This document discusses the benefits of Lean manufacturing and why only 2% of US manufacturers have implemented it successfully. It argues that tax incentives alone will not create sustainable US jobs - companies must also dramatically increase productivity through techniques like Lean. Lean can reduce labor costs by over 50% and give companies a competitive advantage over outsourcing. The document provides examples of the significant benefits Lean has provided to companies that have adopted it fully, such as doubling productivity and reducing costs by 15-18% compared to outsourcing. It analyzes why most companies have not successfully implemented Lean and argues that it requires a certified Lean coach for success.

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MAKE AMERICA
GREAT AGAIN
MANUFACTURES CAN
Manufacturing Compe66veness Ini6a6ve

2. TAX INCENTIVES ALONE WILL NOT CREATE
SUSTAINABLE U.S. JOBS
• High U.S. labor wage disparity is the impediment to sustainable
domes6c jobs growth and economic expansion
• U.S. PRODUCTIVITY must drama6cally increase to offset labor cost
disparity and level the cost of goods playing field
• Only 2% of U.S. companies have doubled their produc6vity with
LEAN Manufacturing, which reduced their labor cost by > 50%
• While the remaining 98% of U.S. manufacturer’s wages are too high
to compete world-wide
• Aer the tax credit windfall creates the incen6ve to maintain, grow
and return manufacturing jobs to the U.S.; produc6vity must
increase drama6cally to permanently secure the return of jobs and
grow the U.S. economy through compe66ve cost of goods
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3. BOB CHAPMAN CEO
OF BARRY-WEHMILLER
Bob Chapman’s presenta6on at the American Associa6on of
Manufacturing Excellence on People Centric Leadership where he
explains why only 2% of U.S. manufacturers have reduced their labor
cost by >50% (8 min. of 36 min.)
Barry-Wehmiller’s revenue is $2.4 billion with a track record of 15%
compound annual growth in revenue and share value and so far has
acquired 70 companies across the globe
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4. TYPICAL BENEFITS OF LEAN for the TOP 2%
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“Working Smarter and Not Harder”
• Produc6vity Up 100% or Greater
• Finished Good Inventory Down 50% to 95%
• Inventory Turns Double to 3X+
• Work-In-Process (WIP) Down 80%
• Manufacturing Lead-Time Down 50% to 85%
• Floor Space Down 30% - 90%
• Quality Quality is built into process
i.e. 3 to 6-Sigma quality
defects < .3% to .0003%
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5. THE 2% LEAN MANUFACTURERS HAVE
• Increased their Net-Profit ~ 215%
• Reduced their labor cost > 50%, which reduced their Cost of
Manufactured Goods by 7.5%
• And their cost is 15% - 18% less than their compe6tors that
outsourced manufacturing to China or Mexico
Labor, 5%
Overhead,
24%
Product
Cost, 71%
Team Empowerment and
Internal QA Checks
Savings = 7%
Lean Labor Savings 50%
50% x 5% = 2.5% Savings
Lean Reduces Inv. 67%
Saving 6% Carrying Cost
Shi QA to Suppliers and
Require they Implement
Lean & Split Savings 50%
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6. THE FACTS ON OUTSOURCING TO CHINA?
2004 Labor Cost Study for Outsourcing Milwaukee’s Drill
• Milwaukee’s US labor cost is $31.34 vs. China’s quote of $17.10. i.e. a
perceived savings of $14.24 per unit (45.4%)
• “Cost Adders” reduce China’s savings by 24% to $10.82 (34.5%)
• If Milwaukee implemented LEAN at their US plant the savings is $15.67 (50%)
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7. WHAT IS DIFFERENT ABOUT THESE 2% LEAN
MANUFACTURERS?
Only 2% of American manufacturers have implemented LEAN with >
50% savings
They are totally commired to LEAN; so it is part of their company
culture
And equally as important, they are commired to the success of their
employees with training, advancement, selec6ng the jobs they want,
and compensa6on for improved quality, produc6vity and mee6ng the
customer’s need. They are ‘employee centric & customer is #1’.
These employees enjoy their jobs, they are proud of their products
and services, turnover is < 1%, and they are commired to the success
of their company
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8. MANAGEMENT STRUCTURES
Typical – 98% LEAN – 2%
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CUSTOMER IS #1 WITH LEAN
Flat organiza6on structure
Quick response
CEO
VPs
Sr. Mgmt.
Supervisors
Employees
Customers
Customers
Employees
Mgm’t
CEO
No more than
3 layers to
stay close to
customer
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9. 76% OF U.S. EMPLOYEES DISLIKE THEIR JOBS
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Reasons:
1. Co-workers
2. Work assignment
3. Supervisor
4. Lack of apprecia6on
24%
76%
Like Job
Dislike Job
While the employees at the 2% LEAN companies like their jobs,
because the companies are “employee centric” and they
“empower” their employees without supervision

10. WHY MOST MANUFACTURERS ARE INEFFICIENT
When you ask why they haven’t changed, they tell you “because this is
how we have always done it”
Many company leaders are generally not aware of the benefits of
LEAN, or unwilling to make the commitment implement LEAN; or look
for the easiest way to increase profit
61% of U.S. manufacturers have arempted to implement LEAN on
their own with no assistance which resulted in modest and
disappoin6ng results
Henry Ford and Jack Welch of GE were were obsessed with elimina6ng
waste and improving their produc6vity and quality
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11. LEAN REQUIRES A CERTIFIED COACH
Lean by the book does not work!
There are excellent books on Lean, and you will learn a lot from them
including the challenges of Lean. However, case studies are only
examples to learn the basics, i.e. a Lean primer; but they do not
provide the processing engineering documenta6on of how it was
achieved.
And every successful Lean project is unique. You start with a clean
sheet of paper and design the processes from the ground up based on
the labor content, process sequences, inventory requirements, daily
product volume, and forecasted growth.
To succeed you have to have a cer6fied coach with proven
performance, that knows what works and what doesn’t
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12. LEAN PHASES
I. “Kaikaku” or radical LEAN of produc6on process is the first phase
of Lean. Typically Kaikaku doubles produc6vity with > 50% labor
savings.
II. “Kaizen” or con6nuous improvement is the 2nd phase of LEAN. It
shis the responsibility of elimina6ng waste from management
and process engineering to the team members; thus genera6ng
ongoing improvements of LEAN
LEAN success is directly linked to a CEO’s level of involvement,
commitment, and up-front leadership of the project. The CEO has to
be achonable, accountable, responsible, and invested.
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13. LEAN EXPERIENCE & PERFORMANCE
Combined Experience: Over 73 years of LEAN training and implementation
at 189 manufacturing and service companies with average labor cost
savings of 70%
Certifications: Teach and implement Demand Flow Technology “LEAN” by
the John Costanza Institute of Technology (Hewlett-Packard legacy, Master
Black Belt Lean Six-Sigma, Data Science, ISO Certification, Supply Chain
Management, and Overall Equipment Effectiveness
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14. TAX INCENTIVES PLUS LEAN WILL INCREASE
U.S. JOBS & GROW THE U.S. ECONOMY
LABOR RATE DISPARITY BETWEEN U.S. AND OFFSHORE
OPERATIONS REQUIRES PRODUCTIVITY INVESTMENT AND
IMPLEMENTATION TO CREATE A LEVEL PLAYING FIELD FOR U.S.
WORKERS AND U.S. PRODUCTS
TAX INCENTIVES MARRIED TO PRODUCTIVITY INVESTMENT
CREATES A SUSTAINABLE ECONOMIC ENVIRONMENT FOR
PRODUCTS AGAIN LABELED “MADE IN AMERICA”
LEAN IS THE INGREDIENT ADDED TO TAX INCENTIVES
THAT DELIVERS THE U.S. JOBS GROWTH OBJECTIVE
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15. LEAN MANUFACTURING
Finding Cash & Profit Hidden on the Produchon Floor
Tom Hildreth (303) 588 – 1447
TomHildreth@ProfitLean.com
Hildreth & Associates LLC
Broomfield, CO 80023
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