Hampton Roads Quality Management Community

Press Release

Hampton Roads Industrial Innovation Forum

Steps for the “Revitalization of Manufacturing” at home

June 2012: Hampton Roads, Virginia.

The Industrial Sector has the most leverage to improve the economy. Our challenge is to integrate regional industrial actions to the best competitive advantage. The Hampton Roads Quality Management Community (HRQMC) has brought together individuals, businesses, and learning organizations to share best practices and learn how to become more competitive through collaboration. Based on this experience we organized a forum on 7 June to address issues of national and regional industrial revitalization through improved organizational productivity.

The keynote speaker for the forum, the Quality Professional of the Year by Quality Magazine Harry Moser, framed the issues in terms of the real cost for off-shore operations compared to building products at home. He expanded the discussion to include workforce development initiatives necessary for improved competitiveness.

Harry Moser is the founder of the Reshoring Initiative and has been collaborating with the Association for Manufacturing Excellence (AME) to define a strategy for the Revitalization of Manufacturingwhich encourages policy-makers, educators, and industry associations and operations executives to join in developing efforts focusing on local and state job creation to bring jobs back home.

One of the key steps in this process is to use a Total Cost of Ownership (TCO) analysis tool to effectively compare total cost of local and offshore sources, enabling businesses to make informed business decisions. "We are committed to changing the sourcing paradigm from 'off-shored is cheaper' to 'local reduces the total cost of ownership,'" said Moser. As companies analyzed the results of the TCO assessment, they identified gaps in performance limiting their capabilities to compete globally.

The Reshoring Initiative, AME and its alliance partners the Society of Manufacturing Engineers (SME), APICS, America Society for Quality (ASQ), America Productivity & Quality Center (APQC), Virginia Business Excellence Consortium (VBEC), Senate Productivity Quality Award (SPQA) of Virginia,GENEDGE Alliance (Virginia Manufacturing Extension Partnership), Virginia Manufactures Association (VMA), the Old Dominion University Business Gatewayand other learning organizations are providing the needed assistance to close performance gaps for businesses and their workforce.

These services come in the form of regional consortiums, continuous improvement workshops, kaizen events, plant tours, annual international conference and assessments for

manufacturing excellence to apply counter-measurements dealing with people, processes, and performance.

“As a region we must deal with the larger market issues and take action as communities of practice to improve our own competitive posture - with workforce development, innovative productivity, and capacity to manage change” said Seth Pillsbury, Director of HRQMC. The challenge is to make "Made in America" and "Made in Hampton Roads" statements of real industrial value.”

The 7 June forum was sponsored APICS, ODU Business Gateway, Busch LLC, Stihl Corporation, Earl Industries, with HII-Newport News Shipbuilding providing the venue to host this regional event. Participants were greeted by Gary Zimak, Director, Quality and Technical Services. Joe Barto, president of Training Modernization Group, was the emcee. The next forum is planned for September, focusing on a collaborative pilot project to train 1st line supervisors for small businesses.

The forum’s objective was to develop issues and an agenda for use by a community of practice to revitalize the regional industrial sector. Discussion was structured into four general themes:

  1. National Manufacturing Initiative
  1. Workforce Development
  1. Supply Chain Management
  1. Business Innovation

Harry Moser provided foundational positions with a keynote presentation describing how to analyze costs for off-shoring decisions and the relationship of costs for production in China against doing the work locally. Of note - the largest difference is the "hard costs" of labor, productivity, plus logistics, and the differences are closing.

To compete, U.S. industry should look to improve its productivity by reducing wastes, and develop a more skilled workforce to support advanced manufacturing techniques and innovative business practices.

Glenn Marshall, AME Director At Large from NNS presented Harry Moser with an award from AME recognizing his leadership in the Revitalization of Manufacturing JOBS in North America.

J.C. Brinker, Associate Director of the ODU Business Gateway, set up the Town Meeting discussion with an outline of the U.S. Manufacturing Competitiveness Initiative:

  • Fuel innovation and production economy from start-up to scale-up
  • Expand U.S. Exports
  • Harness American Talent
  • Achieve Next-Generation Productivity through smart innovation and manufacturing
  • Create competitive advantage through next generation supply networks and advanced logistics

Charles Kane, president of Busch LLC, Virginia Beach, followed on with a list of strengths, weaknesses and opportunities of the regional industrial sector:

  • Strength Port access

Veterans Pipeline

  • WeaknessesLack of true local industrial infrastructure

Lack of skilled workers

Lack of regional industrial focus

Lack of education system focus

Labor costs

Boom/Bust of DOD budget cycles/cuts

  • OpportunitiesRecognition of industrial base as economic driver

Capacity of shops that normally build for DOD but have space capacity. How to break into commercial market

Everett Jordon, Education Director of the HII-NNS Apprenticeship School, outlined the sharply improved value and status of the maritime skill certificate. School applications have increased a magnitude over a couple of years ago, and the level of training rigor is increasing as well.

Jordon shared NNS has a long history of hiring veterans, particularly those exiting the Navy who are familiar with our products, culture, and work environment. NNS pursue exiting military from all the branches that possess skill sets that match their manning needs. Currently NNS employs ~ 2,800 veterans which equates to about 13 percent of its total workforce. The Apprentice School currently has 56 students with military experience out of a student body of 785, or 7 percent overall. Noteworthy, is the fact that four of our past six Homer L. Ferguson Graduates (top graduate of the class) were former military. This is a clear testimonial that former military perform extremely well in the program.

Bob Granata, VP of Operations & Technology Development at Newport News Nuclear, expanded on the value of apprenticeship training to urge attention on innovation: benefit can be found by improving workplace attractiveness to take advantage of the greater interest by next generation workers for skill development and work opportunities.

He also pointed out that while innovation and improved workplace appeal are important, the real driver of organizational change is pain, not return on investment. Identifying where costs may be saved or workforce skills developed is useful only if we can also identify the immediate problem such an effort will resolve.Granata shared howinnovation drives the economic growth of NNS, the region, and supply base.

Supply chain management was discussed, highlighting the need for skilled change leaders in industrial organizations to keep extensive logistics issues aligned with rapidly changing business strategies. Paul Schmidt, Profit Playbook, pointed out that local businesses have reduced costs by reshoring:

  • Inventory CostsAll costs are not applied to Sourcing Costs. Missed opportunity costs because of fund unavailability
  • Return on AssetsLow turn rate if outsourced

Mr. Schmidt also pointed out a unique resource of 167 international companies from 27 countries in Hampton Roads - potentially offering high value guidance on global supply chain management issues.

J.C. Brinker concluded the discussion with a call for action. Hampton Roads faces a significant reduction of industrial performance unless actions are taken now to establish an infrastructure of industrial organizations focused on continuous improvement and productivity, and support a clear voice able to communicate the appeal and benefits of innovative industrial labor to the region.

Pain

  • Loss of next generation engagement
  • Failure to deal with strategic changes
  • Lack of skill levels to meet demands for advanced manufacturing
  • High veteran unemployment

Benefits

  • Cost savings
  • Workforce development
  • Business innovations
  • Veteransrecruited into workforce

Regional S W O T Chart

The Hampton Roads Quality Management Community facilitates collaboration among regional enterprises to support continuous improvement and economic growth. Participation supports execution of continuous improvement initiatives, with regional networks, agendas, and collaboration opportunities to achieve:

  1. Reduced costs for CI skill training
  2. Basis for sustainment – regional agenda
  3. Regionalism which in turn supports greater competitiveness
  4. Structure of DMAIC controls.

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