By Jack Healy, Director, Manufacturing Advancement Center, [email protected]
The past can be described as a place where many of us long to go, but are usually precluded by the realities of the current world. The reality of today’s manufacturing environment has been ably summed up in a new report issued by the National Association of Manufacturers, “Escalating Cost Crisis.” The report describes the continuous increases in external manufacturing cost structures that now add up to 31.7% of all US production costs, well beyond that of any of our top global competitors. This is a major contributor to the demise of so many of our businesses.
Unfortunately, many firms living this reality are not taking this “structural disadvantage” as a catalyst for change. Instead, they continue to operate as they have in the past. I say “unfortunately” because the reality is that the companies that do not change, or plan to change, to a more productive manufacturing system will join the rest of the firms left behind by the realities of today’s global economy.
Demonstrating Results
A survey of 18 Massachusetts based manufactures who, several years ago, made tough decisions to change their production processes to “Lean Manufacturing,” shows that with such change you can leverage sufficient operational improvements to offset much of the escalating structural costs. With the resulting improved productivity, these companies continue to compete effectively.
Massachusetts MEP clients are surveyed, by an independent third party company to determine the economic impact resulting from their relationship with the MEP program. Clients are surveyed one year after the completion of their project and asked a number of questions related to changes in efficiency and output. In Q2 2006, Massachusetts MEP clients reported that they:
Created or retained 571 jobs that otherwise would not have existed
Increased and retained $44.9 million in sales
Spent $4.6 million on new investments
Experienced $16.7 million in cost savings
While the MassMEP provides the training that helped to achieve these results, the clients contributed the most important part — the leadership that initiated and sustained the commitment necessary to realize much-needed organizational change. The US manufacturing community has known about the benefits of Lean Manufacturing for well over 20 years, but few have made the journey because of a deficit in the leadership.
Massachusetts, long recognized as a high cost of business state, enjoys no competitive advantage for its manufacturing industries. Yet the direct and indirect economic impacts generated by the outputs of just 18 Massachusetts companies will contribute $86.8 million dollars in additional gross state product. Imagine what more leaders could contribute if they were a commodity instead of a rarity.
Demonstrating Leadership The MassMEP has been fortunate to have the privilege of working with and learning from manufacturing leaders throughout the commonwealth. These leaders are people who have assumed a moral commitment to make both their businesses and their employees more competitive. And they have put their entire selves into the effort.
We have seen such leaders survive and reposition their companies after losing three quarters of their customer base. They have gone on generate as much production as they ever did, with half the employees. We have seen leaders reposition their companies with new products and in new markets, in an environment where so called “experts” say it can’t be done.
Picture of a Leader: Roger Saillant, CEO of Plug Power, Inc and keynote speaker at the William J. O’Brien Leadership Seminar, November 8, 2006.
Roger Saillant: Leader Extraordinaire I would like to share one of these leaders with all of you through the William J. O’Brien leadership series to be held on November 8, 2023 at the College of the Holy Cross. The event is free and open to the public. This event will provide the opportunity to hear Roger Saillant, Ph.D., Chief Executive Officer of Plug Power inc., an innovative, environmentally conscious company that develops hydrogen fuel cell technologies. Previously, Dr. Saillant served more than 30 years with the Ford Motor Company and Visteon Corporation. Dr. Saillant holds a Bachelor of Science degree in Chemistry from Bowdoin College, a Ph.D. in Chemistry from Indiana University, and a post-doctorate degree in Organometallic Chemistry from the University of California at Los Angeles
When Mr. Saillant assumed his current position, he faced a company that was in a free fall. He re-established Plug Power’s credibility among employees, suppliers, customers, and stockholders, as well as established an international network of partners. Mr. Saillant repositioned the company to introduce reasonably priced products into the telecommunications industry and residential marketplace. It is an amazing story of leadership and courage.
Come to Holy Cross on November 8, 2023 and hear someone who has experienced it all and is willing to share his journey.
