotic or altruistic — although there may be some of that factoring into the decision.

In fact, with Chinese labor costs rising 15% to 20% each year, that country’s labor cost advantage is narrowing compared to the United Sates.

Harold Sirkin of Boston Consulting Group points out that factoring in raw materials and other costs, China maintains only a ~3% lead on product costs.  Add in transportation costs from Asia, and the “Made in America” alternative takes on new validity.

“We are at an inflection point,” Sirkin has stated, noting that the United States is now competitive with China.

GE’s chief executive officer Jeff Immelt echoes these sentiments, contending that on a relative basis, America has never been more competitive thanks to technology and improved productivity.

“High transportation costs mean you want to be closer.  It’s not just pure labor arbitrage,” Immelt notes.

As for productivity, the mere three hours it takes to assemble a GE refrigerator in America makes its total cost lower than a similar Chinese or Mexican-made models destined for the American market, according to Immelt.

I like what I’m hearing about the coming resurgence in American manufacturing … but I think we’ve heard this prediction before. 

The film directors discovered this inconvenient issue when traveling the United States and visiting manufacturing plants from large cities to small towns:  There’s a sizable gap between what manufacturers need in human capital, and the ability of the labor force to meet those requirements – whether it be older workers, or young workers right out of school.

Vincent Vittorio and Nathaniel McGill, movie directors
“American Made Movie” documentary film directors Vittorio and McGill.

“We need to provide the apprenticeship training necessary for a new generation of American workers to grow as fast as our technology is changing,” the documentary movie directors contend.

That may be happening at some technical colleges and a few community colleges across America.  But it’s not happening nearly enough if, like me, you hear constant complaints from manufacturing execs about the disconnect between the lack of (even basic) job skills and (increasingly sophisticated) job requirements on the manufacturing line.

Maybe it’s time to look harder at appropriating pieces of the German/Austrian apprenticeship model, wherein talented students are plucked from high school and placed with manufacturing firms for on-the-job training in lieu of college.

In such environments, a structured program of learning and training provides the roadmap for successful transition and integration into the job force.

An apprenticeship may not seem as “classy” an accomplishment as a college diploma.  But a college diploma doesn’t mean nearly as much these days.

What once was a sure-fire ticket to a career has given way to an environment in which half of all new college graduates are unemployed, underemployed, or working jobs for which their degree is irrelevant or unnecessary.

To that half of the young labor force, the near-100% placement/success rate for apprenticeships must seem awfully attractive now.

What are your thoughts about a coming manufacturing renaissance in America?  Please share your comments here.

Gallup Sees Deterioration in Americans’ Perceptions of Major Industry Sectors

Decline in perceptions of U.S. industriesThe past decade hasn’t been kind to the image of most industries in the United States. And given the economic and sociopolitical upheavals experienced by nearly every strata of society, it’s not hard to understand why.

This isn’t just conjecture, either. For years, the Gallup polling organization has surveyed Americans’ opinions of 25 major industry sectors every August to determine if their overall opinion of each of them is positive, neutral or negative.

The results of the 2011 survey of 1,008 respondents (age 18 and over) have now been released, and they show that a majority of Americans view just five of the 25 industries in a positive light:

 Computer industry: ~72% rate positive
 Restaurant industry: ~61%
 Farming and agriculture: ~57%
 The Internet: ~56%
 Grocery industry: ~52%

Interestingly, when comparing these results to ten years ago (August 2001), just two of these five sectors have improved their positive ratings: the Internet and the computer industry.

At the other end of the scale, seven of the 25 industry sectors scored 30% or lower in positive ratings:

 Banking industry: ~30% rate positive
 Airline industry: ~29%
 Legal field: ~29%
 Healthcare industry: ~27%
 Real estate industry: ~23%
 Oil and gas industry: ~20%
 Federal government: ~17%

The remaining 13 industries in Gallup’s survey came in between 30% and 50% on the scale – hardly stellar ratings, but not in the basement like the hapless sectors listed above.

Over the past decade, Gallup has observed that a clear majority of the industries – 19 of the 25 – have seen declines in their positive scores.

The most precipitous ones include the usual suspects, led by – you guessed it – the federal government:

 Federal government: Down 24 percentage points since 2001
 Real estate industry: Down 23 points
 Banking: Down 17 points
 Educational field: Down 15 points
 Accounting industry: Down 11 points
 Healthcare industry: Down 10 points

It’s little wonder why we’re seeing these six industries striking out so badly with the American public; they’re precisely the ones associated most with various political or economic problems.

By contrast, the positive views about the computer industry and the Internet reflect the continuing innovation and financial success of many businesses in this sector.

This can’t be lost on consumers – many of whom have directly benefited through the steady stream of new products and services introduced by companies in these sectors over the past decade.

And as for agriculture, groceries and restaurants … well, we all have to eat, no matter what the economic situation! Besides, there’s been little controversy seen in these categories, and they’re mature sectors have been smooth-running in this country for years.

One hopes the next decade will witness a reversal in the downward trajectory of the public’s perceptions of American industries. In at least a few of the cases, it’s hard to imagine how they could sink any lower!

The Fortunes of the Fortune 500

Global Business:  28% of the 500 largest multinational companies are U.S.-based.Time was when the United States accounted for the largest contingent of the Fortune 500 global companies. Not so anymore. According to stats reported recently by international business expert Ted Fishman in USA Today, only about one-fourth of the 500 largest global enterprises are based in the U.S.

And those that remain on the list aren’t behaving particularly “American,” either. This group of ~140 companies has eliminated nearly 3 American million jobs since 2000.

Is that a consequence of the recent global recession? Hardly … the same companies added ~2.4 million jobs overseas during the same period.

The particulars behind each company’s employment choices are varied, of course. But certain factors seem to come up often in the analysis, including:

 Gaining closer geographic proximity to the world’s fastest-growing economies such as India, China and other Far Eastern countries.

 The availability of workforces that are “cheaper” to hire and require fewer employee benefits.

 A relatively unattractive U.S. corporate tax rate compared to other countries – hard to believe, but America’s 35% top corporate rate is eclipsed only by Japan’s (39.5%).Going forward, it would be nice if America’s largest corporate entities could be more sensitive to the need for additional investment here at home. Then again, it would be equally gratifying if government adopted policies of lower tax rates and easing regulations to make business growth and job creation in America easier.

The truth is, both parties will continue to pursue their own self-motivated interests, which is only natural.

The problem is, it’s a lopsided game. With a big wide world out there, the multinationals have a host of options at their disposal … and thus hold the winning cards. Tax laws and new regulations can be put on the books time and again, but the multinational crowd continues to float above it all, seemingly unaffected by anything – at least not to any great extent.

Meanwhile, U.S. small business gets hammered.

Remembering Financier and Arts Patron Roy Neuberger (1903-2010)

Roy Neuberger
Roy Neuberger: Financier and art patron extraordinaire.
When someone lives to the age of 107, that’s news in and of itself.

But when Roy R. Neuberger died at 107 on Christmas Eve Day, he was far more than just a person who had lived an extraordinarily long life. He was one of the most significant figures in 20th Century American finance, along with being an important patron of the arts.

Neuberger’s life story follows the arc of America’s modern history. Born into a family of wealth in Bridgeport, CT in 1903, he was orphaned at an early age. At first Neuberger was interested in a journalism career, but found college studies unfulfilling and dropped out of New York University before earning his degree.

Neuberger’s first job in business was with B. Altmans, a famous New York department store. He would later recall that this experience prepared him not just for a life in business, but also nurtured a lifelong appreciation for art.

Neuberger then took a sabbatical from business in his early 20s to travel to Europe, where he dabbled in painting and lived the life of a Bohemian in Paris along with other American expatriates.

After this wanderlust wore off and he was back in the United States, Neuberger stepped back into the business world by beginning his career on Wall Street – mere months before the stock market crash of 1929. Soldiering on during the years of the Depression, by 1939 he had co-founded Neuberger Berman, an investment firm that would later establish one of the first no-load mutual funds in America (the Guardian Fund – still in operation today).

But Neuberger’s love of art and painting was never far from his mind. In fact, by the early 1940s he was well on his way to becoming one of America’s most important art patrons. Neuberger was an early admirer of the paintings of Peter Hurd, promoting his works and helping to put this artist on the cultural map. It was a pattern that would be repeated over the years, as Neuberger championed the works of such luminaries as Edward Hopper, Milton Avery, Alexander Calder and Jackson Pollock.

Over the decades, not only did Neuberger amass a trove of modern art, he was to become a major benefactor of important works to institutions like the Metropolitan Museum of Art, the Whitney Museum and the Museum of Modern Art (MoMA), as well as numerous college and university museums. This culminated in the building of the Neuberger Museum of Art on the campus of the State University of New York in Purchase, to house his collection. The museum, designed by architect Philip Johnson, opened in 1974.

On the social scene, Roy Neuberger was a fixture in New York business, political and artistic circles. He was a close personal friend of Gov. and later Vice President Nelson Rockefeller. In later years, after the death of his wife, he was a regular escort of the glamorous singer, actress and fellow art patron Kitty Carlisle Hart – another member of the glitterati who lived a long and celebrated life (96 years).

Throughout his many decades of involvement in the arts scene, Neuberger never severed ties to his business or the world of finance. Indeed, he was a person who seemed genuinely comfortable operating in both realms – two worlds that sometimes do not get along so well.

Neuberger even found time to write his memoirs: So Far, So Good – the First 94 Years was published 13 years before his death … and he penned a second book on art collecting as late as 2003.

Clearly, Roy Neuberger was someone who had a real zest for life and who never stopped growing and learning … which surely makes him an inspiration to many. But if that’s not enough for you, just the fact that he lived to be 107 years old is noteworthy in itself!

The Automotive Comeback Story of the Year?

2010 Chrysler Town & Country Minivan
Chrysler's Town & Country minivan: On top of the charts again.
Not surprisingly, the ongoing saga of the GM bailout and subsequent re-listing of General Motors on the New York Stock Exchange was the biggest automotive news story of 2010.

But in what may be the more surprising comeback story, the Chrysler Town & County minivan is poised to regain the top spot in a segment that Chrysler once dominated, going all the way back to when the first minivan rolled off the assembly line in the early 1980s.

But in recent years, beset by organization troubles along with spirited competition from other domestic and imported automakers, Chrysler had lost its first-rank position to the Honda Odyssey while its overall share of the minivan market declined.

For December, the Town & Country’s unit sales were over 102,000, compared to the Odyssey’s ~98,000. Chrysler’s sister brand, Dodge, racked up minivan unit sales of ~89,000, the same as the Toyota Sienna. That puts Chrysler on pace to lead the minivan pack for all of 2010 and reclaim the sales crown.

It’s no secret that Chrysler considers the minivan to be one of the keys to its brand identity – and a key component of its comeback strategy. “Our goal is regaining leadership. We consider we own it and we need to regain what once belonged to us,” the Detroit News quotes Olivier Francois, head of the Chrysler brand, as saying.

[Another reason Chrysler might have lost its edge over the years in the “minivan derby” was a perception of quality issues and the way its vehicles handled. But speaking as someone whose family has driven Chrysler minivans since 1990 – and currently owns four Dodge Caravans spanning ten years’ worth of model years – we’ve never encountered any major quality issues beyond the expected maintenance requirements for vehicles we routinely run for close to 200,000 miles each.]

If a car maker is making a major push for product sales, it makes sense to place more inventory in the showrooms for consumers to buy. Significant “upgrades” to Dodge and Chrysler minivans are being introduced for 2011, and greater numbers of vehicles will be delivered to dealerships, it’s being reported.

Of course, no one believes that Chrysler’s goal to maintain the sales crown for minivans will be slam-dunk easy. Japanese automakers are introducing their own all-new minivan models in 2011.

And why not? They’re seeing an increase in consumer interest in the minivan segment just like everyone else. While no one expects sales of minivans to return to the stratospheric levels of the late 1990s, stories about the “death” of the minivan that were being published in more recent years have now completely disappeared from the newswires.

One of the interesting questions Chrysler will be facing in the coming years is whether to continue to cultivate two separate minivan nameplates or to consolidate them into one. Chrysler has tended to lavish more “design” attention on the Town & Country and more “performance” focus on the Dodge Caravan. As a result, the Town & Country is now more popular with female consumers and the Caravan more popular with men.

This “gender-focused” targeting finds its penultimate manifestation this year with the introduction of Dodge Caravan’s so-called “man-van” – a high-performance version of the Grand Caravan featuring a “macho” all-black interior with red stitching. Can’t wait for one of these show up in the auto showroom!

Are younger Americans turning their backs on manufacturing careers?

What are the attitudes of young Americans toward pursuing manufacturing as a career? A recent field research project gives us some clues – and the results don’t paint a very pretty picture.

The national survey was sponsored by the Fabricators & Manufacturers Association, International and was administered to ~500 teenage respondents. The poll found that a majority of teenagers (~52%) have little or no interest in a manufacturing career and another 21% are ambivalent, leaving only around one quarter showing any interest at all in considering manufacturing as a career path.

When asked why a career in manufacturing is not attractive to them, the top four reasons cited by respondents were:

 Prefer to have a professional career: 61%
 Prefer a job with better pay: 17%
 Wish to have better career growth than manufacturing would provide: 15%
 Don’t want to do the physical work: 14%

Perhaps we shouldn’t be surprised by these results, because manufacturing has never had quite the cachet of a professional career. But with the number of people graduating from college these days with no meaningful job prospects, it’s a bit ironic that teens still consider the traditional college degree/professional career launch pad as the better way to go.

Indeed, there are a good many misconceptions about “dirty” manufacturing work activities that are completely at odds with the reality. In fact, many manufacturing personnel work with the most advanced, sophisticated equipment and systems that require the kind of high-tech computer skills young people love to apply! And advanced technologies like robotics are to be found in manufacturing more than in any other industry.

Here are several other sobering findings from the FMAI survey:

 Six in ten teens have never toured a factory – or even stepped inside any kind of manufacturing facility – in their life.

 Only about one-quarter of teens have ever enrolled in an industrial arts or shop class.

 ~85% of teens spend two hours or less in any given week “working with their hands” on projects such as models or woodworking (30% spend no time at all on such pursuits during the week).

Here’s a thought: Could kids’ ambivalence about manufacturing be influenced by what’s perceived as “cool” in the career world?

TV programs, when they deal with the working world at all, aggrandize the careers of lawyers, doctors and law enforcement officers … or big business tycoons à la Donald Trump. Many school administrators tend to focus on only one “honorable” education trajectory for students – the traditional university degree.

Certainly in today’s economy, manufacturing jobs are being hammered just as much as employment is in many other industries. But despite the current situation, I think it’s possible more parents would support the idea of their children pursuing a manufacturing career – or a career in trades like welding or electrical – if the pursuit these types of careers received a little more moral support from the wider society.