Three presentations on the importance of American manufacturing. On October 23, Dayton City Commissioner Nan Whaley served as moderator for the Third Annual Dayton Region Manufacturing Forum, entitled "Manufacturing Momentum: The Dayton Region and Beyond." The latest technical innovations in manufacturing and tooling were presented at the Advanced Manufacturing Technology Show at the Dayton Airport Expo Center on October 23 and 24, 2013. Speakers: Scott Paul | President, Alliance for American Manufacturing John Leland | Director, University of Dayton Research Institute Alan Shaffer | President & Chief Executive, Dayton Progress

1. The Case for Manufacturing
Manufacturing Momentum
SCOTT PAUL
President, Alliance for American
Manufacturing

3. Key Manufacturing Indicators
• Auto/Light Truck Sales strong
• New Single Family Home Sales/Starts/Permits are up
since 2009 but only ~50% of 1990-1999 average
• Real Fixed/Equipment Investment rising
• Balance of International Trade (-China) improving
• Industrial Production Index still below 2007 levels but
rising
• Capacity Utilization at 76.1%, well below average
• ISM PMI is 56.2 (positive all but 1 month since ‘10)
• New Manufacturing Orders at pre-recession levels
• Manufacturing employment is up 4% since 2010, but flat
for past 18 months.

4. Dayton Area Manufacturing

5. Key Manufacturing Trends
•
•
•
•
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Energy Boom
Auto Industry Strength
The “Cloud” and Broadband
Additive Manufacturing
Reshoring

6. Is It Time to Rethink Your
Manufacturing Strategy?
For the past 10 years, China was the
answer to many manufacturing questions.
That's no longer automatically the case.
MIT Sloan Management Review, Winter 2012

7. Measuring Costs of Offshoring
60 percent of U.S. manufacturers, when
calculating costs, use rudimentary tools that
ignore 20 percent or more of the total cost
Archstone Consulting, 2009

8. Economics of Reshoring
• U.S.-made products are 35% more expensive
than Chinese products in the Chinese market
• U.S.-made products have an average 10% total
cost advantage in the U.S. markets (using 2009
Chinese wages)

9. Strategic Calculations for Reshoring
•Innovation: connection between ability to
innovate and proximity to production
•Mass customization: Additive manufacturing
and other trends require proximity to customer
•Environment: life-cycle cost equation may be a
stronger factor in future. Proximity matters.
•Strengthening supply chains: When OEMs
reshore supply chain proximity can/should
follow.

10. Is Reshoring Happening?
• 34 percent of companies with $1b+ sales
considering it (MIT Forum for Supply Chain
Innovation, 2012)
• ~50 percent of companies with $10b+ sales
said they were considering it. (Boston
Consulting Group, 2012)
• 40 percent of manufacturers had reshored
some work (MFG.com survey, 2012)

11. Case studies: reasons for reshoring
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Higher foreign wages and currency values.
Lower foreign quality leading to high warranty costs
and rework.
Delivery times are too long.
Freight costs are rising.
Travel costs, travel time, onsite audits prohibitive
Inventory costs are too high
Total costs are rising.
IP is being stolen or at risk.
Communications are difficult.
Image and brand impact of Made in USA

12. Top industries reshoring (so far)
1. Electrical Equipment, Appliances, Components
2. Transportation Equipment
3. Machinery
4. Fabricated Metal Parts
5. Plastics & Rubber
6. Computers and Electronics
7. Furniture

13. High Profile Reshoring Cases
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•
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•
•
•
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General Electric
Apple
Google
(Wal-Mart)
Ford
Airbus
Toshiba
Lenovo
NCR
Flextronics

14. Reshoring From Where?
1.
2.
3.
4.
5.
6.
China (at least 60% of cases)
Mexico
Japan
India
Taiwan
Philippines

15. Reshoring to where?
• South and Midwest represent over 50% of
cases.
• Top states: California, Ohio, North
Carolina, Illinois, Texas, Michigan, Tennessee,
Georgia, Kentucky

16. Reshoring…and exporting?
U.S. manufacturing sector could capture $70 to
$115 billion in annual exports as a result of
significant cost advantages over Western Europe
and Japan
Boston Consulting Group, 2013

17. Behind the numbers
• Adjusted for productivity, U.S. labor costs
projected to be 15-35% lower than Western
Europe and Japan by 2015 for many products
• Prices for natural gas are projected to be 6070% lower
• Electricity is projected to be 40-70% cheaper
in the U.S.

18. Industries poised to grow
• Transportation equipment
• Chemicals
• Machinery
• Computers
• (Petroleum and coal products)
• Electrical equipment, appliances, components
• Primary metals

19. Potential Jobs Impact
• 600,000 to 1.2 million direct manufacturing
jobs by 2020
• 1.9 to 3.5 million indirect jobs
• 2.6 to 4.7 million total jobs
• Lower unemployment rate by 2 to 3 percent
• Diversify export mix
(energy, commodities, food, aerospace, scrap)

20. The Case for Manufacturing
• Middle Class Jobs: 38% wage premium for
new manufacturing jobs over rest of private
sector
• Innovation: manufacturing contributes
outsized role to R&D and patents
• Exports: manufacturing accounts for >60% of
US exports
• Value added: no sector has manufacturing’s
“ripple effect”

21. Questions/Discussion
Keep in touch:
americanmanufacturing.org
@ScottPaulAAM on Twitter
spaul@aamfg.org

22. Manufacturing Momentum
Applied research organization
Second in the U.S. in funded materials research
Winner of three R&D 100 Awards
Over 450 research staff
Average annual revenues: $90M

23. Core Technical Areas
Materials & Processes
Mechanical & Structural Technologies
Energy & Environmental Technologies
Sensor Systems & Signatures
Human Performance

24. Federal R&D Funding

25. Industry R&D Funding

26. Future Innovators and Inventers
NSF Science & Engineering Indicators 2012

27. Source: The Kauffman Foundation

28. Manufacturing Momentum
October 23, 2013
presented by:
Alan Shaffer
President
DAYTON PROGRESS CORPORATION

29. Dayton Progress Corporation
We are based in West Carrollton, Ohio
and are the largest manufacturer of
precision tooling for metal stamping &
forming in the world.
67 years old, founded in 1946
10 factories in North America, Europe and Asia employing 1,000 people
13,000 customers in 51 countries
Product Precision of .0002” (1/10th the diameter of a human hair)
We train all employees and pay 100% for college tuition and books
Owned by MISUMI Group, Inc. $1.8 billion sales Japanese company
29

30. Foreign companies think the U.S. is a great
place to manufacture. You should, too!
• 61% of all American companies acquired by
foreign businesses are manufacturers.

31. Made in America, Again
• Americans out produce Chinese 4 to 1:
• 17.6% of global manufacturing is by
1.3 billion Chinese.
• 18.2% is by 0.3 billion Americans.
• China labor cost is rising 15% to 20%
per year.
• By 2015 the cost to produce in large
China cities will be only 10% to 15%
below U.S. costs and 25% above Mexico
cost.
• Transportation costs are rising, making
it cheaper to manufacture at home.
31
31

32. Housing Construction Is Forecast to
Recover Annual U.S. New Housing Starts
2,500,000
2,000,000
1,500,000
1,000,000
500,000
78
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
10
12
14
16
Forecast by MAPI October 2011
2011
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33. Vehicle Sales Are Forecast To Recover
U.S. Light Vehicle Sales
Millions of Units
20
18
Units - millions
16
14
12
10
8
6
4
2
0
78
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
10
12
14
16
Forecast by MAPI October 2011
2011
33

34. A Huge Industrial Stimulus Was Launched 7.29.11
1. Fleet MPG must double by
2024, to 54.5
2. All vehicles require redesign
and weight reduction.
Source: The Whitehouse
New C.A.F.E. standard for MY2025
Announced by President Obama 07.29.11
34

35. But I heard there are fewer manufacturing
workers now and outsourcing is killing jobs?
• Yes, there has been outsourcing of
manufacturing work since 2000, but productivity
is the biggest reason for fewer jobs.
• 100 years ago 70% of Americans worked on
farms. Now less than 3% do and we feed 300+
million Americans and a significant % of the rest
of the world. Productivity!

36. Sales per Worker
American Manufacturing Worker Productivity Is
There are 2 reasons
Soaring
1. With the advent of CNC, modern
machinery, tools, tool setting &
fixturing, programming systems and
automation, the American manufacturing
worker has significantly increased their
productivity.
2. Starting around 2000 we
also outsourced the most
manual manufacturing jobs.

37. If U.S. manufacturing was a country it would be the
10th largest economy in the world.

38. Opportunities
• Significant demand for manufacturing employees
• Not enough willing candidates with skills or ability to learn
 600,000 open positions in manufacturing in the US*
 And yet we have a 7.5% national unemployment rate**
 In Ohio 869,000 workers ages 16-24 have a 15.7%
unemployment rate**
There is a career awareness
and preparedness gap
*Deloitte / Manufacturing Institute 2012
**Bureau of Labor Statistics
38

39. Diverse careers in clean
technological workplaces
Working with your brain, not your back
Manufacturing & Engineering
• Controls Engineer
• Machinist
Business & Support
• Maintenance Mechanic
• Accountant
• Press Operator
• Estimator
• Quality Technician
• Human Resources
• Manufacturing Engineer
• Plant Manager
• Tool & Die Maker
• President
• Welder
• Procurement
• Programmer
• Scheduling
• Production Supervisor
• IT
• Process Engineer
• Sales
And many, many more!
39

40. The #1 Issue in American
Manufacturing is the Next Generation
Workforce: How to Hire, Train &
Retain?

41. 2,500 manufacturers / Average 40 employees each
100,000 workers – 14.1% of region workforce
$4.5 billion payroll – 17.4% of total region
$32 billion annual revenues
41

42. Workforce development is needed now
•
By 2016…
o
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…30% of Ohio’s manufacturing workers eligible for retirement
Tomorrow’s manufacturing workers…
o
…Are currently in 6th through 12th grades
• Among 18-24 year olds…
o
…Manufacturing ranks last among industries for careers*
o
Low career awareness + wrong career image
*Deloitte, Manufacturing Institute
Public’s view of manufacturing today
42

43. Manufacturing careers meet a need
Outcome of U.S. Students Entering High School*:
~ 10% will drop out (could later earn a GED)
~ 10% will enter Vocational Technical Training (they’ll be fine)
~ 30% will graduate into the workforce with no career training
~ 50% will go to college
~ Half will drop out
~ Half will graduate with a degree
What happens
to these 78%?
~ Only half will earn a degree that can
merit a job with an income that can pay
off student loans. Half will not.
* Approximate national figures from National Center for Educational Statistics
43

44. Student debt is crushing the next generation
of adults: $25,000 average per student
$800 billion credit card debt
Most Americans
$900 billion student debt
<30% of Americans

45. This is the 1st generation to have student debt
Delaying starting families
Making fun things in life
like vacations difficult
Delaying buying a house
and shrinks the size of
house you can buy.

46. The death of U.S. manufacturing is a myth
12 million Americans produce nearly 20% of the
world’s goods used by 6.5 billion people.
These 12 million Americans enjoy some of the
highest levels of income and benefits in America.
Why don’t students know this until it is too late to
for them to consider and prepare?
46

47. Compensation in manufacturing is superior
2011 Average Incomes - All Ages / All Jobs*
$66,756
Ohio Manufacturing Jobs
$54,700
All Americans with 4-Year Degrees
All Other Ohioans
$41,921
$33,500
U.S. High School Graduates
$23,400
U.S. High School Drop Outs
$0
$10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000
The highest-paying, high benefit jobs
not requiring a college degree are a national secret!
*Ohio Department of Labor, US Department of Labor
47

48. Questions?