NC officials seek ways to boost shrinking manufacturing sector

jmurawski@newsobserver.comFebruary 9, 2013 

  • Emerging Issues Forum

    The 28th annual Emerging Issues Forum is dedicated to sustaining North Carolina’s manufacturing base. The event at the Raleigh Convention Center is sold out but can be followed online at:

    The Twitter hashtag to participate is #MfgWorks

    Topics include emerging manufacturing niches, such as living organs, and educating the state’s manufacturing workforce.

    The sessions run from 8 a.m. to 5 p.m. Monday and from 8 a.m. to 2 p.m. Tuesday.

    Speakers and presenters come from government, academia and industry. The participants include:

    Chris Anderson, CEO, 3D Robotics & Former Editor, Wired Magazine

    Will Powers, executive vice president and chief financial officer, Rolls-Royce North America

    Andrew Liveris, president, chairman and CEO, The Dow Chemical Company

    Tom Kurfess, assistant director, Advanced Manufacturing, Office of Science & Technology Policy, Executive Office of the President

    Lonnie Love, group leader, Automation, Robotics & Manufacturing, Oak Ridge National Labs

    U.S. Sens. Kay Hagan, D-Greensboro, and U.S. Richard Burr, R-Winston-Salem, and former Gov. Jim Hunt

Tipper Tie, an Apex shop that makes food service equipment, called an all-hands meeting a few years ago and announced: Workers would no longer be treated like assembly-line automatons. Instead, employees were given the authority to call the shots and make decisions – even shoot down the boss’s ideas at company meetings.

The result has been a company-wide productivity boost that has saved a day a week in wasted labor in one department. A change in another workplace procedure saved the company $280,000 a year in overtime costs.

“We wanted to have 140 skilled problem solvers,” said vice president William Roy. “We were in a culture of ‘Do what I told you to do and wait for me to tell you what to do next.’ ”

The Tipper Tie story illustrates what North Carolina officials see as manufacturing’s future in the state.

They are also pushing hard to redefine manufacturing as a thinking-person’s career. State officials have given up on saving the traditional blue-collar jobs that had sustained local communities in earlier generations.

“The reality is North Carolina and the United States will never be able to compete for these jobs,” said Lew Ebert, CEO of the N.C. Chamber, the state’s business lobby. “What you want is an economy of knowledge workers.”

Much of the menial work has gone overseas to be performed by low-wage floor crews. Other types of manufacturing jobs have been wiped out by automation, robotics and technological efficiencies.

The jobs North Carolina economic planners want to keep are computerized and sophisticated, in such areas as pharmaceuticals, semiconductors, components and a plethora of specialty products. There is no giant manufacturing industry to dominate the field as textiles, furniture and tobacco once did in their golden age.

This week, executives, academics and policymakers will gather in Raleigh and spend two days discussing the state of manufacturing and its future in North Carolina. The organizers of the state’s 28th annual Emerging Issues Forum will spend a portion of the symposium promoting North Carolina’s manufacturing base to potential employers.

Shrinking sector

North Carolina boasts the nation’s fourth-largest manufacturing economy, even though the underlying trend has been alarming business leaders and government officials for years. In just 20 years – between 1990 and 2010 – the number of manufacturing jobs here has plummeted from 823,900 to 432,200. A thriving sector that in the 1960s accounted for 25 percent of all the state’s jobs has fallen below 10 percent.

“It’s fair to say the manufacturing proportion of the North Carolina labor force will shrink no matter what we do,” said Peter Coclanis, a professor of economic and business history at UNC Chapel Hill. “These are bigger forces than any state or any country can manage.”

Not everyone is embracing the philosophy of ultra-efficient manufacturing, even if they acknowledge its inevitability. Ted Hall, founder of ShopBot Tools in Durham, said some workers in the new manufacturing economy are low-skill grunts, glorified for operating a computer, but permanently on the verge of obsolescence. For this contingent, he said, the main difference between then and now is reduced job security.

“That’s all they learn, said Hall, whose 30-employee company makes digital fabrication tools. “It’s good for two years until that piece of equipment is replaced.”

Since 2008, North Carolina has trained more than 91,000 manufacturing workers, at a public cost of $37.5 million, to help workers keep their jobs in the state’s dramatically shrinking manufacturing base.

Tipper Tie, for example, received $158,458 in training for Lean Six Sigma and other productivity enhancement training. Two sessions, conducted between October 2009 and June 2012, included 234 employees, with some workers attending both sessions.

The transformation at Tipper Tie is the result of dozens of changes, most of them self-evident but unimaginable in the old top-down culture. For example, Kevin Beasley, an assembler, led a group of colleagues to create color-coded bins to hold machine parts the company uses to build food service equipment.

“We’d stand around a cart for 5, 10, 15 minutes just looking for a part or sub-assembly,” Beasley said of the way things used to work when mechanics fished for parts out of cardboard boxes.

Roy, Tipper Tie’s vice president, knows that some will wonder why the state government is subsidizing training to help private companies boost their profit margins. He said the economic gain and tax boost repay the state many times over.

Service Thread, a Laurinburg company that makes industrial thread and filaments, has 24 workers enrolled in a program that costs $28,800 to the community college system. The workers will spend about five weeks getting trained on complex Italian equipment that cost the company $465,000. The training is provided by a representative of the vendor, along with a translator.

Service Thread is also making a cultural transition from old to new manufacturing. The company several years ago enrolled its workers in literacy classes at Richmond Community College after reading-comprehension testing showed that about 40 percent of the workers read below the 8th grade level. Such reading levels would have been common in manufacturing years ago, said Jay Todd, the chief operating officer. Now, less than 15 percent of the company’s workers read below that level, he said.

Service Thread, with 102 employees, is on track to put about 200 people through customized training by 2015, an average of two training sessions per worker.

“I don’t want anybody here who’s going to get into a monotonous phase, going through the motions with their blinders on,” said Ryne Bullock, a 28-year-old production manager at Service Thread. “I want people to be engaged, knowing what’s going on, asking why and talking to me.”

Siemens, a global energy conglomerate, has received free community college training for 3,620 individuals valued at $1.1 million.

Siemens employs 1,550 at its turbine and generator factory in Charlotte, nearly half of them blue-collar manufacturing jobs, often straight out of high school. They operate lathes, boring mills and other complex equipment and are paid between $10-an-hour and $25-an-hour.

These employees are put through a battery of training courses that Siemens calls “mechatronics,” a program leading to a 2-year associate’s degree.

Getting one of these jobs requires passing a screening exam in literacy, math, mechanical aptitude and other basic skills. Only 10 percent of applicants have an adequate high school preparation to pass the Siemens exam, said Mark Pringle, director of operations for Siemens Energy in Charlotte.

“They’re just not training these skills in high school,” Pringle said.

Murawski: 919-829-8932

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