Ethics, Working for Good

Ethics, Working for Good

Oh, the crunch enhancer? Yeah, it’s a non-nutritive cereal varnish. It’s semi-permeable. It’s non-osmotic. What it does is it coats and seals the flake, prevents the milk from penetrating it. Clark Griswold in National Lampoon’s Christmas Vacation

Technology is for the benefit of humans. It has been ever since some human figured out a better way to trap a gazelle or plow a field.

Except for my wife, who hates soggy cereal, how much benefit is there in cereal varnish?

Or the product manager at Facebook working with engineers and psychologists figuring out ways to keep attention fixed on the app so that an additional few ads can be served up?

Or the engineers doing some fantastic work on digital voice recognition which could do great good for disabled people or help in dangerous situations instead figuring out how Alexa can spy on people 24 hours a day to accumulate data on when people are home to be sold to telemarketers or to governments to find terrorists or political opponents?

Ethics at work concerns developing things for the benefit of people and society. But weapons developed for defense could also be used offensively. Something good could be used to corrupt us. Or undermine us.

Ethics is both what we do and what we fail to do.

Mostly ethics should be in our awareness. At the end of the day one question we can ask ourselves, “What did I do for the good today? Where did I fail to act where I could have made a difference for the good?”

Government versus Business

Government versus Business

I saw this note in today’s Espresso from The Economist, “France’s finance minister pledged to save jobs under threat at General Electric’s plant in the country’s north-east. The American industrial conglomerate, which made a loss of $23bn last year, had said it would cut around 1,000 jobs. Earlier this year GE paid France a €50m ($56m) fine for failing to create jobs after it took over Alstom’s energy business.”

Meanwhile in the US, officials are taking a second look at the results of Foxconn’s supposed multi-billion dollar investments. Politicians made great PR hay in 2017 with the announcement of a large investment in Wisconsin. Two years down the road, maybe the investment may not be so large and the employment a few thousand shy.

Governments can preach and give breaks and whatever, but market forces and bad management mean much more than governments for success. Take Alstom, for example. Perhaps there is French pride involved, but GE discovered that that particular acquisition was not all that it hoped for. One of a string of GE missteps. The French government can fine all it wants, but job creation depends upon good management and proper economic tailwinds.

I recently reported on the “success” of re-shoring manufacturing jobs, as the Reshoring Initiative would have it. Most likely it’s a result of financial analysts taking a closer look at supposed savings from only low wages discovering that other costs, such as logistics, insurance, loss of intellectual property, longer lead times, inability to quickly respond to changing markets all combined to make manufacturing offshore unappealing.

Most of the ills of manufacturing society I read about have a common root cause—less than competent management. I don’t see any quick fixes for that! And it won’t come from government fines generated by disappointment at lack of political gain.

Manufacturing Thought Leadership Summit Discusses Digitalization and Innovation

Manufacturing Thought Leadership Summit Discusses Digitalization and Innovation

Manufacturing in America—an event bringing together vendors, academia, end users of controls and automation. Siemens Industry, collaborating with its local distributor Electro-Matic, held a trade show/seminar series/thought leadership summit at the Marriott Renaissance Center Detroit March 22-23. The show has a distinct automotive industry feel, as you might expect, even though Detroit, and indeed all of Michigan, is reforming itself along high tech lines with less reliance on traditional automotive.

There was certainly a lot of thought leadership opportunity at the event. There was the Siemens Industry President of Digital Factory. There was the Governor of the State of Michigan.

ThunderChickens FIRST Robotics Team

And then, there was the group of high school students competing in the FIRST Robotics competition known as the ThunderChickens—Engineering A Better Way To Cross The Road. The picture shows a model of their robot. Such passion. Such creativity. The mechanical guy pointed to the control module. “It limits me to 6 motors,” he said. “Last year we only had one, but this year I could have used many more.”

Six motors!! What I’d have given as a kid building stuff to have one! Oh well, they were great.

Raj Batra President Siemens Digital FactoryRaj Batra, President of Digital Factory for Siemens, said the focus is on digitalization. Digital Twin is a piece of digitalization. This is the digital representation of a physical thing—product, machine, or component. Siemens brought all this together through the 2007 investment in acquiring UGS to form Siemens PLM. “Companies thought it was hype back then, now we know it drives value,” said Batra. “If you are a pure automation company how do you accomplish all this without a design component? You can’t have the digital twin. Meanwhile, a CAE company that doesn’t have automation and control do manufacturing—what do you get?” Batra added challenging the competition.

Batra continued, “We are close to a new era of autonomous manufacturing. And there is the growth of IIoT, we call Mindsphere. This all means manufacturing is no longer a black box to the enterprise. Indeed, it is strategic to the enterprise.”

Paul Maloche, vp sales and marketing Fori Automation, manufacturers of automated guided vehicles, discussed the methods by which collaboration with suppliers (in this case with Siemens) leads to innovation. Fori was diversifying from reliance on building machines for automotive applications, and evaluated the aerospace industry. The Siemens rep came in and said they could help get them into that market. But Fori would have to convert to Siemens control. The Fori team replied, “OK.” This led to development of automated guided vehicle technology and products. The partnership opened doors. Fori won several orders in aerospace market for the new AGVs with Siemens control.

Alistair Orchard, Siemens PLMAlistair Orchard, Siemens PLM, riffing off a space movie, began his talk, “Detroit, we have a problem.” All the old business models of trying to ship jobs overseas has not worked. We need to make stuff to be successful as a society. “So much of what we do has not changed in 50 years in manufacturing,” he noted, “but digitalization can change everything. Additive manufacturing can lead to mass customization due to 3D printing using the digital twin. You can try things out, find problems in design or manufacturing. You can use predictive analytics at design stage. Digital enterprise is about manufacturing close to the customer.”

Governor Rick SnyderGovernor Rick Snyder, Michigan, touted his manufacturing background as former operations head at Gateway Computers. “As governor,” he said, “it’s about how you can build an ecosystem and platform for success. Long term, success needs talent. His philosophy contains the idea that we shouldn’t tell students what they should study, but let them know where opportunities are and how to prepare for them. The private sector needs to tell government what they need in the way of talent.”

Michigan has grown more manufacturing jobs than anywhere else in the country. Not only manufacturing, though, Michigan is also a center of industrial design. But the economy not only needs designers and engineers, but also people in skilled trades. “We need to promote that as a profession. We must break the silos that said your opportunities are limited to your initial career choice.”

Michigan has invested a lot in students, especially in FIRST Robotics, where Michigan teams have risen to the top. The state has also started a computer science competition in cyber security.

How are you innovating and making the world better?

Josh LinknerJosh Linkner, CEO Detroit Venture Partners, gave the keynote address on innovation. I’ll leave you with his Five Obsessions of Innovators.

1. Curiosity—ask open ended questions
2. Crave what’s next—future orientation
3. Defy tradition—use Judo flip to turn idea on its head
4. Get scrappy—grit, determination, tenacity
5. Adapt fast

Manufacturing Leaders Consider The Impact Of A Trump Presidency

Manufacturing Leaders Consider The Impact Of A Trump Presidency

President TrumpWell, we have a new US President coming into power in January. What impact will President Trump along with a Republican House and a Republican Senate have on manufacturing?  Even at this point with a month until inauguration, we are getting a glimpse, but it’s still a guessing game. Trump and Congressional leaders are not on the same page on all matters of policy, so this will be interesting to see play out.

Robert McCutcheon, Partner, US Industrial Products Leader, with PwC called yesterday to discuss a paper he has written—Five post-election topics on the mind of domestic manufacturers . This paper, part of a broader series of research and reports from the firm, looks specifically at five areas of policy that will impact manufacturers. These are Tax, Infrastructure, Military, Regulation, and Trade.

Of these, McCutcheon told me that manufacturers are most interested not surprisingly in Tax and Regulation policies. These can have quick and direct impact on manufacturers’ bottom lines. A close third is Trade policy. I’m watching the dance that Trump has started around China—both the Taiwan issue and the Trade Pact (where the US stands to lose influence in all of Asia). So I was curious especially for McCutcheon’s analysis on these.

What follows are taken directly from the paper. If anyone wants to share their wishes or concerns specifically about manufacturing policies (not about politics in general), the comments are open.

Five Post-Election Manufacturing Topics

Undoubtedly, there will continue to be significant questions about the future of domestic manufacturing post-election. With Republican control of both the White House and Congress, one thing seems clear: Change is coming. Here are the five key policy discussions that could have significant implications for domestic manufacturing over the next four years:

Tax

The results of the 2016 election will have significant impact on the direction of tax reform over the next four years. President-elect Trump has stated that one of his top priorities is comprehensive tax reform to significantly lower individual and business tax rates. Under his proposed plan, the top individual tax rate would be lowered from 39.6 percent to 33 percent, and the US corporate tax rate would be lowered from 35 percent to 15 percent. Owners of partnerships, S corporations, and other “pass-through” business entities could elect to be taxed on their pass-through business income at a flat rate of 15 percent, rather than under the regular individual tax rates. US-based manufacturers also would be allowed to elect full expensing of plant and equipment (with no deduction for interest expense). President-elect Trump also has proposed a 10 percent “deemed” repatriation tax on the foreign earnings of US-based companies.

President-elect Trump’s call for action on comprehensive tax reform is expected to receive strong support from Republicans in Congress, but the divisive nature of the 2016 elections could mean there will be no “honeymoon” period for the new president. House Republicans have been drafting statutory language to advance the tax reform “blueprint” that they released earlier this year, which differs in some important respects from Trump’s tax proposals. House Speaker Paul Ryan (R-WI) has said a Republican-controlled Congress could advance tax reform in 2017 by using “budget reconciliation” procedures that allow legislation to be approved in the Senate with a simple 51-vote majority, instead of the 60 votes generally needed to advance legislation.

Infrastructure

President-elect Trump has made it clear that there will be significant infrastructure investments that will undoubtedly bring benefits to the manufacturing industry in the engineering and construction sector, especially now that Trump has announced his plan to spend $1 trillion over the next decade to upgrade the nation’s roads, bridges and waterways. Lawmakers on both sides of the aisle are now hopeful they could reach agreement on at least one bipartisan matter. His plan vows to reduce bureaucracy and government red tape and to rely principally on public-private partnerships and private financing supported by the use of federal tax credits for private financiers. We should also see upstream benefits in the supply chain as infrastructure spending generally results in a significant increase in economic activity from the materials, goods and services consumed in these projects.

Trade

Trade was one of the cornerstones of Trump’s campaign, promising a radical trade agenda, and vowing to withdraw from the Trans-Pacific Partnership trade deal and renegotiate with the North American Free Trade Association. This has led many of America’s top manufacturers to urge President-elect Trump to scale back on his trade initiative and pursue a more nuanced approach to trade with China and Mexico. In an open letter to Mr. Trump, chief executives from more than 1,100 US companies warned of “an urgent need to restore faith in our vital economic and government institutions.” Many of these business leaders have expressed concerns about economic uncertainty and trade threats.

Some industries, however, may feel that a change in the US position around trade will benefit them. The steel industry, for instance, has been hit hard with anti-dumping and “unfair trade” cases for many years.  A new stance on trade tariffs could significantly benefit domestic steel producers. The question regarding the ramifications of these changes, and how they will not only impact imports and exports, but also overall trade relations, remains.

Military spending

We anticipate an impact for the aerospace and defense sector as a result of the proposed increase in military spending. Plans include an increase in the Army’s active force to 540,000 troops, the Navy building a 350-ship fleet and the Air Force increasing the fighter fleet to 1,200 combat-coded aircraft. Estimates vary, but these proposals could increase the defense budget by hundreds of billions of dollars over the next four years, impacting defense contractors as well as their supply chains.

Regulation

President-elect Trump’s plans include asking all department heads to submit a list of every wasteful and unnecessary regulation, reforming the entire regulatory code in an effort to keep jobs and wealth in America, declaring a temporary moratorium on new agency regulations that are not compelled by Congress or public safety, and canceling hundreds of existing executive orders.

The US has already undergone a shale revolution which positively impacted the manufacturing sector including, but not limited to, the chemicals industry. By lifting some of these regulations, we may see more economic activity in the manufacturing sector overall. The President-elect’s pledge to reduce regulation could lead to exploration and new development as well as new pipeline projects that could not only benefit the oil and gas industry but also the downstream industries that consume much of this output as feedstock into their manufacturing processes. This could contribute to a more cost competitive domestic manufacturing environment.

Final Word

There is a lot of uncertainty around how the election results will ultimately affect domestic manufacturing. No doubt the new Trump administration, with Republican control of Congress, will result in change. We will continue to monitor policies as they develop across all five of these categories over the coming months. Stay tuned as we assess the potential impact on jobs and growth for industrial products companies in the US.