US MANUFACTURING SET TO MODIFY THE TIME/DISTANCE EQUATION

Transportation has always been taken for granted. 

I recently re-united with an old flame who happens to live on the other side of the country.  When I returned to my end of the Earth the inevitable cooling of passions happened and she started complaining that I wasn’t “making myself more available for her”.  I think I replied, “I’ll try to do better,” but I said it in a tone that made it sound more like because I live on the other side of the country, lady!  We are literally battling space-time curvature just to bounce signals off a couple satellites to talk between two plastic-silicon rectangles!  Seriously! 

Distance has cooled the public passions of US manufacturing as well, thanks (or no thanks, depending on where you are on that space-timeline) to consequences of the global economy.  It seems jobs and plants have been eking farther and farther away from the American consumer for decades.  Now we get the news that American manufacturing companies… “such as Caterpillar, NCR and Wham-O….have either repatriated some manufacturing operations or are planning new operations in the US.” (Manufacturing Economy Daily- July 6, 2011)

It’s not just the big boys like Caterpillar either.  In a recent survey done by the global consulting firm Accenture, 61% of manufacturing respondents said they were highly considering moving supply location to demand location.  What’s clear is that with worldwide shifts in the perception of traditional energy resources come shifts in profitable manufacturing methods.  Off-shoring was the name of the game for the latter part of last century.  Ironically, with institutions like the IMF throwing around the “End of the American Century” title these days (Apparently they predicted our century to end for 2016.  I had no idea we owned a century.  Thank you, IMF for giving CNN a new Anderson Cooper-prime-time-segment-title), the end of “our” century may just mean a re-shoring of US manufacturing assets and operations, which can only mean an overall, more healthy American economy. 

Of course this won’t happen overnight.  And there are concerns that may stall these trends.  In the same survey, 74% of respondents cited labor costs as their chief worry to relocate stateside.  Another 67% said proximity to the customer, and 64% cited lack of skilled workers.  Yes, these are issues, but the issues are evolving as we speak.  The discrepancy between labor pay here and in other superpower countries like China is already shrinking.  Software companies will be the first to tell you that being closer to the customer almost always results in a more informed customer, which means products are scrutinized and made more efficient.  Finally, American skill and innovation can be found in America’s ace up its sleeve; its closely nurtured university-private sector relationship.  A relationship that, with President Obama’s latest pledge to supply manufacturing with campus department information and programs, will only grow more over the next few years.

Bottom line: when things get unpredictable, businesses simplify, and a simple distance is the logical move for these unpredictable times. 

(Unless, of course, you happen to be a certain girl on the other side of the country, who constantly drinks frappacinos and thinks Justin Bieber is a legitimate musician.  No.  No he is not.  What did I ever see in her, anyway?)

Donal Thoms-Cappello is a freelance writer for Rotor Clip Company, Inc.

CAN GOVERNMENT BE PART OF THE SOLUTION?

The U.S. government is an easy target: it taxes too much, spends too much and wastes too much. As businesses like Rotor Clip strive to compete in a global marketplace, it’s tempting to find fault with our government for the undue burden it sometimes places on us through its tax and regulation policies.

But the constant vilifying of our government as the only source of our problems has gotten old. It has become a focus of our frustrations and hatreds that have only succeeded in spawning a venomous kind of rhetoric that grows more poisonous with each passing day.

I’m all for free speech, but while we’re busy taking our government to task for real (or imagined) trampling of our corporate and individual rights, other countries are utilizing their governments to gain a leg up on the competition. Here are some examples of how they’re using that clout:

1. Several years ago, the government of Germany offered every individual and corporate entity a generous subsidy for every kilowatt of energy fed back into the power grid. This spawned enormous investment in solar energy. As a result, the Germans developed advanced photovoltaic technology surpassing the Japanese as the world’s leading exporter of these products. Also, it is estimated that over 1 million jobs were created as a result of the government’s action. (Source--Make It In America: The Case for Re-Inventing the Economy, Andrew N. Liveris)
   
2. The Chinese decided to promote the wind power industry in an effort to meet that country’s future energy needs. As part of the effort, the Chinese government mandated that 70% of all parts used for production of wind turbines come from domestic companies. There were cries of foul from foreign companies and after two years the government relented and lifted the rule. But in that period of time, the country’s domestic suppliers to the wind power industry were well established and ahead of foreign competition. (Source--Make It In America: The Case for Re-Inventing the Economy, Andrew N. Liveris)
   
3. The government of Argentina is pursuing foreign food processors like Cargill and ADM for tax evasion. It doesn’t appear to be an attempt to nationalize this industry; rather, it seems that the government is putting pressure on foreign companies and is “interested in having local businessmen in certain sectors it considers crucial.” (Source--Bloomberg Businessweek—April 18-April 24, 2011)
4. Walt Disney recently opened a resort in Shanghai, China. Despite owning a 43 percent stake in the 963 acre resort, it is sharing ownership with three other state owned companies. (Source--Bloomberg Businessweek—April 18-April 24, 2011)
5. Japan’s ruling Democratic Party has pledged to increase dramatically the role the Japanese government plays in promoting Japanese companies’ interests overseas. To that end it is assisting Japanese companies with developing a port in North Vietnam and is also considering a major airport project to serve the southern commercial hub of Ho Chi Minh City. (Source--Financial Times, March 3, 2011)

It’s time for a government and business partnership to start solving problems and promoting a worldwide, pro-business agenda that looks out for our interests around the world.

Joe Cappello is Director of Global Marketing for Rotor Clip Company.

CLEAN ENERGY INVESTMENT UP 21%

I recently heard Sugar Ray Leonard being interviewed on the radio and thought of his classic fight with Tommy Hearns.  Leonard’s quick movement and death-by-a-thousand-cuts style always seemed to be more fun to root for over the kind of style used by The Hitman: powerful focused jabs that came out one-by-one and weren’t pretty but landed like slabs of concrete.   In fact, it was the predictable effectiveness of those jabs that ironically made Hearns so un-rootable.  Leonard, on the other hand, made victory seem overwhelmingly entertaining.  Where was he gonna' hit next?  What punch was coming out?  The possibilities were endless.

As clean energy gets a 21% increase in venture capital investment this quarter, a trend that only looks to accelerate in the short and long-term future, it’s clear one reason why the market is so hot is the possibilities.   Like watching Sugar Ray, no one has any idea what’s coming next.   Wind, solar, battery, hydroelectric and geothermal alternatives are all having their day in the pardon-the-expression-“sun,” with everything from retaining rings to specialized hardware rounding out a new and growing supply chain.   Exxon is even experimenting with drawing energy from algae tanks in Northern California.  Just one of these resources getting the attention of VC firms, Google, and US manufacturing giants like Ford would be considered a sign that the business world is on the cusp of change; all of them drawing this much investment at the same time means it already has changed. 

And yet, is it such a good thing to have all these scattered options?  If we rely on the same old resources, in fifteen years the world will have a 40% gap between demand and supply.  Tommy Hearns was predictable and boring, but also mighty effective at getting the job done.   No frills, no complex strategies.  Just a feint, counter-step, and then a big ole’ punch.  If investment firms collaborated, looked at the most profitable method of clean energy harvesting (right now that looks like wind turbines, which have a capacity factor of 30-40%, far more than solar’s 12-15% and more convenient than hydroelectricity) and decided to throw one massive, Tommy Hearns-hook-super-investment into that method, we would absolutely be able to meet the world’s energy demands and boost manufacturing before 2030.

Then again, Sugar Ray was fun to watch, wasn’t he?

Donal Thoms-Cappello is a freelance writer for Rotor Clip Company, Inc.

SERVICE VS. MANUFACTURING JOBS: OVERCOMING THE PERCEPTION BARRIER

It’s no secret that the food and service industry is doing quite well these days.  A twenty-something fresh from moving into his or her first apartment finds a favorite restaurant or café down the corner (as opposed to the local US manufacturer who may not be so easy to locate) and quickly realizes it’s the most immediate option for steady income.  Grocery chains like Trader Joe’s and Gelson’s have caught on to Starbucks’ recruiting middle-class youth for employment with the trump card of benefits and health plans and have used it successfully. 

With short and flexible hours available, I could pull a morning barista shift at the nearby hipster café (where they charge five dollars for the labor of pouring the froth just so it makes a little heart in your espresso), get out at noon, have a few hours to enjoy myself with the finer things in life like Twitter or World of Warcraft, and then wrap up the evening with a night shift bartending at my local Fuddruckers.  If all goes well, I could come home with two hundred dollars total in tips alone for the day.

Yes, service provides the fuel to immediate income and a flexible, stable lifestyle   Of course, being in my second decade, I don’t really know what “stability” is.  If I did, I’d never look at having two jobs in the service business as stable.  In fact, back when the American economy was supposedly all hunky-dory in 2006, the Food Sector still had a 56.4% turnover rate.  In a job market that depends on the average consumer having a little extra cash to spend on a night out or an extra bottle of wine, there’s no such thing as “job security”, especially now.  Not only that, most service jobs require all employees to be up close and personal with the customer.  Most people know how to carry a tray, many can deduce a 20% tip, but there are precious few of us out there who know how to deal with our fellow man when he’s hungry, impatient, and demanding to know why there isn’t a line of busboys continuously refilling his bread basket. 

Manufacturing, on the other hand, doesn’t demand as much on the diplomatic side and while it may get a bad rap these days by pundits and comedians, no other industry has been able to sustain its productivity so consistently.  Unlike food and services which is seasonal in its customer base, there’s always a relatively high demand for durable goods like computers, automated devices or engine parts year-round.  Good luck trying to sell all that authentic European gelato when winter comes rolling in, or selling out the beer in the middle of July when hockey and basketball are over, football is in camp and baseball is…well…baseball.  And those tips I brought home?  Well I better pray I keep running into generous people and that I never get in a bad mood at work, because that extra income is masking my minimum wage-to $10 an hour rate.  Yes, no one tips a factory worker for making sure their air purifier lasts as long as advertised, but making a decent rate plus benefits, he’s not exactly calling them to make sure they had no trouble opening the box either.

After expressing so much passion about alternative energy, I asked the barista at my local café why he didn’t quit his job making liquid cocaine for the rush hour and go work in a solar panel plant outside of LA.  He laughed and said “I dunno.  This job sucks, but it’s better than being a slave in some gulag lifting [lazy expletive] all day.”  I suspect this is the only barrier the manufacturing sector needs to break down to get those potential employees; the perception barrier.  The Obama generation is inclusive and collaborative, yet ironically seems to view factories as crude Cold War relics, where everyone wears gray jumpsuits and solemnly carries massive hunks of steel parts while vats of liquid iron boil all around them.  “Labor isn’t my ‘thing’, man” my barista continued, “I’m really an idea person”.   Wonderful!  I explained to him two-thirds of the research and development in this country stems from the manufacturing sector.  Innovation?  Improving on what came before you?  That’s what makes the industry go.  “Honestly”, I raised my eyebrow at him, “how much can you really improve the act of running hot water through espresso grinds?”

This is where a job in making durable goods will always beat out the lure of the quick-fix service gig.  It appeals to a different, but self-affirming life priority; developing and honing a personal craft.  It’s an instinct we’ve had since the days of Homo Erectus, to find a task in this world and do it better and longer than anyone else.  Part of what made Henry Ford’s little experiment so successful was not just the amount of people who took pride in owning an automobile, but also the amount who took pride in making one.  A lasting product that not only made you and your bosses money, but seemed to move the world into the next age of man.  Maybe a job in services allows for more World of Warcraft, but the sooner a young adult gets into manufacturing, the sooner a craftsman enters the world.

Donal Thoms-Cappello is a freelance writer for Rotor Clip Company, Inc.