CHEM Blog

I am sitting at Charles De Gaulle airport in Paris after I spent the week talking to innovation mavens in the European Union (E.U.) about the state of innovation, and I am wondering what we are going to do, both in the U.S. and the E.U., to keep out of the jaws of the Asian economy.

The Asian countries in question are those in the Far East, specifically China, South Korea, Japan and Taiwan, whose governments have moved them into a position of economic dominance with a combination of central planning, government funding and finagling; in collusion and in full cooperation with our American corporations.

It seems as though we have been overtaken by a series of self-delusions, either lying to ourselves or, frankly, being lied to by those in power in order to make this massive shift in our fortunes seem inevitable. The list of these self-delusions is fairly extensive, but let’s walk through mine, one at a time.

The Fair Trade Delusion

We say our borders should open up to every world market, with no job or industry technology protected, because everything should be produced by the lowest bidder.

We have proceeded down this path unwilling to enforce the concept of “fair” and unable to make our trading partners adhere to our standards.

The Chinese play this game with real zeal. While the Chinese economy grew by 8.7 percent last year, the rate of U.S. imports grew by 0 percent. The rest of the Asian countries are in the same boat, selling us as much as possible while suppressing demand, either by forcing a high saving rate or putting up barriers to our goods. 

The Level Playing Field Delusion

If you believe that any of those Asian countries enforce the same manufacturing safety, work rules or environmental laws that U.S. manufacturers must follow, I suggest you stop your heavy drug use and start paying attention.

Most Chinese workers don’t have health care, retirement or any protection that is liable to cost their company money — so much for the “worker’s paradise.”

The Too Big To Compete Delusion  

Throughout the 1980s, 1990s and even today, the Federal Trade Commission (FTC) — an agency designed to protect the U.S. from any one company becoming a monopoly — turned a blind eye as companies in many industries accumulated great power. The FTC excused the snowballing power, stating that each company needed to be big enough to compete in the world market.

From toymakers to big oil, pharmaceuticals to banks, and including my most favorite monopoly, the health insurance industry, we have seen wave after wave of consolidation, all in the name of efficiency and international competition.

We have become a country run by big business with big clout and we are all better off for it, right? 

The Benevolence Delusion

I have an acquaintance, a marketing director for an automotive aftermarket company who swears that corporations are run by the cream of the crop in this country; God-fearing, decent people who make the best decisions, motivated by fairness, decency, what is best for their mothers, apple pie and the American way.

Let’s look at the decency from some of our fellow citizens: Union Carbide in Bhopal (industrial disaster, pesticides), United Brands Company in Central America (Bananagate, bribery to reduce export taxes), the Ford Pinto (rear-end collisions, deadly fires), General Motors (side saddle fuel tanks in trucks), Bridgestone/Firestone (tire tread separation), Nestle in Africa (breast milk substitute debacle), Enron, AIG, Goldman Sachs, etc. Shall I go on?

Let’s face this delusion head on; American law gives the status of an individual to a corporation as though it is a living entity. A corporation may act, create, exercise controls and behave like an entity, but it has no conscience. It has only the lowest common denominator of a sense of decency, and too often that lowest common denominator is to maximize profit at all costs.

A corporation even has all of the rights and privileges of an individual, but it cannot be punished like an individual. If it commits a crime it may be fined, but rarely does any individual in the corporation go to jail for bad behavior. A corporation can make decisions that kill people, but can’t be prosecuted for murder.

The Laissez Faire Capitalism Delusion

I know I will receive some nasty e-mail from the laissez-faire-capitalism, free-trade, market-fixes-all-problems zealots out there, but before you darken my inbox, I want you to dig into the roots of this unfettered, uncontrolled capitalism nonsense.

First, know that I do not condemn all of capitalism. In fact, I was a great believer in our controlled capitalistic system, before it was corrupted by Milton Friedman, Alan Greenspan and the “Chicago School.”

I am simply tired of those who believe this is the only model of capitalism that has any relevance. If you doubt me, investigate the failures of the “Chicago School” in places like Chile and Russia, after the fall of Wall Street, and take a close look at what they and the neoconservatives of the last two administrations have been up to.

The Misery is Inevitable Delusion

Perhaps the saddest delusion of all. Looking at our great country from a vantage point outside of one of the most beautiful cities in the world, I see us as lemmings running off of the cliff together, meeting our doom with resignation and self-delusion.

Why can’t we instead insist that our government (it is ours after all) force markets to open? We need to force the Chinese to devalue their currency and require foreign corporations (including the ones we operate overseas) to adhere to the same environmental, workplace and safety standards that we abide by in the U.S. Why can’t we reinstate the market protections that served our country so well from the 1930s to 1999? I refer to the protections that helped to keep the natural human inclination toward greed in check.

With a refocus on science, math and engineering education, we can restock the technical resource that helped us lead the world for the past 60 years.

We don’t have to devolve into a third world country with a massive lower class slinging burgers for the wealthy few. We can save ourselves and we can save our middle class — this country’s producers. We simply need to stop deluding ourselves. 

Mike Rainone is the co-founder of PCDworks, a technology development firm specializing in breakthrough product innovation. Contact him at mrain1@pcdworks.com and visit www.pcdworks.com.

By MIKE COLLINS, Author, Saving American Manufacturing

"We have never seen a problem of this size or magnitude in world history. There’s more counterfeiting going on in China now then we have ever seen before," says Dan Chow, a law professor at Ohio State University who specializes in Chinese counterfeiting. “We know that 15 to 20 percent of all goods in China are counterfeit."

The facts:

• In 2006 an estimated 8 percent of China’s Domestic Gross Product (GDP) was generated by counterfeiting.
• China’s own Council of Research and Development Center estimated that there was $19 billion to $24 billion worth of counterfeit goods flooding China’s economy back in 2001.
• Brand owners estimate that 15 to 20 percent of all well known brands in the PRC are counterfeit.
• Up to 80 percent of all worldwide counterfeiting is done in China.
• In 2005, U.S. Customs seized $93 million worth of counterfeiting and infringing goods.
  China is going to implement Compulsory Certificates for high tech goods that are issued during the import customs clearance. If you don’t have a certificate the process can add 25 to 30 days to process a license.
• Encryption codes for products like secure routers, anti spam and anti-hacking software databases and other high tech products will have to be reviewed by a government panel, which could be leaked to Chinese competitors. The CCR certificates would either give the Chinese our encryption codes and trade secrets or prevent large U.S. companies from selling to China.

Reasons for Counterfeiting

When America began off shoring products to China they naively expected the Chinese to play fair and act like America’s other trading partners. Everybody seemed to forget that China is one party authoritarian government and they might have a very different view of fairness and capitalism. Buying a fake Rolex or a pirated DVD on the street may seem pretty harmless but intellectual property rights are only the tip of a bigger corrupt iceberg.

A report by the Organization of Economic Cooperation and Development estimated that China’s counterfeit trade amounted to $200 billion in 2005. They also said that criminal syndicates are behind much of the counterfeit trade and that some of the money is used to support abusive labor practices, drug trafficking, and prostitution.

A big part of the problem is that many government officials are easily bribed and the judicial system is reluctant to prosecute. The government is very afraid of social unrest and counterfeit factories keep a lot of poor people employed. The Carnegie Endowment for International Peace found that the odds of going to jail for counterfeiting are, “at most, 3 out of 100. Most of the cases that are prosecuted usually pay a small fine and are back in business in matter of days.”

My own view is that because the Chinese have never grown up in a democracy, they have a very different view of ethics and the law. They seem to think that in world trade anything you can do to achieve individual gain or competitive advantage over a rival is all part of the game. This is part of their culture and varies from a little old lady copying Nike shoes to espionage and spying.

John Engler of the National Association of Manufacturers says, “Counterfeiting on the part of the Chinese companies has reached epidemic proportions. This is grand larceny on a massive scale and it has to stop.”

Can their counterfeiting be called criminal or economic terrorism? Here are some examples:

In Los Angeles, a Chinese born aerospace engineer who had access to sensitive information on the space shuttle was sentenced to 15 years in prison for stealing the information and sending it to China. U.S. District Judge, Cormac Carmey declared he “could not put a price tag on national security and sought to send a signal to China to stop sending their spies here.”

An ex Ford engineer is accused of copying thousands of Ford Motor Co. trade secrets and then quitting his job and moving to Shenzhen, China. He was arrested when he came back from China to Chicago. The indictment says Mike Yu copied design details on doors, mirrors, steering wheel assemblies, power systems, wipers and other vehicle components.

Mike Yu used this information to acquire a job in China with a Ford Competitor. U.S Attorney Terence Berg said, "Employees and Employers should be aware that stealing proprietary trade secrets to gain a competitive advantage is a serious federal offense that will be prosecuted aggressively.”

The Special Case of Brett Kingstone

Brett Kingstone started a company called Super Vision in Orlando, Florida. It was based on his invention of a special fiber optic product that could replace the multibillion dollar neon sign market.

He started with projects for AT&T, Euro Disney, Pepsi Cola and Disney in Orlando. He had patented his product and he began looking for distributors all over the world. His sales grew from $1.7 million to over $10 million in just a few years and he was doing particularly well in the Asian markets.

But then, in 1998, his sales in Asia began evaporating and he discovered a Chinese competitor who was offering a product almost identical to his product but at 50 percent lower price. The mysterious Chinese competitor was also trying to persuade Super Visions distributors to sign up with them.

At the same time he discovered convincing evidence that somebody was sabotaging his production line in Florida. Things continued to go down hill until an employee admitted that he had seen two of Super Vision’s employees throwing documents and parts into a dumpster. When the two employees were questioned they admitted they had been working for a company owned by a Samson Wu.

Shortly thereafter, another employee admitted he had been on a retainer of $20,000 per month with the same company to steal proprietary design and process secrets. Another employee, Jack Caruso, was also being paid by Wu to steal blueprints, chemical formulations, diagrams, laboratory equipment and even large pieces of equipment from inside the locked R&D lab.

Brett enlisted a law firm and for 2 years gathered the evidence to build a case against the WU family, which included other members of the family and two businesses in Florida, Marson Trading Company and Optic International..

The jury found the Wu family and their conspirators guilty on 10 counts and awarded Super Vision a $43 million judgment. The guilty company immediately shut down all bank accounts, left the properties to the bank, and left the country.

The FBI was notified but was never interested in going after the perpetrators after the bombing on Sept.11, 2001 happened. Brett also contacted the lead prosecutor of the Florida Attorney General’s office who got him an appointment with the U.S. attorney’s office.

The U.S. Attorney would not prosecute for technical reasons. The original District Court judge finally sentenced Samson Wu to 10 days in jail for fraud on the court and forced WU to ship all of his processing equipment back to the U.S. (But no court orders were issued to collect any money).

As a final desperate act Brett asked the Commerce Department to intervene but they offered no assistance. Brett says, “In the meantime they continue to sign trade agreements with China which are repeatedly dishonored by the Chinese and unenforced by our government.”

Brett Kingstone sums it up this way, “Now we are seeing a very different war come to our shores. This one is being ignored while our economic foundation is being ripped out from under us. China is systematically stealing our technological and manufacturing base and counterfeiting our products and developments with cheap labor, thereby devastating our manufacturing industries. The fallout from these economic acts of terrorism will be much more severe then overt acts of terrorism.”

He goes on to say  that by allowing and supporting counterfeiting and espionage the Chinese government is doing a better job of looking after their people and manufacturing sectors then the U.S. government is doing.

The fact is that we are in an all out economic war and the U.S. economy is losing in terms of globalization. The tactics used by the Chinese are not just simple acts of counterfeiting of simple consumer products; it is espionage and economic terrorism at its best. We have mortgaged our country and economic terrorism threatens economic growth, job security, R &D and technology efforts and our standard of living.

So What Can We Do?

America can begin by enforcing the laws that are already in place and help companies like Super Vision. We can work harder at forcing the Chinese and other countries to quit manipulating their currencies.

We should not be sending any government work, including military contracts, to overseas companies and support American jobs. We should compete with all of our trading partners exactly as they compete with us. This isn’t protectionism -simply do unto others as they would do unto you.

The biggest challenge is to convince the Fortune 500 manufacturers that outsourcing to China is not a good long term strategy because we are slowly giving China and other Asian countries our R&D and proprietary secrets to get lower cost products.

The giant companies may be inadvertently destroying their own U.S. markets. Outsourcing may be a legitimate short term strategy for reducing unit costs. But in the long term it will transfer the technology and research and development to China and kill off any hope of reviving American manufacturing.

We are playing right into the hands of our biggest competitor, when we really should be doing everything in our power to not give them any advantage over us.

Jeffrey Immelt, Chairman of GE, suggests the employment goal should be to double the manufacturing employment from 10 to 20 percent of total employment by 2020. Perhaps Mr. Immelt is looking down the road and sees what is going to happen to the U.S. economy if we keep outsourcing and allowing the Chinese to copy or steal our technologies.

Or perhaps he sees that the biggest consuming market in the world (his own country) is continuing to decline. In any event it is time for GE and the other giant American companies to quit suggesting goals and to begin walking their talk.

By stealing our technology, copying our products, forcing us into a trade deficit, manipulating their own currency and then buying our debt, the Chinese may win the long-term war of globalization.

Mike Collins is the author of Saving American Manufacturing. His website is www.mpcmgt.com.

By JIM LANE, Biofuels Digest

In Washington, 90 U.S. scientists wrote to House Speaker Nancy Pelosi and Senate Majority leader Harry Reid to fix accounting standards for greenhouse gas emissions associated with bioenergy projects.

The scientists said they wanted to correct a perception that “all biofuels and bioenergy are equally good for the environment and are all lower in carbon emissions than fossil fuels.”

Signatory William Schlesinger, president of the Cary Institute of Ecosystem Studies, said, “If our laws and regulations treat high-carbon-impact bioenergy sources, like today’s corn ethanol, as if they are low-carbon, we’re fooling ourselves and undercutting the purpose of those same laws and regulations.”

The letter appears to be directly aimed at amending what the scientists perceive to be loopholes in the American Power Act, introduced in the Senate by John Kerry of Massachusetts and Joe Lieberman of Connecticut.

The Text

The scientists wrote: “Bioenergy can reduce atmospheric carbon dioxide if land and plants are managed to take up additional carbon dioxide beyond what they would absorb without bioenergy. Alternatively, bioenergy can use some vegetative residues that would otherwise decompose and release carbon to the atmosphere rapidly.

Whether land and plants sequester additional carbon to offset emissions from burning the biomass depends on changes both in the rates of plant growth and in the carbon storage in plants and soils. For example, planting fast- growing energy crops on otherwise unproductive land leads to additional carbon absorption by plants that offsets emissions from their use for energy without displacing carbon storage in plants and soils.

On the other hand, clearing or cutting forests for energy, either to burn trees directly in power plants or to replace forests with bioenergy crops, has the net effect of releasing otherwise sequestered carbon into the atmosphere, just like the extraction and burning of fossil fuels. That creates a carbon debt, may reduce ongoing carbon uptake by the forest, and as a result may increase net greenhouse gas emissions for an extended time period and thereby undercut greenhouse gas reductions needed over the next several decades.”

Citing Land Clearing and the Biofuel Carbon Debt, as published in Science in 2008, the group said “any legal measure to reduce greenhouse gas emissions must include a system to differentiate emissions from bioenergy based on the source of the biomass. The National Academy of Sciences has estimated significant potential energy production from the right sources of biomass4. Proper accounting will provide incentives for these sources of bioenergy.”

Reaction from the Natural Resources Defense Council

Nathanael Greene, of the Natural Resources Defense Council, commented: “Today a group of leading scientists from across the country sent a letter to congressional leaders and Obama officials urging them to carefully count the carbon from biomass burned for energy as part of a comprehensive climate bill or any other legislation or regulation.

The American Power Act (APA) proposed by Senators Kerry and Lieberman provides a solid framework for reducing our global warming pollution and investing in a cleaner economy. Unfortunately, as proposed, the bill would turn a blind eye towards emissions from biomass combustion, threatening to significantly undermine the bills carbon reduction goals. (For some basic thoughts on how the bill should be amended see this fact sheet put out by NRDC and other groups after the House climate bill passed.)

I did a little video late last year explaining the fundamental flaw in the approach that the APA would take. The letter from the scientists puts it clearly: Replacement of fossil fuels with bioenergy does not directly stop carbon dioxide emissions from tailpipes or smokestacks. Although fossil fuel emissions are reduced or eliminated, the combustion of biomass replaces fossil emissions with its own emissions (which may even be higher per unit of energy because of the lower energy to carbon ratio of biomass).

Bioenergy can reduce atmospheric carbon dioxide if land and plants are managed to take up additional carbon dioxide beyond what they would absorb without bioenergy. On the other hand, clearing or cutting forests for energy, either to burn trees directly in power plants or to replace forests with bioenergy crops, has the net effect of releasing otherwise sequestered carbon into the atmosphere, just like the extraction and burning of fossil fuels. That creates a carbon debt, may reduce ongoing carbon uptake by the forest, and as a result may increase net greenhouse gas emissions for an extended time period and thereby undercut greenhouse gas reductions needed over the next several decades.

Out Take: ”Round up the Usual Suspects.”

The letter was signed by seven members of the National Academy of Sciences and a Nobel Peace Prize co-laureate. and should be taken seriously as a point of view in science, and certainly as a political act.

This letter represents scientists, but does it represent science? Imagine what a country the United States would have turned out to be if every U.S. state ratified a different Constitution.

It was primarily signed by biologists and ecologists and did not include leading scientists noted in the development of bioenergy technologies — such as George Church, Chris Somerville, Bruce Dale, Lee Lynd, or Charles Wyman to cite a few examples. A letter signed by a more inclusive group of scientists would have done more to dispel the sense that this letter represents a narrowly-held view within the scientific community, rather than consensus, and consensus must be the basis of any renewable energy policy which would provide any of the benefits of policy stability that renewables as a sector unequivocally require.

Give me Liberty or Give me Death: Give Us Unity or We’ll Face Dearth

The Digest urgently calls on its friends in the scientific community, through the National Academy of Sciences, or other appropriate vehicles, to develop a point of view which can be generally said to be representative of a broad scientific consensus. We have seen what a lack of consensus can do to side-track the discussion of climate change.

Whatever the consensus is, let the chips fall where they may.

Renewable energy needs stability, not a series of partisan letters from open side of the table that can be expected to be answered with a parallel set of letters from the other. That’s ping-pong, not policy, and the time for games has long since passed.

A copy of the letter is available here.

Copyright 2010; Biofuels Digest; All rights reserved

To be truly innovative, a material supplier must understand not just what a customer needs now, but what they are thinking about five years or even 10 years out.

This means a successful supplier should listen to and work with a variety of customers, not just those that represent a single industry but ones that operate in whole host of markets, to achieve material innovations that are ready to take advantage of emerging megatrends now.

We believe a close supplier and customer relationship, grounded in experience and technical expertise and knowledge of trends, is truly where innovative material ideas are created.

Based on this model, we've been able to successfully develop some pretty innovative materials that are expanding the design space and helping our customers to develop their next generation of products in a variety of markets.

Changing the “DNA” of Acetal Copolymer

In the past few years, we've pushed material innovation back into the reactor to change the backbone chemistry and create truly innovative polymers that meet customer application requirements that are increasing all the time.

One example of how we've applied our experience in the lab to change the DNA of an engineering polymer involves Hostaform POM, the Ticona brand name for polyacetal copolymer.

As the market leader of this engineering polymer first introduced in 1962, Ticona scientists have significantly expanded the application landscape for what was previously possible with conventional POM.

Listening to our customers, we learned they wanted a material with better short-term mechanical properties, combined with long-term stability and chemical resistance, to give them a competitive edge in developing innovative products across many automotive applications such as door latches and components, wiper mechanisms and seating components.

Our response was a significant long-term R&D effort and allocation of resources to come up with the new high-strength Hostaform HS15 that was introduced in April 2010.

It is a member of the family of Hostaform POM S Series grades that includes high productivity and high impact performance, both designed to help customers develop innovative new fastener and seat belt component applications that need to withstand heavy impacts. Additional applications include seat belt ratchets, buckles and air bag components, bumpers and quarter panel brackets.

The Hostaform S Series, though, is just the latest in material innovations that are the culmination of Ticona seeing a customer need, conducting the R&D and coming up with a portfolio of materials that outperform traditional polymers.

Enabling Customers to Develop Eco-Friendly Innovation

Several years ago, we saw that the consumer electronics industry was being pushed to make eco friendly products and required to remove hazardous substances from their products, not only by governmental regulations such as RoHS, WEEE, REACH but also pressure from non-government groups such as Greenpeace.

We saw this as an opportunity to help consumer electronics companies such as Sony, Apple, Dell and Nokia meet these future challenges. We committed the necessary research and development to come up with a portfolio of polymers dedicated to eco-friendly innovation.

One key polymer at the top of this list is liquid crystal polymers (LCP). As the leading supplier of LCP for connectors, Ticona has a long history of applications in the electrical and electronic equipment industry.

Branded as Vectra, this patented LCP from Ticona was created more than 23 years ago. These highly crystalline, thermotropic thermoplastic LCPs have a UL V-0 rating and can withstand high surface mount technology soldering temperatures, including those needed with lead-free solder.

The materials help customers meet RoHS and WEEE requirements. New developments to this LCP portfolio includes innovative grades to solve emerging needs of our E/E customers regarding high flow for thinwall and complex shapes, higher temperature resistance, fast cycle times and recyclability.

We've also enhanced and developed new flame resistant thermoplastic polyesters, under the brand name Celanex XFR, to help manufacturers produce eco-friendly system components without the use of hazardous chemicals such as antimony, beryllium and phthalates.

This innovative flame retardant (FR) system, recognized in 2006 with a Frost & Sullivan Product Innovation Award, replaces conventional FRs, and actually enhances the performance of the engineering polymers while making components more eco-friendly. Once again, we anticipated trends, talked to customers and developed innovative material solutions that help our customers use eco-friendly solutions for their applications.

Creating “Looks That Thrill”

Another example of material innovation involves the development of a portfolio of polymers that give designers new ways to express their creativity via enhanced interior aesthetics while reducing costs.

Designers told us they wanted ‘looks that thrill.’ These designers understood plastics offer a number of benefits in designing complex shapes and parts integration. But to achieve a color, metallic or special effect look, we raised the bar for these types of parts to a new level. By eliminating painting and secondary finishing operations, costs could also be reduced.

This challenge resulted in the development of a portfolio of polymers for Molded-In Colors and new MetaLX metal-effect polymers that designers are using in applications where they want to achieve brilliant solutions with plastics while eliminating secondary operations such as painting and plating and also reducing the environmental impact of volatile organic chemicals (VOCs) for those processes.

As these examples demonstrate, innovation takes more than a good technology based company applying some of its technology.

Material innovation takes a great company that does everything well — from the way it uses its recourses to how it looks at markets to help its customers differentiate their products in a way that gives them a sustainable competitive advantage.

For more information on Ticona engineering polymers, visit http://www.ticona.com/homepage.

I know some fathers who are never happy with their child’s report card.

Consider this lecture from a dad to his fourth-grade son, Johnny: "Well, Johnny, you went up in five subjects and down in none, but you still have one A-, one B+ and two Bs on this report card, and I really do not see you putting all your effort into being a straight-A student." Wow! What a total clown. This would be a great opportunity for praise, recognition and yes, even some celebration, but instead, it boils down to a critical review and a disappointed Johnny. How stupid is this?

It is the same with our economy and its report card. What I am hearing these days is a lot of complaining, moaning and groaning about the economy. I hear about Greece, unemployment, the Yuan, early Easter, good weather, Washington’s attack on Wall Street, slam dunk comparisons on year-over-year comparison because last year was so bad, etc. It might as well be Johnny’s dad talking.

Let’s look closer at the most recent economic report card: capital spending is up; retail spending is up; first quarter earnings are up; the Leading Economic Index is up; the Index of Leading Indicators is up; factory output is up, and CEO optimism is up. Economists and companies alike have underestimated the economic turnaround (click here to see the New York Times article, "Consumers Help Drive U.S. Economy to 3.2 Percent Growth Rate," for more on this subject), as well as the impact that consumers can and have had on recovery.

Then why all the pessimism? In my opinion, there are really only three issues that need to be grasped:

1. The U.S. consumer is spending, and this is a good thing. I have said for well over a year now that the US consumer was the key to putting the recession behind us and returning to growth. This is happening.
2. Unemployment is not good, but as we all know, this is a lagging indicator. The unemployment numbers are only important if you are looking backwards, not forwards. By the time unemployment returns to acceptable levels, the recession will be long gone, and growth will be fully embraced.
3. The confidence of company leadership in the recovery is the key issue that will impact whether we have an OK recovery or a great recovery. There is no doubt that we will have a good recovery; it is happening now. But the confidence of leadership in the recovery is what is holding us back from a great recovery. Let me give two examples:

• Electronic parts shortages: Due to the lack of Comeback Planning by electronics component manufacturers, there exists today a significant shortage in key components. This is having a major impact on the consumer products and fast moving consumer goods, high-tech and automotive industries, as well as retailers of these products. Electronics component shortages are resulting in unfulfilled demand, thus slowing the recovery.
• Retailers with empty shelves: Due to the lack of Comeback Planning by many retailers, they are not replenishing their inventory in the retail supply chain, and their levels of lost sales are high. Customers are leaving stores empty handed. These lost sales are resulting in customers buying less, thus slowing the recovery.

Back to my point: Leadership needs to take hold of their return to robust growth and have confidence that the recovery will be great to ensure that we move from a good recovery to a great recovery. I know, Greece, unemployment, the Yuan… Yet we need to get past this and realize that not taking market share now will result in companies missing out on the Great Comeback.

I see a robust recovery coming, and so my recovery will be robust. Where is your firm? Do you want to be like Johnny’s hapless dad and complain about the recession, or do you want to celebrate a great recovery? I think it’s time to move forward with confidence.

By ANNA WELLS, Executive Editor, IMPO

What’s scary about running a business is the sometimes latent and foreboding knowledge that there are far-reaching effects to everything. As we’ve seen time and again—and especially lately—natural disasters can have the ability to shut us down completely, whether or not we even operate in the hard hit areas.

When most people hear the words “oil spill,” visions of seals and seagulls covered in black sludge come to mind. But I bet I’m not alone in this crowd when I say the words oil spill also make me think of the supply chain ramifications of restricted fishing areas and increased pricing on seafood in anticipation of a shortage.

The impact of this oil spill will surely be difficult for those in the food processing and restaurant industries, especially for those who live closest to the spill. Louisiana—an area that could do without more tragedy—will likely be hardest hit, considering it provides 1/3 of the shrimp, oysters, crab, and crawfish in the country. For food processors without a price lock, this could mean a catastrophic increase in the costs of their raw product. As the banned fishing areas were expanded yesterday by 46,000 square miles, it appears that this industry will take a fair amount of time to become right-sided again.

This is not the only way manufacturers have been affected this month by events in their own backyards. Recent flooding in Tennessee displaced dozens of manufacturers, many of which are still barely beginning to recover. According to The Tennessean, in assessing the damage, these business owners “are finding that the waters drenched industrial machinery, soaked records and swept away chemicals, raw materials and inventory.”

These disasters ought to serve as a reminder to the rest of us that there are numerous things out there that can hop out and surprise us. While it would have been extremely difficult for the folks of Nashville or Louisiana to anticipate disasters of such magnitude, it does raise an interesting discussion: As manufacturers in an age of predictive maintenance, we spend so much time focusing on how to plan for and prevent internal catastrophe, when perhaps all it really takes is a few days of aggressive rain to make everything we’ve worked for unravel in front of us.

Granted, manufacturers can’t foresee every turns of events, or create a completely airtight plan to save everything from every possible disastrous cause. That said, there are a few things to consider when it comes to mitigation strategies:

• Electronic back-ups: Not all disasters are the same, and in today’s web-based society, a technological disaster—like a server meltdown or a network hacker—can mean more problems for your day-to-day business than ever.
• Business continuity plans: Remaining flexible is critical, which sometimes means securing secondary suppliers or having options for alternate facilities that can take on more production work.
• Cross-training: When P&G was hit by Hurricane Katrina, it was able to get its Folgers business back up and running partly due to its consistency of operational processes. According to an interview with ComputerWorld.com, Jake Barr, an associate director of supply network operations at P&G, explained that this meant that personnel from other business lines could step in to help with operations without needing site-specific training.

Just keep in mind that disaster preparedness and response is not just something we ought to pay lip service to—and it’s definitely not something that we should shutter in a dusty binder for decades. Odds are your environment, personnel, production, and technology will change fast enough to keep chasing your disaster response plan into obsolescence if you’re not careful.

And unfortunately, our businesses will always be vulnerable to multiple avenues of attack. Before it reared its ugly head a year or two back, I never envisioned we’d be sending folks home from the workplace over swine flu scares. It’s also a bit alarming to consider how many of us still have teeth marks on us from recent economic disasters—much of which we could do little to pinpoint, let alone prepare for.

But if we’ve survived worse, then we’ve gained a little knowledge from it. In this case, if we can’t save the wildlife in the Gulf, maybe we can keep some manufacturers alive. Here’s hoping we can find a way to wash off all of this oil.

Has your facility ever had to face a natural or technological disaster? Email me at anna.wells@advantagemedia.com.

By ANNA WELLS, Editor, Industrial Maintenance & Plant Operation (IMPO)

As I drove down Madison’s Beltline highway last month in search of lunch, I saw some of the first signs of spring. The city-wide blanket of snow was beginning to look like a blanket soaked in beer and run across a dirty wood floor.

We’re used to having an ugly springtime here … Road dirt, salt and sand do exactly what you might expect when mixed with melting snow, which is to create a muddy, mushy stream that takes time and a good city drainage system to resolve. After the great melt, however, Madison can be seen at its most beautiful.

I was disappointed to see more than just dirty patches of snow along the highway: The emerging dead grass was peppered with garbage, from small items likely tossed from windows to actual bags of trash. The presence of this refuse didn’t become evident until its foot-deep cocoon of precipitation was no longer hiding its dirty face from the world. I must say it can put a bit of a damper on my premature reveling over a beautiful afternoon.

But it also got me thinking about how clean and organized a place can look when we have something to hide the garbage behind.
I wouldn’t air my dirty laundry here if I didn’t think we were all guilty of this, but … I have a drawer in my desk that I have internally marked “miscellaneous.” This drawer houses random business cards of contacts I may or may not call in the future, documents I have not had (or taken) the time to read, notes on article topics never pursued … You get the picture.

Whether it’s a drawer, a closet or an entire room doesn’t matter (OK … it does a little — anyone else seen that show Hoarders?). What matters is that we allow ourselves to ignore these tiny bits of trash simply by shoving them in a desk drawer or behind a closed door. If your facility’s “snow” melted, would there be a big pile of garbage underneath?  

And the even scarier part of this scenario is that your “miscellaneous drawer” might house just as much treasure as trash. Do you have a file of unpursued leads taunting you at your desk or an e-mail folder for follow-up that you avoid because of the time vacuum you already know it would create? How about the tool crib that nobody has time to organize? I can commiserate, but I also think it’s time to do some spring cleaning.

My parents recently announced that they are moving this summer and are now faced with packing up the house they’ve lived in for the past 15 years. I have been commissioned to help, and I’m embarrassed to admit, I still have a lot of stuff there. I’m actually kind of grateful for the opportunity to go through it all.

It stands to reason that if there are items of importance to me, they maybe shouldn’t have spent the last decade packed in a box in my parents’ attic. But I won’t know until I check ... And it’s finding the motivation to do it that’s so hard. It’s all too easy to live those words “out of sight, out of mind.”

To boot, and in the spirit of spring and melted snow (and a self-mandated hour block I’ve deliberately set aside to do this), I’m cleaning out my “miscellaneous drawer.” My bet is it’s not all just garbage in there … But it might be. Either way, it’s time to find out.

Do you have a "miscellaneous drawer” of your own? Maybe it's time to clean it out yourself. Let me know what you find at anna.wells@advantagemedia.com.

It is no secret that American manufacturers must contend with challenges many of their foreign counterparts don’t, such as higher labor and healthcare costs, pollution abatement fees, and relatively higher business taxes.

Add a shrinking skilled labor pool, and one can see why the U.S. manufacturing sector has turned elsewhere — i.e., outsourced labor overseas — to bolster its survival. This has been bad news for the overall well-being of the domestic manufacturing industry, a sector that remains a powerful economic engine and source of employment.

Of the more than $580 billion in business tax revenues in Fiscal Year 2008, almost $90 billion of that came from manufacturing firms, according to the Manufacturing Institute. That’s more than the tax revenues from the retail and communications industries combined.

However, those manufacturers who wish to stay at home and succeed here have the tools to do so. An increasing number of domestic manufacturers are countering the notion that one must turn to cheaper labor to reduce their expenses.

Instead, they have turned to lean manufacturing, which has increased their productivity, strengthened customer relationships and most importantly, kept jobs at home. To top it off, they don’t have to worry about paying the skyrocketing transportation costs that come with shipping those foreign-made parts back to the United States.

Flexible & Integrated

Lean manufacturing is effective because - when done right - it can make a business flexible and integrate its supply chain, which streamlines production flow and assists just-in-time delivery. But we should remember that although the continuous improvement philosophy behind lean manufacturing has seemingly limitless potential, it is not an immediate fix-all.

Businesses must make holistic and long-term commitments to these principles to stay on a profitable course.

Companies who have truly embraced lean manufacturing have incorporated it into their culture by focusing on improving cash flow, enhancing their organizations through leadership and continuous improvement, driving out operating waste and building a profitable sales pipeline.

For example, a Switzerland-based supplier of measuring instruments with U.S. headquarters in Greenwood, Ind., has exemplified this focus. Ninety percent of its products are manufactured in the United States, and the company is currently expanding its Greenwood facilities. The manufacturer credits much of their success to its commitment to lean principles.

It has dramatically improved its productivity since it adopted lean strategies, and in 2008 it reorganized its inventory and reduced it by 27 percent, making it that much more nimble in responding to customer demands. It improved its cash flow by increasing its inventory turns and also enhanced its operations by putting an emphasis on continuous improvement.

The company made "lean" a mindset adopted at every warehouse within its operations, and it continually seeks employee feedback, holds regular staff meetings to stay proactive and always sets higher goals.

A Columbus, NE-based manufacturer has also benefitted significantly from practicing lean strategies, specifically by driving out operating waste. This company took part in the Oregon Manufacturing Extension Partnership’s lean program, to streamline its operations in the long term. According to the Manufacturing Institute’s 2009 Facts About Modern Manufacturing report, this company rewarded employee feedback on how to increase operational efficiencies.

With this new insight, the manufacturer was able to take critical action. The company’s lead time dropped from a matter of days to hours, product changeover reduced from nearly 30 minutes to less than a minute, and employees became at least 29 percent more productive.

Onshoring Gaining Strength

Although increased foreign competition continues to drive U.S. manufacturing sector overseas, many are pulling operations back home to save on shipping costs. Known as onshoring, this rapidly-growing trend recently caught the eye of the Wall Street Journal, who reported that manufacturing behemoths such as Caterpillar, Inc. and General Electric are moving production home to save money.

With the dollar so weak, an increasing number of manufacturers find it is more cost-effective to consolidate manufacturing domestically and pay a higher working wage than to import foreign-made products back into the country.

Shipping cost savings aren’t the only motivation for manufacturers to bring their production back home. The federal government offers incentives to manufacturers who take this course of action. With tools such as lean manufacturing in their arsenals, manufacturers are more able than ever to create competitively-priced, efficiently-made products here in the United States,and it looks like the best and the brightest have already begun.

John W. Kemp is a Senior Managing Director in the Operational Improvement and Restructuring Division of Houlihan Smith and Company, Inc.

Chuck Mouranie is a Managing Director in the Operational Improvement and Restructuring Division of Houlihan Smith and Company, Inc.

By DAVID MANTEY, Editor, Product Design & Development (PD&D)

With all of the bribing in the news lately, it reminded me of a conversation I had with my grandfather a long time ago. It was back when I first read Tuesdays With Morrie and I was looking for anyone in the senior demographic to bestow wisdom upon me.

After many conversations with many men and women, the consensus was that they knew less than they ever had. We’re all wandering about this life in no discernable direction. The longer you wander, the more you realize how little you know.

While it seemed poignant when I made the note, I figured the literary knowledge bestowment market had been put on tilt by authors looking to help you before they help themselves. I was 24 years old at the time. Who takes life advice from someone who’s only been drinking for three years?

It wasn’t a new saying. On the topic of over-saturation, Hollywood had been selling the point before talkies hit the reel. As I filled out the supplementary school loan application (which still holds a higher balance than originally borrowed) and ignorantly discussed, with disgust, the role of money in pursuit of my own Morrie, my grandfather replied, “Money is everything and everyone has their price.”

Mobsters, hit men and spouses without options had been telling me this for years, but typically as the result of a loose gun-running plot with a secondary love tryst (see also: every other movie/serial television show). It was different to hear if from my Morrie, but I immediately began tallying personal price points for malicious acts — all of which have yet to be met. Bidders flirt with the idea, but given my lack of expertise and professional mercenary level of pricing, Craigslist seems to be the better option.

Now that James Delayo, New York City’s former chief crane inspector, is headed to up to six years in prison because the 10 grand in sweaty money to fake inspection and crane operator licensing exam results was too much to pass up, it’s time to contemplate pricing.

I’m not sure how deviously severe my actions could be as an editor; I’ll have to contemplate which fixes I could be in. Maybe a series dedicated to purchased poor reviews of a competitor’s product line – oh wait, corporations already hire blogger assassins to rail on anything not in the best interest of special interest groups. I’ll come up with an algorithm to include word count, connotation severity and context when determining a price point.            

I find it most interesting that many people are concentrating on how a man could throw away a 28-year career, which culminated at the top of the crane inspection food chain, for ten large. I could use $10K, but I’m trying to work my angle as a back alley editorial merc and I need the language patterns to jive.

Let’s focus on the career he threw away. After all, the body count didn’t reach double digits so he can’t be held too accountable. Delayo was arrested after the second of two huge cranes collapsed and killed nine people in 2008. According to authorities, the charges had to do more with shortchanging safety for profit than manslaughter. Had he not taken the bribes, wouldn’t those nine be alive?

According to his lawyer, Delayo is “devastated by what happened.” Oh happy day, the man has a soul.  

Am I wrong, or have the price points for bribery come down in this competitive market? Delayo's payoffs ranged from $200 to $3,000; maybe it is my remaining optimism that has me believing that it would take a lot more money to bribe the majority. Of course, no one is waving dollar bills in my face as I write this. And who knows, if that happens, I may never hit “publish” and this piece will remain an exercise in free association thought.

It’s important to remember that Delayo is not alone. A crane rigging contractor, an owner and a former mechanic have all been charged with manslaughter. Another inspector is also on the hook for false reporting.  

Everyone has a price, but fewer seem to have integrity. And because of MasterCard’s successful marketing campaign, it seems cheesy and outdated to call anything priceless, so we’ll dub it invaluable.

What’s your price? Leave dollar amounts and bids below or e-mail them to david.mantey@advantagemedia.com, and I’ll send you to an anonymous PayPal account.

At last month’s Advanced Biofuels Leadership Conferenc, we were privileged to have 48 CEOs join us — I don’t think more have ever been in one room at one time. We heard from Deputy Secretary of Agriculture Kathleen Merrigan — nominated by TIME Magazine as one of the “100 Most Influential People in the World” — who gave us an overview of the USDA’s vision for a continued revival of rural economies, improved energy security and reduced greenhouse gas emissions through the development of sustainable, advanced biofuels.

It is an important message — for biofuels will not succeed if they are not sustainable — economically, socially and for the environment — and we were delighted to have the Deputy Secretary share the USDA’s vision. 

Problems in the Fossil Oil Industry

In particular it is important that bioenergy becomes a catalyst for growth and change in developing economies. For we have known for some time that the future of the fossil oil-based economy is not a rosy one. The concept of peak oil has been around for some time — a mythical date after which oil production globally will reach a maximum and begin to fall. The U.S. government is beginning to discuss for the first time that such a maximum could be reached in the next two or three years.

If we have known for some time that the long-term outlook for fossil oils is tough, we have also had reminders that the near-term isn’t much better. The explosion of an offshore oil platform in the Gulf of Mexico caused a tragic loss of life, and is resulting in a massive oil spill that is being compared to the Exxon Valdez disaster in terms of economic and environmental impact.

Oil shocks and oil disasters — long before the world runs out of oil it experiences shortages and disruptions— and shortages express themselves in price volatility as economies lurch from frantic competition for resources to fuel economic expansion. The competition results in a run up of prices, which is followed by the inevitable collapse of economies, ruined by the high price of energy.

Developing Nations are Most at Risk from Oil Shocks

Like low-lying coastal areas in times of flood, it is the developing economies that are most at risk from price volatility, and high oil prices, and the absence of stability. In developed nations, loss of economic stability is known to trigger recession and change of governments. In developing nations, the economic and political consequences can be far worse.

So we have good reason, on economic grounds alone, to look to biofuels to offset our dependence on fossil-based oils for our transportation fuels. But we have energy security to consider as well, and the global effort to reduce greenhouse gas emissions. 

The Cost of Fossil Fuels in Military Expenditure and Soldier’s Lives

With respect to energy security, consider this: it is estimated that ten percent of all U.S. military casualties come from the delivery of fuel. Even if it were true that none of the deployments of U.S. troops had anything to do with the protection of Middle Eastern oil fields and the sea lanes that connect the West to them — even if it were untrue that the cost of fuel in forward military areas reaches $418 per gallon — the cost of delivering military fossil fuels is far too high in terms of human life.

The casualties are a direct outcome of the distance between oil fields and forward military areas. Biofuels have the potential to shorten supply lines, reduce costs, and save lives. Not to mention the reduction in the strategic value of certain bloody corridors the West feels obligated to defend, clear or secure.

So we have good reason, on energy security grounds, to explore the most effective ways to develop sustainable biofuels.

Food: the Product of Crops and Fuel

We have heard questions raised about fuel versus food, and it is proper that these questions have been raised. Let us not run away from them, or deny them, but listen to them, and respond.

We have heard concerns that the expansion of the biofuels industry in the Philippines would threaten the supply of cassava to food markets. Cassava, as we all know, is a vital staple food — not only in the Philippines but around the world.

But let us also remember that no one in the world eats raw cassava. Eaten raw, it forms a cyanide inside the body and causes severe sickness, and even death. It takes energy to turn cassava the crop into cassava the food. Plenty of energy. Food is what you have after you have applied energy to crops.

In many countries, energy is taken from forest biomass, converted into sticks to fuel a three-stone fire, and the forests are disappearing in Africa in ways that threaten more than long-term carbon counts. In Africa, wood collection is primarily the work of women and girls, and violence against women will increase when they have to roam farther from the village to find fuel for the cooking fire.

So let's not fall into the discussion of food versus fuel, because it is a false choice. We should instead be thinking in terms of food and fuel. They are interlinked in the village, and through fertilizers and tractor fuels, and through the global distribution system of food. We need both fuel crops and food crops, and badly, and now.

How Advances in Biofuels Benefit Good Sectors

Let me give you an example. At the Advanced Biofuels Leadership Conference, a company called Chromatin announced that they would deploy their gene-stacking technology towards the development of greatly enhanced yields for sorghum — a vital crop for both food and biofuels. The investment in Chromatin might never have happened without the potential of earning returns on the investment from both improvements in fuel as well as fuel. But the benefits will accrue not only in fuel production, but in food.

We recently heard about the use of camelina as a feedstock for aviation biofuels — with companies like United Airlines, American, Delta, British Airways, Lufthansa, and the FAA and Defense Energy Service Center joining us this week to detail their interest in new fuel sources. Wheat growers in the U.S. and Canadian plains are learning that camelina, used in rotation with wheat, can not only provide added income from the camelina crop, but can result in higher wheat yields for the food markets. 

The Vital Importance of Increasing Farm Income

But there is more to the story than advanced technology. Biofuels are a means of improving rural incomes, and income per acre. Not only because of the higher yields that come from technology, but the higher yields that come from improved agricultural practices, the kind that result from increased investment in land management and agricultural education. Higher yielding lands can be left fallow, and allowed to recover, or planted with a soil-restoring biofuel crop. Today, too often fields are planted desperate with cash crop upon  cash crops — in this way, they are driven to exhaustion and abandoned altogether, or converted to lower-value uses such as pasture.

We have heard much about the theoretical impact of land use change, when biofuels demand was supposed to drive higher prices are supposed to drive the conversion of pasture lands to crop lands. We hear less about the fact that the ethanol market in the U.S. continues to grow, yet we are looking at a two-year bear market for corn.

We hear still less about the devastating impact on small farmers in the developing world when exhausted land is dumped onto the pasture market, driving down land values and driving former farmers into the cities to become members of the new, global refugee class.

The Conversion of Prime Farm Land to Housing

We hear less about the conversion of 23 million acres of prime U.S. cropland to developed residential and commercial land in the last generation — releasing untold amounts of carbon into the atmosphere and taking a potential 3.5 billion bushels of corn off the market. Why, that’s almost as much as is used for U.S. ethanol production altogether. Yet we don’t hear about it. Because the discussion about land use change is rarely a scientific discussion, or an economics discussion — it is a political discussion.

Land Use Change from Biofuels: A Rich Man’s Argument

More than that, the analysis of the conversion of land use from pasture to crops is a rich man’s discussion. Only a rich man could describe the conversion of pasture to crop land as a tragedy — in a world in which children will go hungry tonight. Children in developing nations cannot eat pasture grass and cannot afford the meat that is raised there. Though climate change is a vital, brutal, scary issue — it can only be the most important thing in the world to a person who has never known hunger. To the hungry — and to the dispossessed farmers around the world whose land cannot yield the income necessary to keep them on the land — we owe a higher focus. We owe them an unrelating commitment to producing fuel to light their fires, power their farm vehicles, and given them products to raise their incomes.

The food crisis is not a crisis over a shortage of food — the world today produces more food per capita than at any time in its known history. It is a crisis of income.

Higher incomes produce smaller families, and smaller families consume less food, and can invest in better home and farm practices to reduce the carbon footprint. Though wealthy Westerners may not realize it, our world is still overwhelmingly a rural one, and no crisis of income can be resolved without addressing incomes on the farm. No crisis of stability can be resolved, no population explosion addressed, no real carbon solution deployed — until we have addressed the fundamental issue of rural income, which is also a key to human dignity. And no future is worth risking another era in which people are denied their human dignity.

Those who wish to lock carbon in the earth must first unlock the value in land.

But it takes more than a handful of advanced biofuels technologies to unlock land value — whether it is from marginal land, or using crop, forest or animal residues. It takes land itself — and a special type of land. The type of land that you find in the Philippines.

You Have a Friend in Bioenergy

If you have land with plenty of rainfall and sunshine and heat, you have a friend in bioenergy.  Wind curves and insolation may not be ideal in the Philippines for solar and wind, but biofuels are made from crops that thrive in your conditions.

If you have land that grows sugarcane — that classic high-yield energy and food crop that has been magnificently improved in countries like Brazil and India — you have a friend in bioenergy. Advanced biofuels may use your sugarcane syrup, or not — but it will definitely provide you with options for higher income from your sugarcane bagasse.

If you have land that is flat in character and situated in the tropics, you have a friend in bioenergy. Even if your land is not productive for high-value crops, it may prove excellent for the production of microchips using lemna, algae, yeast or cyanobacteria as a platform.

If you have oilseed crops — you have a friend in bioenergy. Advanced biofuels not only use the oils, they can use the palm waste, the jatropha waste or the coconut waste. Any country with agricultural wastes can and should seek to maximize the income potential from biofuels. In bioenergy, residues are king. 

Food for All, Fuel for All

Our work will not be finished until every farmer’s income in the world provides a dignified, worthy living. We need fuel to turn crops into food, food for all who need it, and fuel for an advanced society. Only an advanced society can provide the citizens of every nation with the education, science and business leadership it will need to compete successfully in this century and the future beyond that.

Our work may not be complete for a long, long time. But it has begun, and it will continue, and it will succeed because technology will always find better ways to use land, and produce enough for all. As it was in prehistory, it will become again in time — we can build a world in which the living Earth can once again provide for all her children — and the fossil earth will be a resource we no longer need to tap.

Let us look at these conversations as a beginning — not as an end — and not consider that our conversation has concluded until we have forged all the partnerships that we can, based on the principles of economic, environmental, and social sustainability. The communities we represent deserve no less than our maximized effort to deliver the highest, best use of the land. Let us make sure we do it, and do it right, and start now.

By PAUL LIVINGSTONE, Senior Editor, R&D Magazine

In 1957, the Russians launched Sputnik. Two students at the Advanced Physics Lab at Johns Hopkins were able to find the signal that the Russians were broadcasting from the tiny satellite, and used it find the exact location of the silvery ball. It was a harmless trick until the government asked them to reverse the method to find objects on the ground. The purpose? The military wanted a way to locate nuclear submarines anywhere on Earth. The basis for Global Positioning Systems, once a top government secret, is now used to find Starbucks.

In 1976, Steve Sassoon used the newly-invented solid-state imager—a charge-coupled devices—to build the world’s first digital camera. More than 1,000 patents followed, but it took Kodak more than 25 years to abandon its reliance on film and recover lost ground.

These anecdotes heard from author Steven B. Johnson and Sassoon at Front End Innovation 2010 reveal just how difficult it is to pin down the concept of innovation. Now in its final day at Boston’s World Trade Center, the conference connects primarily entrepreneurs and product developers to several dozen speakers from companies as disparate as Ericsson and Nestle, Target and Google. The key quest for most attendees was finding a quick and effective path to a profitable (there’s one definition of innovative) product.

Perhaps the best example of what they were looking for was toted around by a good number of trendy tech hounds: Apple’s iPad. But while no representative from Cupertino was on hand to share their product development kung fu, it’s clear that even companies with a far lower profile wrestled constantly with the unceasing mission to bring innovative products to customers.

One of the most interesting perspectives came from Jurgen Seitz of United Internet Media, who quickly reviewed the characteristics that defined his most successful clients. He says his digital media company, which helps other companies launch software products, has noticed that the companies that succeed best do not waste time writing out an in-depth business plan. They also don’t set specific product goals. They don’t even test prototypes internally. Instead, they find a way to make a product as quickly as possible and use the public to test it.

Software is a constantly evolving product that typically must swim or die, so there is a lot of sense to this approach. But for manufacturing firms, I think, the notion of putting product prototypes out on the market without considerable in-house development would be far too scary a notion. And for biotech or medical, it might be illegal. In his presentation, Seitz used as one of his slides a clay mock-up of a car—I don’t think car manufacturers will take up this approach anytime, but they could certainly use some customer feedback on the software they use in the dashboard.

Also compelling were the tales of big companies trying to grapple with fundamental shifts in technology. Nestle USA, for example, is trying to gauge the impact of nanotechnology on its food products. More than a dozen food products now use nanotechnology in the packaging, including a ketchup bottle coated so that the product slides out easily. But nano-engineered products haven’t yet entered the production of the food itself, said Olga Patel of Nestle, but it’s only a matter of time before they do.

Even Google, which held an open-ended presentation on the crucial role that conflict has in idea generation, is clearly uncertain about where to go in some of the world’s most rapidly changing markets. They have identified them—Surit, India; Beijing, China; Lagos, Nigeria—but how to address the needs of people who live there with technology that is both effective and affordable is going to be difficult. To help them out, they’ve defined a design philosophy that breaks down what goes in to a “Googley” product.

Some of the other top topics at Front End Innovation:

Open Innovation, OI: It was on the tip of everyone’s tongue, and often part of the pitch made the numerous innovation software vendors exhibiting at the event. Incubators, ventures, partnerships, open collaborative campuses—these and other strategies for accelerating both the idea process and product development had wide appeal among even the largest companies. At the conference Xerox probably exemplified this approach the best, having privatized the Palo Alto Research Center for economic sustainability, but also opening research centers around the world.

Sustainability: More than one company (notably Unilever) talked about they want to grow business but without growing environmental impact. The key, they said, was to make “green” part of the entire value proposition of a product, instead of an added cost.

Public relations: We all know that effective communications are crucial when selling products to customer. But it’s important to the innovation process as well. Steve Sassoon of Kodak illustrated this well in his talk about the nearly 20 years between the invention of the digital camera and its first commercial introduction to the public.

Product Development: As I mentioned earlier with Seitz’s experience, the notion of abandoning business plans, ditching product goals and cutting straight to testing new products against the public is a scary thought for most companies. But for the right kind of product, this can break a company out of costly delays and unnecessary introspection. Time is also a factor: the average time to launch any new product is close to 12 months. Shaving months or even weeks away can make the difference.

What inpires you to innovate? Drop me an e-mail at paul.livingstone@advantagemedia.com.

The 6th annual Midwest Product Safety & Liability Prevention Conference will be taking place at the Sheraton Gateway Suites by O’Hare Airport in Rosemont IL July 14 and 15. Randall Goodden answers questions about who will be there and how it will help manufacturers reduce product defects. 

No. These Conferences are intended for manufacturing management. For the most part they are continuing education for manufacturing management that have already attended the Product Safety, Recall & Product Liability Prevention seminars being taught across the country, and designed for general management, general counsel, engineering, quality, reliability and product safety personnel — although they have also been highly popular to many of the major insurance companies.

Aren’t Product Liability Preventive Efforts Pretty Much Common Sense?

In the criticism of the bailed out Wall Street bankers for their continued obscene spending and executive bonus programs during the 2009 recession, President Obama repeatedly stated, “They just don’t get it”.

How can they carry on the same practices that contributed to their financial downfall, right after the tax payers bailed them out?

The same can be said about the countless manufacturers that are each year faced with unbelievably large product recalls, huge fines from regulatory agencies and ultimately record setting product liability and class action lawsuits – “They just don’t get it.”

Unlike Wall Street bankers, they’re not doing it intentionally, but largely out of ignorance.

It doesn’t matter whether it is a huge multi-billion dollar international corporations, or smaller $30M companies, many of the problems are the same for both, which is continuously evident when you analyze the reasons why products are being recalled.

Leading Causes of Product Problems

The vast majority of product recalls are due to ‘Defects in Design.’

We just keep failing to recognize all the potential problems with new product designs, as well as how to really conduct design reviews and product safety analysis. That’s only part of the issue, as there are also problems with:

• The adequacy of warnings and instructions.
• Manufacturing defects.
• Marketing defects.
• Problems with contracts and agreements.
• Major issues with documents.
• Oversights and lack of control with suppliers.

The list goes on and on.

None of these problems fall under “Common Sense” — otherwise it wouldn’t keep happening. They especially wouldn’t keep growing in size as all of the issues are finally played out in the courtroom, with the number of product liability cases ultimately costing many manufacturers hundreds of millions of dollars.

Recall Trends

Product recalls for consumer products have gone up every year for the past 6 years, not only in the United States, but throughout Europe as reported by RAPEX.

One of the common misconceptions is that there are so many recalls because there are so many products coming from China.

Not true. Even though the Consumer Product Safety Commission (CPSC) form lists the “country of origin” and 40 percent of all consumer products as “Made in China,” it leaves a false perception that China must be the problem.

In 2007, a major year for recalls, and the year that really put China in the spotlight especially for toy recalls (80 percent coming from China), it was found that only 30 percent of the fault with the toys was actually that of China’s (lead paint), and the rest was due to the faulty designs given to China by a couple of our leading toy companies.

As a result of this international incident, I was asked by Chinese government agencies to come to China throughout 2008 to teach Product Safety Seminars in five major cities from Beijing to Guangzhou. I helped Chinese manufacturers learn to identify defects in designs, whether they designed the products or the product designs were given to them by companies outside of China. The seminars have been ongoing ever since.

One of the hundreds of products recalled in 2009 was the drop-sided baby cribs (2.1 million units). It was found that the drop-side of certain designs could become disconnected from the holding brackets, allowing the baby to try to squeeze out of the opening and in the process get its head stuck between the main frame and the drop-side portion.

Some of the causes of failure included the fact that the drop-side could have been installed upside-down by the purchaser, or when the purchaser assembled the crib, they may have misassembled some of the hardware or missed pieces of the hardware in assembly; they could have installed some of the pieces of the hardware upside-down; plastic hardware could break; any of which could then lead to faulty securement and potential separation, and ultimately to a fatal accident.

Now, the entire concept of a drop-side is no longer allowed by the CPSC.

When you review the massive numbers of recalled products, you read things like, “1 million baby strollers being recalled because when the owner unfolds and opens the stroller the hinge in the center of the frame can cut-off a child’s finger.” In fact, it did so to 12 small children.

Recognizing potential pinch-points is a simple product safety hazard to identify. Where was the management team to catch and prevent that from happening? Was there any team that ever reviewed the design?

Compliance with Regulatory Requirements

Some products in specific industries, such as consumer products, automotive, food and pharmaceutical have to be designed and manufactured in compliance to that industry’s regulatory requirements, which is wrongly viewed as the only safety requirement the manufacturer needs to really focus on in design. Such regulatory requirements offer no guarantee or assurance that the product is then ‘safe’.

The legal community looks at regulatory requirements as a ‘minimum requirement’, and fully expects the manufacturer to not only comply with voluntary and regulatory requirements, but go above and beyond any such requirements to ensure its products will be safe and reliable for intended uses — as well as to consider foreseeable misuse hazards.

Every design has unique elements that the regulatory agencies will never review or be aware of, or have the capability of recognizing, to determine if those elements could potentially be harmful. This is what the government agencies and legal community fully expect the manufacturer to determine.

Manufacturers need to realize that regulatory requirements pertain to all products in a general classification, such as: how high the drop-side rail has to be above the crib mattress in the highest position as well as how high above the mattress it has to be in the lowest position, the maximum distance vertical slats and corner posts can be apart from one another, the required strength of the vertical slats, the safety of any hardware the child is assessable to, acceptable surface finishes, mattress sizes, and a few other general design requirements, but they’re not going to address unique design features of any specific product.

The types of mechanical hardware used, how the hardware and locking mechanisms will work by design, and countless other design features will be unique to the specific crib model, and unknown to the regulating agency.

There are numerous problems within corporations around the world, and design issues with the simplest of products — not to mention the complex electronic products, industrial products and automotive products.

‘Defects in Design’, or ‘Defects in Manufacture’ are only one part of the problems manufacturers face, but if you don’t acquire the education necessary, you will continue to live in La-La Land, convinced you’re doing everything possible, and that such preventive efforts are “common sense.”

We can always sit and watch the statistics continue to grow over the next six years, which isn’t bad at all, if you’re a lawyer.

Randall Goodden is the President of Goodden Enterprises LLC and Randall Goodden International, is the author of the three best-selling books on the topic over the past 15 years, and is recognized around the world as the leading authority on Quality, Product Safety & Product Liability Prevention.

By JOEL HANS, Associate Editor, IMPO

Fan of the Obama administration or not, it’s clear that we need a new direction on our country’s manufacturing policy. We’ve needed one for a long time, actually — before President Obama took office, and before President Bush won for the first time in 2000. It’s not a matter of Democrat vs. Republican. I think every rational person in this country can agree that manufacturing is critical to an American economy and that something has to change.

Instead of appealing to the usual suspects for advice on making policy, the Obama administration has decided to do something different. Under the Open Government initiative, this administration has opened up the floor to the people actually involved in manufacturing’s nuts and bolts. The idea is simple, and it’s called “crowdsourcing.” Instead of hearing policy ideas from CEOs who pull in more than a million dollars a year, this administration wants the men and women in manufacturing to make proposals and vote on what they consider the most beneficial ideas toward a comprehensive manufacturing policy.

Sounds simple, huh? It is. Just head over to the website, register for an account, and start voting. Better yet, start making your ideas heard.

I know there’s a lot of lingering doubt over the government and its attention to regular citizens — distrust among the people is at impressive lows.

Manufacturers wonder if the government will enact the correct policy to stem the tide of operations moving overseas, and it’s a fair concern. While some favor ramping up protectionism to prevent imports from the likes of China, others believe that opening the markets to increased free trade, free of tariffs, will reinforce America’s manufacturing prowess. Everyone seems doubtful that the government is listening at all. Doubt and pessimism don’t get us very far, though.

Think about your business. When the economy started to tank, what did you do? Did you just accept guilt and do nothing to even mitigate the damage? If you did, well, you’re likely not in business any more. The smart-thinkers and the truly successful are ready and willing to face the next Great Depression if we have to, because they’re ready with new ideas and strategies to fight all these losses in American manufacturing.

You, too, must have some ideas wandering around in your head. Maybe they seem a bit silly to you, like my idea that we would be a lot more productive as a country if we got free ice cream every time we crossed something off our to-do list. I know I’ve been padding my list just in case the call comes down from the freezer. But who knows? Your “silly” idea might have traction, and if you put it for the crowd to analyze and decide upon, you just might help shape the future of our manufacturing policies. You might even become the next manufacturing “czar.”(If you’re uncomfortable with that name, you can also choose to be called the “manufacturing ace-in-the-hole” or the “manufacturing big enchilada.”)

I don’t expect this idea of the Obama administration crowdsourcing our manufacturing policy to go over well with a good portion of Chem.Info's readers. But if you would rather spend your time writing me a negative comment about the Obama administration than registering a suggestion or voting on the already-posted topics, you’re doing everyone, including yourself, a disservice. As far as I know, I’m not yet the “manufacturing big enchilada,” so your opinions don’t go any further than my inbox.

So instead of hitting “send,” head over to the website and put your idea on the table. Or comment on what is already there. At least submit a few votes to the ideas you think are most important to you. Consider this a rare opportunity to help shape policy that would otherwise be relegated to high-falutin organizations and members of Congress. How often do we get the opportunity to have our voice heard about all the noise and distraction of 21st century life? I like to consider myself an optimist, and one idea from an otherwise unknown manufacturing operation in the quiet corn fields of Ohio can do, well, just about anything.

To appease the email-loving types, you can always send me a message at Joel.Hans@advantagemedia.com. But I’ll be sorely disappointed if you ping my inbox before at least giving this crowdsourcing thing a chance.

By LUKE SIMPSON, Associate Editor

Last week’s earnings reports for the big chemical companies were flush with big profits, signaling a turnaround for not only the industry, but the economy as a whole. Share prices shot up and things were looking rosy:

• Dow Chemical’s first-quarter sales rose 48 percent.
• DuPont announced first-quarter profits were up 15 percent, prompting the company to boost its 2010 earnings forecast.
• Eastman Chemical’s earnings were 50 times higher than a year ago.

The next thing you know, the market goes into a freefall, dropping nearly 10 percent — the biggest point drop ever seen — before shooting back up about 7 percent.

I happened to be checking some of my shares when the you-know-what hit the fan. An indexed fund I bought into about a year ago was sitting pretty at about $52 a share until about 2:40 p.m. yesterday when it fell off a cliff to $0.13. Suffice it to say I was sweating.

Then just as quickly as it started, my fund was back up to $51. It’s hard to say exactly what happened, but it felt like the machines had taken over.

A lot of reports point to Procter & Gamble as a trigger for the collapse. The company’s well-liked shares have been steadily increasing above $60 for the last month, but suddenly dropped to $39.37.

Procter & Gamble’s management stated that it thinks the low share price was an error, leading to the question: Was it a computer glitch or the so-called “fat finger” — human error that resulted in a $16 billion sell order instead of the intended $16 million?

And how much of the subsequent drop-off was panic and how much resulted from the safety mechanisms built into trading programs, which are designed to sell a stock if it dips below a certain level?

The NASDAQ reported overnight that it will cancel trades that rose or fell more than 60 percent between 2:40 and 3 p.m., indicating that something less than legitimate was going on.

It wasn’t until I left work that the ridiculousness of the situation dawned on me. We now have a highly automated electronic trading system that can throw the entire market into chaos in 60 seconds flat.

I can handle the fact that the market and the “real economy” are often not in agreement, and I can even accept the fact that debt problems in a small pocket of Europe affect us the way they do, but I’ll never trust anything without a conscience, be it a computer or the greed-driven traders that program them.

Did you survive the crash of 2:45? Are we losing control of a system that is already too volatile? Send me an e-mail at luke.simpson@advantagemedia.com.

The economic stimulus of 2009 was partly supposed inject a little nitrous oxide into the burgeoning green energy sector. And judging by prior performance—a wealth of new turbine farms in Texas and solar energy in the Southwest—made possible through healthy profits by utilities and favorable tax credits, the future would be only slightly slowed by the Great Recession.

But the jury's still out on whether green energy is the future of U.S. jobs. And we’re still not sure which green jobs those will be.

News that BP will shutter its last U.S. solar plant comes a short while after an announcement by A-Power Energy Systems that their new wind turbine factory in Nevada would create 1,000 jobs. The up-and-down news highlights the big differences between these energy sectors.

Wind turbines are large, complex mechanical installations that are more cost-effective to produce in the country where they'll be used. Siemens, for example, recently said they would be investigating the possibility of a big turbine manufacturing plant in the UK as a way to capitalized on anticipated demand for wind energy in that country.

However, wind turbines are subject to the volatility of certain commodities, and the investment plateau is much higher. Then there’s the maintenance on a 300-foot-tall rotor-gearing mechanism.

Solar cells, meanwhile, while comparatively cheap, have butted up against an efficiency barrier. Breakthroughs in recent years have depended on highly-customized architectures—delicate nanostructures—or expensive materials—indium and gallium. The conventional amorphous or crystalline silicon solar cell module, meanwhile, has plummeted in price. Demand initially encouraged companies to get into the business big time, but in the long-run they’ve been hurt by low prices. Hence, the quest begins for cheaper labor.

I don’t think this is necessarily a bad thing. Solar cell technology will continue to change, and silicon is not exactly the greenest manufacturing method around. Wind turbines, meanwhile, are complex machines with a level of technology that demands higher skills to go with the higher wages. Owning expertise in wind energy—from gearing manufacture, to blade materials, to smart grid technologies—is definitely a long-run plus for the U.S.

Solar will continue to grow. The existence of schemes like feed-in tariffs, which cities like Los Angeles are considering to stimulate their uptake of solar energy, will guarantee. But the notion that solar or wind will in the short term overtake other energy sources is fiction: the recent announcement to allow expansion of domestic coastal oil-drilling is evidence of that. (Ed: This column was written before the oil rig disaster in the Gluf of Mexico was fully realized — there may be hope for solar and wind yet!)

But despite the costs, the future seems bright for wind energy. If we can support the investment necessary to build a networked system of wind turbines, such as one proposed recently for the East Coast, we might not have to drill for oil there.

By KAREN LANGHAUSER, Editor

My parents started smoking at age 18, and have told me countless times that they really were not fully aware of how dangerous smoking was when they started. While in no way were cigarettes promoted as good-for-you, even in the 70’s, in my parents’ defense, their decision to become smokers did predate extensive anti-smoking campaigns, as well as the abundance of medical research today’s consumers have on tobacco usage.

New legislation was just proposed by the Australian government that would force tobacco companies to use plain, logo-free packaging on their cigarettes, in an attempt to make the products less attractive to consumers. The rules, which would not take effect until July 2012, would ban tobacco companies from including logos, promotional text or colorful images on cigarette packages. Cigarette brand names would be relegated to tiny, generic font at the bottom of the package.

While it might seem insensitive to consider the economic implications of such a law, especially when human lives are at stake, I can’t help but point out that this law will seemingly render cigarette marketing obsolete, as brand awareness will be nearly impossible with plain, logo-free packages. The tobacco industry, like any industry, is highly competitive, and brand loyalty is important for sales. It seems though, that this is exactly what the Australian government is looking to do -- decrease cigarette sales.

Despite the fact that cigarette makers are producing, marketing and selling a product that kills five million people globally per year, tobacco manufacturing is a legitimate, legal business. In the U.S., the manufacturing of cigarettes alone employs over 15,000 Americans, many of which have mortgages to pay and families to feed. I know no one wants to pity the wealthy cigarette execs, but there are a lot of blue collar employees involved in the manufacturing process whose livelihoods depend on sales in the tobacco industry.

Any time government mandates are proposed, I always wonder why we are always assuming consumers are stupid and gullible. Today’s society (in both Australia and the U.S.) is flooded with information about the dangers of smoking – from television ads, to billboards, to entire educational programs in our schools. The world is certainly not ill-informed about the risks of smoking.

I am willing to bet that not a single smoker buys a pack of cigarettes thinking it’s a healthful decision. They buy them because they are addicted – and I firmly believe today’s society is too well-informed to make the ugly decision to start or continue these addictions based on pretty packaging.

What do you think about cigarette advertising? E-mail me at karen.langhauser@advantagemedia.com.
Don't agree with me? Read Amanda Earing's take on the issue: Tobacco Battles Burning Out

By AMANDA EARING, News Editor, Manufacturing.net

Recent legislation proposed by the Australian government would force tobacco companies to use plain, logo-free packaging on their cigarettes, in an attempt to make the products less attractive to consumers.

But Australia isn’t the first government to regulate tobacco in effort to stomp out the industry’s hold on the health of millions of consumers.

In the U.S., the Food and Drug Administration now has full authority to regulate the tobacco industry and has already banned flavored cigarettes. This June, tobacco companies must reveal their formulas for the first time, just as drugmakers have for decades. Manufacturers also will have to turn over any studies they've done on the effects of the ingredients.

Despite well-known health effects, tax increases, and numerous anti-smoking campaigns, tobacco manufacturers continue to battle government regulation and argue that decreased cigarette sales will destroy hundreds of thousands of jobs in a legitimate, legal industry. U.S. tobacco manufacturers have rallied together and filed suit to halt the FDA’s efforts to limit their marketing, claiming the new law violates their right to free speech.

But instead of fighting government efforts to help eradicate an addiction that kills five million people globally per year, perhaps tobacco manufacturers should be looking at ways to keep their industry alive. Tobacco, as a plant, has many other uses.

Nicotine in tobacco form is linked to millions of death from cancer, heart disease and emphysema, but recent studies show the drug may benefit neurological disorders such as Parkinson’s disease.

Other researchers have been working on a method to modify the tobacco leaf for use as a biofuel, which scientists argue would alleviate dependence on major U.S. food crops such as corn and soybeans as alternative fuel sources.

VHS has gone the way of Blu-ray, CDs to MP3 players, typewriters to computers. Products come and go, but those industries that are innovative and look for alternative uses for their products will survive. Even the publishing industry scampers to adapt from print to a Kindle and internet-driven world.

Tobacco companies need to take a page from history. As tobacco production continues to decline worldwide, the industry’s argument that more government regulation will destroy jobs is futile — a losing battle. Tobacco companies needs to spend less time fighting social and federal efforts and more time looking for ways to become a positive force in a growing health- and environmentally-conscious global marketplace. Or else, the industry will just burn out.

To sound off on the issue, please e-mail Amanda Earing at amanda.earing@advantagemedia.com. Tomorrow, read Karen Langhauser's alternate take on the issue.