Improving the Performance of Utah’s Manufacturing A Presentation to the Utah

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1 Improving the Improving the Performance Performance of Utah’s Manufacturing of Utah’s Manufacturing A Presentation to the Utah A Presentation to the Utah Alliance for Economic Alliance for Economic Development Development David K. Sorensen, Exec. Dir. David K. Sorensen, Exec. Dir. Manufacturing Extension Partnership of Utah Manufacturing Extension Partnership of Utah Wednesday, July 14, 2010 Wednesday, July 14, 2010

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Improving the Performance of Utah’s Manufacturing A Presentation to the Utah Alliance for Economic Development David K. Sorensen, Exec. Dir. Manufacturing Extension Partnership of Utah Wednesday, July 14, 2010. Understanding Manufacturing. What is Manufacturing? - PowerPoint PPT Presentation

Transcript of Improving the Performance of Utah’s Manufacturing A Presentation to the Utah

Page 1: Improving the Performance of Utah’s Manufacturing  A Presentation to the Utah

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Improving the PerformanceImproving the Performanceof Utah’s Manufacturing of Utah’s Manufacturing

A Presentation to the UtahA Presentation to the UtahAlliance for Economic DevelopmentAlliance for Economic Development

David K. Sorensen, Exec. Dir.David K. Sorensen, Exec. Dir.Manufacturing Extension Partnership of UtahManufacturing Extension Partnership of Utah

Wednesday, July 14, 2010Wednesday, July 14, 2010

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Understanding ManufacturingUnderstanding Manufacturing

What is Manufacturing?What is Manufacturing? How does it fit into the Utah economy?How does it fit into the Utah economy? What is Manufacturing like in Utah?What is Manufacturing like in Utah? How does Manufacturing relate to How does Manufacturing relate to

technology development?technology development? How do Manufacturers improve products?How do Manufacturers improve products? What is the potential for Manufacturing?What is the potential for Manufacturing? What should we be doingWhat should we be doing??

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What is What is Manufacturing?Manufacturing?

Manufacturing is all about Manufacturing is all about “adding value” “adding value”

to raw materials to raw materials

to produce finished goods.to produce finished goods.

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TrashTrashShredded Plastic Shredded Plastic Trash, $0.12/lbTrash, $0.12/lb

Processing Processing EquipmentEquipment

Manufacturing works in rural UtahManufacturing works in rural Utah

Added Value Finished Added Value Finished Goods, $0.50/lbGoods, $0.50/lb

Value Added ProcessingValue Added Processing

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How does it fit into the How does it fit into the economy?economy?

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Let’s first look at what elementsLet’s first look at what elementsmake up the Economy?make up the Economy?

The entire economy is made up of 20 “Industry Sectors” or The entire economy is made up of 20 “Industry Sectors” or NAICS CodesNAICS Codes (North American Industrial Classification System).(North American Industrial Classification System).

These 20 Industry Sectors are grouped into 5 major These 20 Industry Sectors are grouped into 5 major categories:categories:– Material ProductionMaterial Production– Finished Goods ProductionFinished Goods Production– DistributionDistribution– ServicesServices– ConsumersConsumers

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MaterialsMaterialsProductionProduction

FinishedFinished GoodsGoods

ProductionProductionDistributionDistribution ConsumersConsumers

Primary Primary Drivers:Drivers:

FoodFoodClothingClothingShelterShelterToolsToolsToysToys

Service ProvidersService Providers

The Flow of Goods & Services in the EconomyThe Flow of Goods & Services in the Economy

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MaterialsMaterialsProductionProduction

FinishedFinished GoodsGoods

ProductionProductionDistributionDistribution

ConsumersConsumers

Service ProvidersService Providers

Manufacturing is Key to Economic Viability!Manufacturing is Key to Economic Viability!

??

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MaterialsMaterialsProductionProduction

DistributionDistribution

ConsumersConsumers

Service ProvidersService Providers

Materials are not consumed locally.Materials are not consumed locally.

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MaterialsMaterialsProductionProduction

DistributionDistribution

ConsumersConsumers

Service ProvidersService Providers

No warehousing or shipping of Utah finished goods.No warehousing or shipping of Utah finished goods.

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MaterialsMaterialsProductionProduction

DistributionDistribution

ConsumersConsumers

Service ProvidersService Providers

Substantial reduction in demand for servicesSubstantial reduction in demand for services

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MaterialsMaterialsProductionProduction

DistributionDistribution

ConsumersConsumers

Service Providers (including R&D technologies)Service Providers (including R&D technologies)

No sector to commercialization of R&D, to employNo sector to commercialization of R&D, to employ

scientists, engineers and technicians or to produce exports.scientists, engineers and technicians or to produce exports.

ExportsExports

??

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MaterialsMaterialsProductionProduction

FinishedFinished GoodsGoods

ProductionProductionDistributionDistribution

ConsumersConsumers

Service ProvidersService Providers

This is the Economy we need to sustain & growThis is the Economy we need to sustain & grow

Manufacturing is key to economic viability!

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What is Manufacturing What is Manufacturing like in Utah?like in Utah?

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Manufacturing is the largest in the StateManufacturing is the largest in the State and 3 Times the Averageand 3 Times the Average

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Payroll

MfMfgg

Ag

Ag

Source: State of Utah, Workforce Services, 2009

Con

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Wages for Utah Largest SectorsWages for Utah Largest Sectors(4 of 20 Sectors with over 100,000 employees)(4 of 20 Sectors with over 100,000 employees)

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

Sectors

$3,103$3,103HealthHealthCareCare

$2,111$2,111RetailRetailTradeTrade

$2,692$2,692Ed.Ed.

$3,962$3,962Mfg.Mfg.

Source: Workforce Services, 2009 $3,962/$2,635=1.50$3,962/$2,635=1.50

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Manufacturing wages are 115% of the state’s Manufacturing wages are 115% of the state’s average of all other 19 industry sectors! average of all other 19 industry sectors!

80%

85%

90%

95%

100

105

110%

115%

Wages

Average

Manufacturing

ManufacturingManufacturing115%115%

Source: State of Utah, Workforce Services 2009

AverageAverage100%100%

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0

50

100

150

200

250

300

J obs

Service J obs

Serv Related J obs

Manufacturing J obs

Mfg Related J obs

258258

100100MfgMfg

100100ServServ

147147

Manufacturing creates nearly twice as Manufacturing creates nearly twice as many secondary jobs as the service industrymany secondary jobs as the service industry

Source: BLS, 2009

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Manufactured Products Account for Manufactured Products Account for 85% of all Utah Patents!85% of all Utah Patents!

0%

20%

40%

60%

80%

100%

Patents

IT Products

Mfg Products

ManufacturedManufacturedProductsProducts

Source: Stoel Rives 2007 Report

Software &Software & IT ProductsIT Products

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Utah’s Private Sector Accounts for 96%Utah’s Private Sector Accounts for 96%of all Utah Patents!of all Utah Patents!

0%

20%

40%

60%

80%

100%

Patents

Public Sector

Private Sector

Source: Stoel Rives

Public 4%Public 4%

PrivatePrivate96%96%

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Manufactured Goods Account for Manufactured Goods Account for 85% of all Utah Exports!85% of all Utah Exports!

0%

20%

40%

60%

80%

100%

Exports

All Other Sectors

Mfg Goods

ManufacturedManufacturedGoodsGoods

All OtherAll OtherSectorsSectors

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NAICS Codes and Titles SummaryNAICS Codes and Titles Summary

1111 Agriculture, Forestry, Fishing and Hunting Agriculture, Forestry, Fishing and Hunting 125 1252121 Mining Mining 44 442222 Utilities Utilities 19 192323 Construction Construction 69 6931-3331-33 Manufacturing Manufacturing 743 7434242 Wholesale Trade Wholesale Trade 161 16144-4544-45 Retail Trade Retail Trade 163 16348-4948-49 Transportation and Warehousing Transportation and Warehousing 128 1285151 Information Information 82 825252 Finance and Insurance Finance and Insurance 85 855353 Real Estate and Rental and Leasing Real Estate and Rental and Leasing 51 515454 Professional, Scientific, and Technical Services Professional, Scientific, and Technical Services 91 915555 Management of Companies and Enterprises Management of Companies and Enterprises 5 55656 Admin/Support/Waste Mgt & Remediation Ser. 83Admin/Support/Waste Mgt & Remediation Ser. 836161 Educational Services Educational Services 36 366262 Healthcare and Social Assistance Healthcare and Social Assistance 87 877171 Arts, Entertainment, and Recreation Arts, Entertainment, and Recreation 57 577272 Accommodation and Food Services Accommodation and Food Services 33 338181 Other Services (except Public Administration) Other Services (except Public Administration) 93 939292 Public Administration Public Administration 66 66

22212221

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Utah’s Manufacturing Sector Utah’s Manufacturing Sector is is NOTNOT Big Business Big Business

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Employees

>500

100 to 500

50 to 100

20 to 50

10 to 20

<10

58%

5% 6%1%

16%14%

88% have less than 50 employees, 58% have 10 employees or less88% have less than 50 employees, 58% have 10 employees or lessOnly 34 of Utah’s 3,900+ manufacturers have 500 or more employeesOnly 34 of Utah’s 3,900+ manufacturers have 500 or more employees

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How does How does Manufacturing relate Manufacturing relate

to technology to technology development?development?

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What Must Manufacturer’s Provide What Must Manufacturer’s Provide to Customers to Remain to Customers to Remain

Sustainably Competitive?Sustainably Competitive?

A Product That Uniquely Meets A Product That Uniquely Meets Customer NeedsCustomer Needs

A Product Delivered NowA Product Delivered Now A Product with Increased Value (More A Product with Increased Value (More

Functionality and/or Less Costs)Functionality and/or Less Costs)

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How does Manufacturing relate to How does Manufacturing relate to Technology Deployment?Technology Deployment?

The technology must be appealing to the companies The technology must be appealing to the companies clientsclients

The technology must help the product uniquely meet The technology must help the product uniquely meet the clients needthe clients need

The technology must support timely delivery of the The technology must support timely delivery of the productproduct

The technology must add value and functionality or be The technology must add value and functionality or be more cost effectivemore cost effective

The company must have the necessary resources to The company must have the necessary resources to take advantage on the technologytake advantage on the technology

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New Technology does not Automatically New Technology does not Automatically Result in Economic DevelopmentResult in Economic Development

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Federal R&D Budget

~$150 Bn

Research Institutions

I.P.(new tech & innovation)

(75% unlicensed inventory)

TCOs

(25%) licensed

Software &Internet cos.

3,000 largemanufacturers

300,000 Small

Manufacturing Enterprises

(SMEs)

Consumer Demand

16%

84%

GAMBIT Market Needs

Available Technologies

GAMBIT & FAST Program Components

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Rapid New Product Deployment

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Rapid New Product Deployment

How will we incorporate new technologiesinto new products If we don’t have a critical

mass in manufacturing in Utah?

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Business Plan

Viable Markets

Sufficient Financing

Established Sales Team

Loyal, Experienced Workforce

Strategic Partners

Inventory & Suppliers

Management Team

Start from scratch…

Brand Name Status

…ORPartner with

strength

2 Ways to Commercialize

TechnologyWhich will you

choose?

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How do they compare?How do they compare?HasHas

Existing Existing ClientsClients

Uniquely Uniquely SolvesSolves

NeedsNeeds

ResponsResponsive, Fast ive, Fast DeliveryDelivery

Cost Cost EffectiveEffective

(Lean)(Lean)

Large Large CorpsCorps

Technical Technical Staff & Staff &

ResourcesResources

Technology Licensing OptionsTechnology Licensing Options

1 - License to large corporations1 - License to large corporations2 - Start up a new enterprise2 - Start up a new enterprise3 - License to small companies3 - License to small companies

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How do they compare?How do they compare?

HasHas

Existing Existing ClientsClients

Uniquely Uniquely SolvesSolves

NeedsNeeds

ResponsResponsive, Fast ive, Fast DeliveryDelivery

Cost Cost EffectiveEffective

(Lean)(Lean)

Large Large CorpsCorps

New New Start Start UpUp

Technical Technical Staff & Staff &

ResourcesResources

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How do they compare?How do they compare?

HasHas

Existing Existing ClientsClients

Uniquely Uniquely SolvesSolves

NeedsNeeds

ResponsResponsive, Fast ive, Fast DeliveryDelivery

Cost Cost EffectiveEffective

(Lean)(Lean)

Large Large CorpsCorps

New New Start Start UpUp

SmallSmall

CompCompanyany

Technical Technical Staff & Staff &

Resources*Resources*

*MEP area of major contribution*MEP area of major contribution

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How do How do Manufacturers Manufacturers

improve products?improve products?

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Ice Tray Parts & Ice Tray Parts & ProcessesProcesses

TotalAssembleFinishFormPunchStampQtyPart

411111Front Fin

411111Rear Fin

40888888Center Fin

3699999Cross Fin

721818181818Hinge Plate

5418181818Hinge Pin

31111Tray

213555627373856

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Ice Cube TrayIce Cube Tray

Old DesignOld Design56 Parts56 Parts213 Processes213 ProcessesCost ~ $ 3.00Cost ~ $ 3.00

New DesignNew Design1 Part1 Part1 Process1 ProcessCost $ 0.09Cost $ 0.09

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Technology & Hi-Tech CompaniesTechnology & Hi-Tech Companies

New New TechnologiesTechnologies go into New Products.go into New Products. ProductsProducts are the Output of Manufacturers are the Output of ManufacturersManufacturers are Our Hi-Tech Companies… Manufacturers are Our Hi-Tech Companies…

not Banks, not Insurance Companies, not Real not Banks, not Insurance Companies, not Real Estate Firms, Not Hotels, Not Food Service, Estate Firms, Not Hotels, Not Food Service, not retail stores, etc. Manufacturers are Our not retail stores, etc. Manufacturers are Our Hi-Tech Companies!Hi-Tech Companies!

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What is the potential What is the potential for Manufacturing?for Manufacturing?

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Problem: Declining Mfg JobsProblem: Declining Mfg Jobs

Sources: U.S. BLS, Historical Data by State, http://data.bls.gov/PDQ/servlet/SurveyOutputUtah DWS, http://jobs.utah.gov/opencms/wi/pubs/une/employment.pdf, thru 12/09

12.5012.2512.0011.7511.5011.2511.0010.7510.5010.2510.00 9.75 9.50 9.25 9.00

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

% o

f U

tah

To

tal

Em

plo

ymen

t

12.4%

8.9%

(% of all Utah non-farm employment)

Percentage DECLINE in Utah Manufacturing Employment

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Job & Tax Loss: Another ViewJob & Tax Loss: Another View

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

201013.012.512.011.511.010.510.0

9.59.08.58.07.57.0

0 / 010 / 5K 20 / 10K30 / 15K40 / 20K50 / 25K60 / 30K70 / 35K80 / 40K90 / 45K100 / 50K110 / 55K120130140150160

GOAL: 12.6% of Non-Farm Workforce

Mfg % of Total Utah Workforce

State Income Tax $ Lost

Total Mfg Jobs Lost

8.7%

-$157.4 million

-49,015 jobs

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Manufacturers Out Of Business Each YearManufacturers Out Of Business Each Year

YearYear ManufacturersManufacturers VanishedVanished DisplacedDisplaced20002000 3,4823,482 -456-456 -7,296-7,29620012001 3,5253,525 -563-563 -9,008-9,00820022002 3,5053,505 -538-538 -8,608-8,60820032003 3,4893,489 -464-464 -7,424-7,42420042004 3,6283,628 -425-425 -6,800-6,80020052005 3,7663,766 -395-395 -6,320-6,32020062006 3,9093,909 -312-312 -4,992-4,99220072007 3,8633,863 -448-448 -7,168-7,16820082008 3,8973,897 -447-447 -7.152-7.15220092009 n/an/a n/an/a n/an/a

TOTALTOTAL -4,048-4,048 -64,768-64,768AverageAverage -449-449 -7,184-7,184PercentPercent -12%-12%

The average number of employee per manufacturer in the is 32.9. The average number of employee per manufacturer in the is 32.9. Even if you assume only half that, i.e. 16 employees per manufacturer,Even if you assume only half that, i.e. 16 employees per manufacturer,there are over 7,000 manufacturing employees are displaced annuallythere are over 7,000 manufacturing employees are displaced annuallyand over 65,000 in the past 9 years, not including 2009.and over 65,000 in the past 9 years, not including 2009.

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Utah Mfg & Employment by County 14Dec09

CountyMfg.Emp.

#MfgFirms ~ Payroll

BEAVER 76 9 $3,839,234

BOX ELDER 6,755 76 $341,237,205

CACHE 9,910 226 $500,615,944

CARBON 336 22 $16,973,457

DAVIS 8,821 304 $445,603,758

DUCHESNE 160 23 $8,082,598

EMERY 27 6 $1,363,938

GARFIELD 44 7 $2,222,715

GRAND 36 11 $1,818,585

IRON 1,451 78 $73,299,065

JUAB 517 15 $26,116,896

KANE 116 9 $5,859,884

MILLARD 180 11 $9,092,923

MORGAN 201 15 $10,153,764

SALT LAKE 50,193 1,698 $2,535,561,661

SAN JUAN 161 7 $8,133,115

SANPETE 729 30 $36,826,339

SEVIER 337 24 $17,023,973

SUMMIT 607 45 $30,663,358

TOOELE 1,491 50 $75,319,715

UINTAH 182 31 $9,193,956

UTAH 16,448 630 $830,891,124

WASATCH 219 39 $11,063,057

WASHINGTON 2,472 176 $124,876,147

WAYNE 11 6 $555,679

WEBER 11,355 271 $573,611,911

112,835 3,819 $5,700,000,000

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Utah Mfg & Emp by County 14Dec09

CountyMfg.Emp.

#MfgFirms ~ Payroll

JobsLost

Mfg. Payroll Lost

BEAVER 76 9 $3,839,234 35 $1,781,220

BOX ELDER 6,755 76 $341,237,205 3,134 $158,317,611

CACHE 9,910 226 $500,615,944 4,598 $232,261,662

CARBON 336 22 $16,973,457 156 $7,874,866

DAVIS 8,821 304 $445,603,758 4,093 $206,738,660

DUCHESNE 160 23 $8,082,598 74 $3,749,936

EMERY 27 6 $1,363,938 13 $632,802

GARFIELD 44 7 $2,222,715 20 $1,031,232

GRAND 36 11 $1,818,585 17 $843,736

IRON 1,451 78 $73,299,065 673 $34,007,232

JUAB 517 15 $26,116,896 240 $12,116,981

KANE 116 9 $5,859,884 54 $2,718,704

MILLARD 180 11 $9,092,923 84 $4,218,678

MORGAN 201 15 $10,153,764 93 $4,710,857

SALT LAKE 50,193 1,698 $2,535,561,661 23,287 $1,176,378,366

SAN JUAN 161 7 $8,133,115 75 $3,773,373

SANPETE 729 30 $36,826,339 338 $17,085,646

SEVIER 337 24 $17,023,973 156 $7,898,303

SUMMIT 607 45 $30,663,358 282 $14,226,320

TOOELE 1,491 50 $75,319,715 692 $34,944,716

UINTAH 182 31 $9,193,956 84 $4,265,552

UTAH 16,448 630 $830,891,124 7,631 $385,493,423

WASATCH 219 39 $11,063,057 102 $5,132,725

WASHINGTON 2,472 176 $124,876,147 1,147 $57,936,511

WAYNE 11 6 $555,679 5 $257,808

WEBER 11,355 271 $573,611,911 5,268 $266,128,272

112,835 3,819 $5,700,000,000 52,350 $2,644,525,192

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Utah Mfg & Emp by County 14Dec09

CountyMfg.Emp.

#MfgFirms ~ Payroll

JobsLost

Mfg. Payroll Lost

RelatedJobs L.

RelatedPayroll Lost

TotalPayroll Lost

BEAVER 76 9 $3,839,234 35 $1,781,220 113 $4,274,927 $6,056,147

BOX ELDER 6,755 76 $341,237,205 3,134 $158,317,611 10,060 $379,962,267 $538,279,878

CACHE 9,910 226 $500,615,944 4,598 $232,261,662 14,759 $557,427,989 $789,689,651

CARBON 336 22 $16,973,457 156 $7,874,866 500 $18,899,678 $26,774,543

DAVIS 8,821 304 $445,603,758 4,093 $206,738,660 13,137 $496,172,784 $702,911,444

DUCHESNE 160 23 $8,082,598 74 $3,749,936 238 $8,999,846 $12,749,782

EMERY 27 6 $1,363,938 13 $632,802 40 $1,518,724 $2,151,526

GARFIELD 44 7 $2,222,715 20 $1,031,232 66 $2,474,958 $3,506,190

GRAND 36 11 $1,818,585 17 $843,736 54 $2,024,965 $2,868,701

IRON 1,451 78 $73,299,065 673 $34,007,232 2,161 $81,617,357 $115,624,590

JUAB 517 15 $26,116,896 240 $12,116,981 770 $31,116,407 $43,233,387

KANE 116 9 $5,859,884 54 $2,718,704 173 $6,981,631 $9,700,334

MILLARD 180 11 $9,092,923 84 $4,218,678 268 $10,833,565 $15,052,243

MORGAN 201 15 $10,153,764 93 $4,710,857 299 $12,097,481 $16,808,338

SALT LAKE 50,193 1,698 $2,535,561,661 23,287 $1,176,378,366 74,752 $3,020,939,644 $4,197,318,010

SAN JUAN 161 7 $8,133,115 75 $3,773,373 240 $9,690,022 $13,463,395

SANPETE 729 30 $36,826,339 338 $17,085,646 1,086 $43,875,939 $60,961,585

SEVIER 337 24 $17,023,973 156 $7,898,303 502 $20,282,841 $28,181,144

SUMMIT 607 45 $30,663,358 282 $14,226,320 904 $36,533,189 $50,759,509

TOOELE 1,491 50 $75,319,715 692 $34,944,716 2,221 $89,738,031 $124,682,748

UINTAH 182 31 $9,193,956 84 $4,265,552 271 $10,953,938 $15,219,490

UTAH 16,448 630 $830,891,124 7,631 $385,493,423 24,496 $989,947,110 $1,375,440,532

WASATCH 219 39 $11,063,057 102 $5,132,725 326 $13,180,838 $18,313,563

WASHINGTON 2,472 176 $124,876,147 1,147 $57,936,511 3,682 $148,780,962 $206,717,473

WAYNE 11 6 $555,679 5 $257,808 16 $662,051 $919,859

WEBER 11,355 271 $573,611,911 5,268 $266,128,272 16,911 $683,417,402 $949,545,674

112,835 3,819 $5,700,000,000 52,350 $2,644,525,192 168,044 $6,346,860,460 $8,991,385,652

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What should we be What should we be doingdoing??

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Utah’s Manufacturing ChallengesUtah’s Manufacturing Challenges Highly diversified and technical (85% of Utah patents)Highly diversified and technical (85% of Utah patents) Huge capital investments.Huge capital investments. Must accommodate process & material changes.Must accommodate process & material changes. Must accommodate product and market changes.Must accommodate product and market changes. Supports above average wages.Supports above average wages. Most complex industry sector (NAICS 743/2221)Most complex industry sector (NAICS 743/2221) 99% small business, average size, 32 employees.99% small business, average size, 32 employees. Limited internal skills & resources.Limited internal skills & resources. Must be innovative & resourcefulMust be innovative & resourceful Manufacturing is invisible to mostManufacturing is invisible to most Needs access to extension servicesNeeds access to extension services

Page 52: Improving the Performance of Utah’s Manufacturing  A Presentation to the Utah

Manufacturing Manufacturing Extension’s 5 Extension’s 5 Focus AreasFocus Areas1.1. Technology Technology

AccelerationAcceleration

2.2. Continuous Continuous ImprovementImprovement

3.3. SustainabilitySustainability

4.4. WorkforceWorkforce

5.5. Supplier Supplier DevelopmentDevelopment

5252

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Impacts: MEP Services in UtahImpacts: MEP Services in UtahImpacts resulting from MEP services aloneImpacts resulting from MEP services alone

on on only 2%only 2% of of existing Utah mfgsexisting Utah mfgs surveyed in 2009. surveyed in 2009. (U.S. Dept. of Commerce 2009 Impact Survey)(U.S. Dept. of Commerce 2009 Impact Survey)

ManufacturersManufacturers ImpactsImpacts

JobsJobs 2,9922,992

WagesWages $122 M$122 M

OutputOutput

TaxesTaxes$659 M$659 M

$14 M$14 MSource: U. S. Department of Commerce, Dec 2009

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The SolutionThe SolutionIn the same 9-year period, the MEP provided In the same 9-year period, the MEP provided

1,096 projects to 1,096 projects to 443 companies443 companies. .

During the that same 9-year period, only 13 During the that same 9-year period, only 13 of those companies no longer appear on the State’s of those companies no longer appear on the State’s list of active firms.list of active firms.

In other words, less than In other words, less than 0.4% per year0.4% per year vanished from the scene which had access the vanished from the scene which had access the Manufacturing Extension compared to Manufacturing Extension compared to 12% per year12% per year of firms without access to of firms without access to Manufacturing Extension!Manufacturing Extension!

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Utah Manufacturing Companies LostUtah Manufacturing Companies Lostwith & without Extension Serviceswith & without Extension Services

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2000-2009

w/ MEP

w/o MEP

Source: Utah DWS

12.0% lost w/oExtensionsServices

0.4% lost wExtensionsServices

How to cut your loses

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We Need to Move from a Pilot We Need to Move from a Pilot Project to a Funded ProgramProject to a Funded Program

Implement what Ag Extension has matured, refined Implement what Ag Extension has matured, refined and enhanced over the past century.and enhanced over the past century.

We can’t wait 100 years to fully implement We can’t wait 100 years to fully implement Manufacturing Extension in Utah.Manufacturing Extension in Utah.

We need to fully implement all 5 elements ASAP.We need to fully implement all 5 elements ASAP.– Appropriate participation in the National ProgramAppropriate participation in the National Program– A state MEP Center with significant resourcesA state MEP Center with significant resources– County extension agents throughout the stateCounty extension agents throughout the state– Experiment stations to help develop and implement new Experiment stations to help develop and implement new

materials and processes with our small manufacturers.materials and processes with our small manufacturers.– Dedicated representation at the state level (Comm. of Mfg.)Dedicated representation at the state level (Comm. of Mfg.)

Page 57: Improving the Performance of Utah’s Manufacturing  A Presentation to the Utah

Manufacturing Extension Manufacturing Extension needs to be moved from a needs to be moved from a

Pilot Project to a Program …Pilot Project to a Program …… … and we simply can’t and we simply can’t

wait 100 years!wait 100 years!

5757

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““I’ve been in this business for 35 years and I’ve I’ve been in this business for 35 years and I’ve learned more about manufacturing in the past year learned more about manufacturing in the past year from the MEP than I did in the 34 year previous!”from the MEP than I did in the 34 year previous!”

ManufacturerManufacturer of the Yearof the Year

30% increase in output 30% increase in output in just 12 months!in just 12 months!

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Revenue: Current ProdWholesale Sales Price $10,000,000

Expenses:Materials $3,000,000 Labor $4,000,000 Facilities & Equipment $500,000Total Cost of Goods Sold $7,500,000

Gross Margin ($) $2,500,000 Corp Overhead + G&A20% $1,500,000 Net Profit ($) $1,000,000

Company Value (10 x Profit) $10,000,000

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Revenue: Current ProdIncreasedWholesale Sales Price $10,000,000 $3,000,000 Expenses:Materials $3,000,000 $900,000 Labor $4,000,000 $0Facilities & Equipment $500,000 $0Total Cost of Goods Sold $7,500,000 $900,000

Gross Margin ($) $2,500,000 $2,100,000Corp Overhead + G&A20% $1,500,000

$0 Net Profit ($) $1,000,000 $2,100,000

Company Value (10 x Profit) $10,000,000$21,000,000New Value of the Company$31,000,000