Innovations Reviving Manufacturing
Companies can achieve future goals by teaming up with a cooperative community.
By Rachel Duran
The greening of industries such as automotive will play a vital role in shaping the direction of the manufacturing industry. Manufacturing companies continue to explore ways to adapt processes in order to creating lean and efficient systems, as well as to produce components for the mushrooming green energy sector. Manufacturers are enthusiastically entering collaborations and partnerships with other companies, academia, institutes, federal agencies, nonprofit organizations and economic development leaders to determine the future of manufacturing.
In the auto industry, whether it is the lightweighting of body panels to advancements in battery technologies for electric vehicles, manufacturers are answering the demand by adjusting existing infrastructure and the skills of the workforce. Their capacities and capabilities support regional, local and corporate strategies to supply the renewable energy industry.
The clean-tech industry, which includes the development of electric vehicles, requires cross-industry collaborations. Scenarios include auto companies for the first time partnering with utilities and mall operators in order to support the use of electric vehicles. In Indiana, the Energy Systems Network Inc. brought together Duke Energy, Toyota Motor Co. and the Simon Property Group Inc. to pilot such a scenario, says Paul Mitchell, president and CEO, Energy Systems Network. The nonprofit group works to accelerate the pace of commercialization in the clean-tech industry in Indiana, and by way of international companies, around the world.
Mitchell says the nonprofit provides an energy ecosystem of universities, companies and state agencies to companies and institutions that support and move technologies into pilot phases and commercial markets in a collaborative manner. “We do this in a way that lowers your costs because you are sharing the costs with other firms that are working in those industries and trying to bring those technologies and products to the marketplace,” Mitchell says.
In another project, the Hoosier Heavy Hybrid Initiative brought component manufacturers together to work on developing next generation hybrid systems for medium and heavy-duty trucks. As a result, Mitchell says Allison Transmission Inc., Remy International and Delphi Automotive Systems LLC entered into long-term partnerships to begin manufacturing the next generation hybrid solutions. “We assisted the companies in pursuing federal funding toward the development and manufacturing of those technologies,” Mitchell says. “They brought in nearly $250 million in federal funding through the stimulus.”
In Davenport, Iowa, Alcoa is underway with a $300 million expansion to support its activities in the auto industry, producing aluminum sheet for various body panels for vehicles. The aluminum replaces the use of steel in these applications. “As the Corporate Average Fuel Economy [CAFÉ] continues to increase, companies have to find ways to increase the fuel efficiency of their fleets and one way to do that is to reduce the weight of the vehicle; and a significant way is to replace steel with aluminum,” says John Riches, public affairs management, Alcoa’s Davenport Works plant.
An example of the weight reduction can be found in the hood. A steel hood might weigh 50 pounds to 60 pounds; an aluminum hood might weigh 20 pounds to 30 pounds. The application helps automakers make significant improvements in fuel economy.
Alcoa’s expansion of the Davenport Works facility will result in a workforce of 2,300 employees when the project is complete. Riches says the company found several advantages to expanding at its current Iowa location, including incentive support and workforce training funds, and a positive regulatory environment, where the governor’s office made attaining permits for the project a priority. “Iowa also has competitive energy pricing, which is a key factor in a product like what we will make for the auto industry,” Riches says.
In addition, the Iowa Economic Development Authority and Quad Cities First have been instrumental in ensuring the necessary parties were involved in the project. “They put things together in a timely way that allowed the project to go forward,” Riches adds.
For example, economic developers outlined the costs of doing business in the Quad Cities (Iowa and Illinois bi-state region) area versus other communities vying for the project, where the cost savings of locating the entire project to the Davenport location would be better than locating the project to multiple locations.
“This expansion is a perfect example of what the chamber is supposed to do, which is to be a known resource to our business community, enact our knowledge of incentives and align the correct people and resources to get our businesses the tools they need to expand,” says Tara Barney, CEO, Quad Cities Chamber of Commerce.
In Crane, Ind., the Energy Systems Network has established a partnership between the Crane Naval Surface Warfare Center, the state’s universities and private companies to form the Battery Innovation Center. Crane is the Department of Defense’s center of excellence for battery technology. It supports not only the Armed Forces but other federal agencies such as NASA. Part of the battery project will include a $12 million facility located outside of the gates of Crane for the prototyping, testing and validation of advanced battery solutions.
Additionally in Indiana, “grid storage is another area important to support renewables and build an intelligent grid system going forward,” Mitchell says. “Duke Energy and Indianapolis Power & Light have deployed smart grid technologies and are working on how to build a more intelligent grid.”
Capacities And Capabilities Are Available
Part of creating a smart grid includes creating efficiencies in the products that plug into the grid. For example, LED lighting, from street lighting to warehouse lighting, is becoming more prevalent in the commercial and industrial sectors. “We would like to see Hernando County become the center of the LED manufacturing world,” says Mike McHugh, manager of business development, Hernando (Fla.) County Office of Business Development.
LED International Lighting Inc. is constructing a facility in Hernando County where it will develop a new high efficiency warehouse lighting system. “They will work with some of our electronics companies to build the circuit boards and mount the LEDs,” McHugh says. Another firm, Sparton Complex Systems, is also involved in the LED industry.
McHugh says Hernando County, part of the Tampa Bay metro, features a diverse manufacturing sector that includes pharmaceuticals and nutraceuticals; food processing operations and aerospace activities. The county will make multimillion dollar investments to support the aerospace industry. A new maintenance facility will be available in the second quarter of 2013 at the county’s airport. “We have the capacity and want to have the facilities to support these activities,” McHugh says.
The region’s assets include an incumbent aerospace workforce and extensive supply chain to support aerospace companies. “The slowdown and ceasing of operations at NASA has really pushed out high-end aerospace workers throughout the state,” McHugh says. He notes part of the location decision by Airdyne Aerospace Inc. to Hernando County was the confidence that as the company grows, it will be able to access a skilled workforce in the region and in the state. Airdyne has developed a series of systems that will go primarily on the C-130 E/H/J special mission aircraft support systems. The company began research activities from a hangar at the county’s airport to demonstrate its products. It will now manufacture from a location located a couple of hundred yards away from its previous operations.
Moving from Florida along the East Coast up to Canada, the community of Miramichi, N.B., is banking on its talent base, the availability of land and sites, and financial incentives to support next generation manufacturing activities. Once a stronghold for paper mills and saw mills, the community is evolving into the manufacture of components to support the green energy industry. Economic developers initially had the idea to use its forestry resource to create biomass energy and become a power generation community, supplying to the grid. Consultants pointed out that the region’s history in manufacturing would bode well in supporting the green energy industry. “Most of the companies that we are targeting are on the biofuels and biomass side of things,” says Jeff MacTavish, director of economic development, city of Miramichi. “We used to process wood so we understand it and our niche is around it.” In addition, 20 percent of the region’s economy was involved at one point in manufacturing processes. Currently many workers are travelling back and forth from Miramichi to western Canada for work. “It affects the family and we want to provide more opportunities here,” MacTavish says. Due to closures of industrial sites during the last four years, a large pool of skilled workers is available, which includes electricians, pipefitters, welders and industrial mechanics.
MacTavish also notes there are two brownfield sites available for redevelopment; and the city is in the process of acquiring vacant properties in an industrial park. “We will transfer the property for a dollar, and couple that with the financial program that exists,” MacTavish says. “There is a $50 million economic development fund available to companies looking to establish manufacturing or innovation firms here.”
A favorable level of cooperation from local and state officials is of major importance to companies involved in the site selection process. A friendly tax and regulatory environment has been helpful to maintaining a healthy advanced manufacturing cluster in Iowa. During the recession, Iowa’s loss of manufacturing jobs was less than the national average. From March 2011 to March 2012, Iowa’s manufacturing sector gained 12,200 jobs. More than 90 percent of Iowa’s employment gains came from those jobs.
What’s more, Iowa’s personal income grew by 6.8 percent from 2010 to 2011, which was the second highest in the nation; manufacturing’s personal income grew by 4.8 percent, with durable goods seeing the strongest growth at 7.2 percent, says Debi Durham, director, Iowa Economic Development Authority.
Another contributor to Iowa’s manufacturing strength is a 30 percent increase in exports from January 2011 to January 2012. Yet another advantage is the state’s economic growth plan, which focuses on strategically recruiting companies that align to the supply chain of the state’s existing manufacturing companies. For example, Brownells Inc., a firearms manufacturer, has identified a company in Brazil as one of its suppliers. In July, the governor, the economic development team and others will conduct a trade mission to Brazil. “We can show this company that not only do they supply Brownell, but there are other manufacturers they can service if they were to locate in Iowa,” Durham says.
In another supply chain recruitment strategy, CJ Corp. of South Korea will co-locate next to Cargill’s ethanol plant in Webster County in order to process amino acids for livestock feed. The company was expected to break ground on its $328 million investment in May.
Iowa’s manufacturing strengths include ag and construction equipment and machinery; wind energy components; and vehicles and components, Durham says.
While companies are concerned with meeting workforce needs and being able to easily access markets, a shovel ready site is also a must, especially when working in compressed time frames. In Georgia, the ability of officials from two counties and one city to speed up the siting process played a role in Caterpillar’s decision to locate its new construction equipment manufacturing facility in Athens-Clarke County and Oconee County.
Caterpillar will invest $200 million in the new facility, and employ 1,400 people by 2020. At full build out the project will include manufacturing, and parts and distribution center operations. “Caterpillar’s timeline was extremely aggressive,” says Mac Brown, interim president and CEO, Athens-Clarke County Economic Development Foundation. “We received word of an opportunity in mid-December 2011 and the company wanted to make a decision by Jan. 31, 2012.”
Part of the ability to meet this timeline was the fact that the region’s economic development officials learned from previous attempts to attract companies to an 840-acre site that lies in the jurisdictions of the three local governments. The communities created a 1.5-page agreement to address code issues, outlining who is responsible for what services and so forth, to avoid the nightmares that result when working with two counties and one municipality. Caterpillar will locate on 260 acres of the site. “Caterpillar noted our spirit of cooperation and never would have guessed they were working with anything other than a single team,” Brown says.
Manufacturing companies undoubtedly appreciate all the cooperation they can garner as they diversify their product lines and/or incorporate new efficiencies into the process. Collaborating with industry members on innovations and new opportunities will assist manufacturing companies in accomplishing their goals.
For complete details about the organizations featured in this article, visit:
Athens-Clarke County (Ga.) Economic Development Foundation, www.athensclarkecounty.com
City of Miramichi, N.B., www.miramichi.ca
Energy Systems Network (Indiana) LLC, www.energysystemsnetwork.com
Hernando County (Fla.) Office of Economic Development, www.hernandobusiness.com
Iowa Economic Development Authority, www.iowaeconomicdevelopment.com
Rachel Duran is the editor in chief for Global Corporate Xpansion. Contact her at firstname.lastname@example.org.
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