3. 4 5
Accelerating
Growth
Accelerating
Decline
Decelerating
Growth
Decelerating
Decline
• Ventilation, heating, air
conditioning, and commercial
refrigeration equipment
• Engine, turbine, and power
transmission equipment
• Private nonresidential
construction
• Household appliance
• Communications equipment
• Semiconductors
• Iron and steel products
• Oil and gas well drilling
• Pharmaceuticals and
medicines
• Construction machinery
• Aerospace products and parts
• Paper • Basic chemicals
• Public works construction
• Alumina and aluminum
• Electronic computer equipment
• Medical equipment and
supplies
• Industrial Machinery
• Material handling equipment
• Motor vehicles and parts
• Navigational, measuring,
electro-medical, and control
instruments
• Fabricated metal products
• Housing starts
• Mining and oil and gas field
machinery
• Metalworking machinery
• Electrical equipment
• Electric lighting equipment
PRODUCTION GROWTH
according to the Manufacturer’s Alliance for Productivity and Innovation (MAPI Foundation)
*includes computers and electronics
**accounts for the vast bulk of value-added in the sector
BUSINESS CYCLE PHASES
(MAPI Foundation)
U.S. MANUFACTURING
OUTLOOK
This chart from the Manufacturers’
Alliance for Productivity and Innova-
tion shows the annual level of activity
over the last seven years and analyzes
this measure of business activity in
the context of the more stable annual
change. It also illustrates the cyclical
position of each industrial sector.
The MAPI Foundation, the research
affiliate of the Manufacturers Alli-
ance for Productivity and Innovation,
released its end of the year quarterly
economic forecast, predicting that
inflation-adjusted gross domestic
product will expand 2.8% in 2015
and 3.0% in 2016. Manufacturing
production is expected to outpace
GDP, with anticipated growth of 3.5%
in 2015 and 3.9% in 2016 (an increase
from 3.6% in their August report).
This November 2014 report fore-
casts a five-year horizon in which
GDP is expected to average 2.8%
and manufacturing production
to average 3.26% growth.
THE BIG PICTURE:
5. 8
The Ohio Manufacturing Extension Partnership (OHMEP) conducted re-
search across Ohio to better understand the challenges facing Ohio man-
ufacturing leaders as they look ahead to 2015. Both a quantitative survey
and qualitative (focus groups) were conducted with executives from Ohio
small manufacturing enterprises (SME’s) across 18 counties. These man-
ufacturers included companies with greater than 50 employees and less
than 50 employees with the majority having less than $50 million in sales
per year. Like many Ohio manufacturers, these companies machine prod-
ucts for a wide variety of industries: automotive, aerospace, consum-
er products, agriculture/food processing, energy, instrument/controls/
electronics, biomedical and others. Thus respondents engaged in various
types of machining (3-, 4- or 5- axis) lathes, milling, turning centers and
grinding machines. This OHMEP study is summarized in this report.
TOP 3 CHALLENGES FACING OHIO MANUFACTURERS:
• Upgrading skills of their workforce
• Changing customer expectations
• Dealing with changes in the regulatory environment
TOP 3 DRIVERS OF PROFITABILITY DECREASES:
• Customer expectations on Delivery time
• Customer expectations on quality and product variety
• Customer expectations on process complexities
TOP 3 INNOVATION FOCUS AREAS FOR
OHIO MANUFACTURERS:
• Ability to work with new materials
• Ability to improve quality and cost processes (includes
machine monitoring and preventative maintenance and
customer/supplier communications erosion)
• Entering new markets
TOP 3 WORKFORCE ISSUES:
• Applicants lack the appropriate skills and training
• Applicants lack enough experience
• Applicants lack soft skills (Communication, enthusiasm)
UNQUALIFIED APPLICANT POOLS ARE
HIGHEST FOR THE FOLLOWING JOBS:
• Tool Makers
• Electromechanical Maintenance Technicians
• Welders
• Machinists
• CNC Programmers
THE FUTURE OF OHIO
MANUFACTURING
TECHSOLVE’S STUDY
“Machining is one
of the pillars of the
Ohio manufacturing
economy contributing
to the significant
production output in
automotive, aerospace,
and capital equipment.”
— Gary Conley, President, TechSolve, Inc.
10. 18 19
THE CHALLENGE OF MANAGING
CUSTOMER EXPECTATIONS
CUSTOMER
DEMANDS
Ohio’s machine product industry
supplies some of the most demanding
original equipment manufacturers
in the economy. They are the
foundation of the supply chains of
the automotive, aerospace, white
goods, transportation equipment
and chemical industries. They also
need to respond to recent trends that
push for low profit margins and rigid
just-in-time delivery schedules.
In Modern Machine Shop Magazines
survey of Top Shops they found top
shops continue to perform set-
up time faster than other shops,
reporting a median set-up time in
the 2014 survey of approximately
37 minutes compare to one hour
for other shops. Top shops also
have a faster order lead time. For
them the time from receipt of order
to customer delivery is 15 days
compared to 21 says for other shops.
(Source: mmsonline.com/topshops
2014 Top Shops Executive Summary)
SUPPLY CHAIN
Customers demand 100% on-time
delivery and low cost products
with highest product quality.
100% ON-TIME DELIVERY
Customers demand that machining companies have near-perfect
on-time delivery. The firms that can meet his standard can dif-
ferentiate themselves from their competitors. The ability of busi-
nesses to achieve on-time delivery depends on a number of factors
including raw material delivery (the availability and wait time from
suppliers), subcontractors, fluctuation in order volume and changes
(poor customer forecasting), and insufficient workforce capacity.
CUSTOMER COST CONSTRAINTS
Another challenge to machining businesses is custom-
er demands for cost reductions. Study participants stat-
ed that there is a constant push to lower cost.
QUALITY DEMANDS
The ability to produce a high quality product is not a new require-
ment of the machining industry. However, the degree to which
customers will accept errors or mistakes has narrowed, further
squeezing the profit margin of firms. Focus group participants,
in all cities, agreed that customer expectations related to prod-
uct quality are very exact – “The quality bar is very high.”
CASE STUDY
COLD JET, LLC
PROJECT TITLE:
Lean Implementation
COMPANY PROFILE:
A world leader of dry ice blasting technology for over 20 years, Cold Jet, LLC
develops and supplies dry ice blasting systems, production equipment, en-
gineered systems, and nozzles. Cold Jet’s unparalleled experience enables
them to provide environmentally engineered solutions to difficult cleaning,
coatings removal, and surface preparation problems. Employing more than
80 experts at their Loveland, Ohio, headquarters, Cold Jet also has a net-
work of hundreds of independent contractors and distributors throughout
the world.
PROJECT:
Today, dry ice (CO2) blasting is used in a wide array of applications from
heavy slag removal to delicate semiconductor and circuit board cleaning.
Experiencing an escalation in sales and production, Cold Jet sought to im-
prove both their processes and their cultural approach to business. Cold Jet
partnered with TechSolve to implement process improvements and develop
Cold Jet’s internal Lean expertise.
The project began with laying a foundation for a common Lean understand-
ing. Key management and shop floor personnel learned about lean manu-
facturing and waste elimination through quarterly training sessions and
meetings. TechSolve also teamed with Cold Jet to rearrange manufacturing
cells in order to improve flow and reduce cycle time of various assembly and
sub-assembly processes. Together they instituted visual management to
track improvements, create ownerships in the new processes, and manage
inventory.
RESULTS:
The program enabled Cold Jet to reduce inventory from 162 days to 76 days
on hand and increase on-time delivery from 85% to 92%. They achieved a
26% increase in productivity (with a decrease of overtime from 40 hours to
12 hours per week), which enabled them to increase their internal produc-
tion capacity from 60 units to 90 units monthly — equating to $4 million in
additional sales and a cost savings of $303,500.
12. 22
Having to increase quality, decrease
cost, and speed-up delivery time
are significant pressures in the
machining industry, and each
machining business is taking
steps to address them. To meet
competitive requirements and reduce
costs, many machining businesses
are turning to lean manufacturing
techniques to drastically cut
cycle time and increase their
competitive edge. Study participants
identified a number of proactive
changes they are making, such
as equipment monitoring and
preventative maintenance.
MACHINE MONITORING
PREVENTATIVE
MAINTENANCE
Measuring machine and workforce
performance is becoming
increasingly important as a way to
decrease downtime and increase
efficiency. Research participants
stated that economic forces have
forced them to look at aspects of their
operations not previously examined
and look for process innovation
and improvements. They also
specified a number of operations and
maintenance considerations they
are making in order to make their
operations more efficient. These
include conducting quick-change
repairs instead of total machine
disassembly and deploying redundant
equipment to reduce downtime so
that while one machine is being
worked on, another is operating.
The need to minimize downtime
is important with one participant
describing operating “like a pit
crew for racing” where you have to
be ready to perform on-the-fly for
maintenance and equipment repairs.
CUSTOMER SUPPLIER
COMMUNICATION
ERODING–RESULTING IN
THE REDUCTION IN THE
PREVENTION OF ERRORS
For the manufacturers that make
others’ products (job shops), lack
of communication is a problem.
Particular instances discussed
included times where the machining
operation identified design errors in
a customer’s specification, but there
was no one to communicate this
defect. Historically, this was not the
case and participants felt it was a
relatively new experience. Several
focus group participants imparted
that even when they were able to
reach someone and inform them of
design errors, the customers would
not change their specifications and
required them to make the product as
designed with the error. However, for
firms that make their own products,
this is a simple interaction and fixes
can occur promptly because design
and production all occur internally.
Machining firms understand that
actions need to be taken and
technologies employed to identi-
fy operational efficiency gaps and
weaknesses. Most know that they
need to leverage key data metrics
including overall equipment effec-
tiveness (OEE) and total effective
equipment performance (TEEP). In
addition, many are aware of, and
interested in, machine monitoring
technologies, such as MTConnect.
ADDRESSING INDUSTRY
CHALLENGES
On-time delivery today, however, requires improving the
ability of machined product customers to predict accurately
what customers will need and enhancing communication
with them so that machining firms have the ability to
eliminate, or at least predict, delays in production.
13. The Ohio Manufacturing Extension
Partnership supports the Ohio
manufacturing industry by
providing the products, services,
and assistance that are dedicated
to the productivity, growth,
and global competitiveness
of Ohio manufacturers.
