Friday, March 29, 2013

Family Business Roots Run Deep


treeFamily-owned businesses are a hot topic in our offices right now. A conservative estimate of 22,800,000 (or 95% of the 24 million small businesses in the U.S. today) are family-owned and they provide employment for at least 60% of all workforce. According to the Small Business Administration, Family-owned businesses are also responsible for 78% of all new jobs created. That’s a chunk of workforce. And while our mandate is to focus on small to medium sized manufacturers, Family–owned businesses are not synonymous with small or even manufacturing. In fact, 35% of the 500 largest companies in the U.S. are family-owned and that includes companies like Wal-mart, Comcast, and Cargill as well as manufacturers such as Ford, Mars and Tyson.

The sad realization is, that while approximately 65% are looking to transition ownership of those businesses, only 28% of them have a plan to actually do so. And of those 28% with the plan . . . only 35% successfully work that plan and successfully transition ownership to the second generation. By the third generation, that success rate drops to 12% and by the fourth, fuggedaboutit. Doing the math, that’s over 2.2 million companies lost in the first transition. . . .or by the fourth generation, just under 10,000 viable companies remain.

For Michigan, we’ve estimated that there are over 750,000 small businesses. If we estimate the same 95%, that’s about 712,500 family-owned Michigan companies, with less than 200,000 of those having a plan to transition the business. That’s a lot of at risk Michigan jobs. Add to that risk factor the 35% success rate . . . and a devastating number of companies and jobs could disappear overnight.

Even companies that survive the transition may suffer from other issues, if they execute the plans poorly. This can result in other consequences such as reduced performance, increased employee turnover, loss of market share, irreparable reputational damage, and negative impact on employee morale.
 
The development of a solid strategic and succession strategy is a critical part to ensuring that family-owned businesses thrive and that Michigan jobs stay in Michigan. Whether looking to sell the business or pass it on to the next generation, the successful execution of transition strategies: help business owners ensure growth, strengthen Michigan’s economy, and help business owners gain the return on their lifetime investment.

At the MMTC, we’re committed to keep jobs, revenue and businesses here in Michigan. Family-owned businesses often outperform the competition in revenue and employment growth, largely because they have a longer-term view of investment and tend to be more stable, inspiring trust and loyalty from both employees and customers.

The Family Business Advisory Program provided by the MMTC helps the owners of family and closely held businesses to navigate one of the toughest and most critical challenges they will ever face – planning for succession. 

Whether you utilize our services or not, it’s important that as a family-owned business owner you begin TODAY to equip and empower your people, position your company, and prepare for a successful transition.

For more about MMTC’s program plan to join MMTC partners Morgan Stanley, Yeo & Yeo, and Rehmann, and special guest, The Galliard Group at the April 18th
Family Business Roots Run Deep Workshop. It begins at 1:00 and includes a networking reception at 4:30. Cost for attending is $49 per person.
 
 

Friday, March 22, 2013

Improve Efficiencies through Lean Six Sigma


Life is full of good things. Sometimes, those good things get better when they are paired with other good things. Take for example, Strawberry and cream. Both good, but when put together, yum. Cookies are good, and milk is good, but cookies AND milk? Now you’re talking. Peanut butter good . . . peanut butter and chocolate . . . BETTER or jelly if you prefer. Macaroni and cheeses come in lots of varieties, but when combined they pack a punch that make your taste buds sit up and take notice. Wow, are you hungry yet?

When it comes to process improvements, Lean Six Sigma is like that. Both Lean and Six Sigma are powerful tools, but when combined, they have the ability to transform a process and company culture, and catapult your company into a better way of doing business.  

As Michigan’s manufacturers see a “comeback” in American manufacturing, it’s crucial to implement initiatives that increase efficiencies. By eliminating excess waste, reducing unnecessary actions and production variations and decreasing costs, manufacturers can increase profitability. Lean Six Sigma is an effective way to accomplish this.

Lean Six Sigma is a powerful, flexible system that fosters a culture of continuous improvement within an organization. The approach focuses on speed and efficiency and strives to identify waste. This isn’t exclusive to the production floor – this applies to all areas of a business. It’s about total cycle time reduction or reducing the time it takes to get ‘things’ done; whether filling an order, making a part or buying materials.

Waste comes through non-value added processes and redundant or unnecessary steps such as an abundance of reporting requirements or personnel practices that limit or delay more essential tasks. The objective is to get rid of this waste so that ultimately goods are produced faster and with fewer costs. By delivering goods within a shorter cycle time (the length of time needed for a manufacturer to deliver goods to a consumer), customer satisfaction improves. The rule: longer cycle times equal higher non-value-add costs.

A critical part of identifying waste in all areas of a business requires employee buy-in. A “Lean Six Sigma culture” can only occur if it is driven by employees at all levels… a staff that is consistently looking for ways to find non-value added activities. The Lean Six Sigma system is designed to foster employee buy-in and demonstrate its benefits to the entire organization.

There are numerous tools that manufacturers can use to keep cycle times down such as:
  • Value Stream Mapping – This graphical tool illustrates the flow of material and associated information as a product or service moves to completion.
  • Value-Add versus Non-Value-Add Analysis – This tool helps determine what the customer actually values. This helps a manufacturer increase capacity by preventing the production of things that customers don’t actually want.
  • 5S Program "Sort, Set-in-order, Shine, Standardize, and Sustain" - The 5S program develops a productive (and safer) work environment.
Furthermore, a unique benefit of Lean Six Sigma is that it works to fundamentally change the infrastructure and culture of an organization. It is an ongoing pursuit to drive a Lean Six Sigma culture. In fact, according to our friends at goleansixsigma.com, some of the most successful organizations in Michigan reduce costs, maximize income, and strengthen productivity by embracing Lean Six Sigma. They list several such as Delphi and Whirlpool on their website.

These large companies have almost infinite resources available to them. At MMTC, we specialize in distilling Lean Six Sigma concepts into its essence, thereby making it digestible to the small and medium sized businesses that make up the bulk of Michigan’s economy. As we conclude the first business quarter of the year, it’s vital for Michigan’s manufacturers to reduce excess waste, shorten cycle times and improve efficiencies. Creating a Lean Six Sigma culture can accomplish this and MMTC can help you cultivate this culture. For more information, please click here

Anyone ready for lunch? I could go for some hot chocolate and marshmallows.


Friday, March 15, 2013

Michigan Company Executives Appointed to Advise Department of Commerce on Manufacturing Policy


Manufacturing is a key industry in the revitalization of the U.S. economy and job creation. Something we have long said and believed and the Department of Commerce agrees. The United States is the world’s largest manufacturing economy, employing nearly 12 million Americans in 2012.

In January 2004, the Bush Administration report released a report titled Manufacturing in America: A Comprehensive Strategy to Address the Challenges to U.S. Manufacturers. One of the many recommendations included the creation of a manufacturing council to serve as the principle private sector advisory committee to the Secretary of Commerce. This cross-section of private-sector individuals serve for two year terms, and reflect a balanced across geographic locations, manufacturing industry sectors, and business size.

Established in April 2004, the Manufacturing Council’s mission is to ensure a conduit for communication exists between the manufacturing sector and the government, to advise the Secretary of Commerce on policies and procedures that affect manufacturing and/or propose solutions to industry-related issues, and to ensure the U.S. remains the leading place for manufacturing investment in the world.

Yesterday, U.S. Deputy Secretary of Commerce Rebecca Blank announced new manufacturing council members, 6 of the 26 members are from Michigan manufacturing companies, 5 of which are new members in 2013.

The MMTC would like to extend congratulations to returning member:
  • Joseph B. Anderson, Jr., Chairman & CEO, TAG Holdings LLC (MI)
And newly appointed members:
  • Christie Wong Barrett, CEO, Mac Arthur Corporation (MI)
  • Shirish Pareek, Founder & CEO, Hydraulex Global (MI)
  • Andra Rush, CEO, The Rush Group (MI)
  • Susan Smyth, Director - Manufacturing Systems Lab, General Motors Company (MI)
  • Carol Williams, Executive Vice President – Manufacturing & Engineering, Supply Chain and Environmental, Health & Safety Operations, The Dow Chemical Company (MI)

We know you’ll do us proud representing our great state and the broad range of manufacturing capabilities we bring to Michigan and the U.S. Economy.

What suggestions do you have to strengthen American manufacturing and global competitiveness? What advice would you offer for establishing policies on behalf of your industry?

For more information on the legacy of past councils and a complete list of 2013 appointees, go to http://www.trade.gov/manufacturingcouncil/ 

Friday, March 8, 2013

Industry Update: More Trends Indicate MI Manufacturers Should Focus on Growth



We’ve been hearing a lot lately about how American manufacturing is making a comeback. Last year was particularly hailed as a “manufacturing renaissance,” as the sector led the way for economic improvement and consistently racked up positive industry stats. Manufacturing has been roaring back… but will it continue on this path?

Simply put, the answer is “yes!” The time has come for American manufacturing to thrive and it doesn’t show signs of slowing down. While there will always be minor blips in the road, report after report, and survey after survey, demonstrates that the manufacturing sector is improving.

Just recently, Industry Week published a report by the Manufacturers Alliance for Productivity and Innovation (MAPI). Its quarterly Economic Forecasts predicts that while “inflation-adjusted GPD will expand by 1.8 % in 2013 and 2.8% in 2014,” manufacturing production will do better than the rest of the economy and is “expected to show growth of 2.2% in 2013 and 3.6% in 2014.” Furthermore, “high-tech manufacturing production, which accounts for approximately 10% of all manufacturing, is anticipated to grow 4.3% in 2013 and 9% in 2014.”

The trade deficit is also a key indicator of manufacturing growth. The study found that the deficit is improving because of a growth in exporting. “Exports are anticipated to improve by 2.5% in 2013 and by 5.1% in 2014,” the study found. Recent reports from the U.S. Department of Commerce also found that the trade deficit in December was down from the previous month and from the previous year.

According to federal trade statistics, Michigan was one of only 11 states to post double-digit export growth last year. In 2012, Michigan ranked 8th in total merchandise exports with $56.9 billion, up 12% from 2011. Transportation equipment accounts for more than half of Michigan’s export dollars at $29.2 billion. Richard Corson, Director of the East Michigan U.S. Export Assistance Center, indicated that the exporting trend is certainly growing in Michigan.

Agriculture contributes over $71 billion annually to Michigan’s economy, making it the second largest industry. Second only to California in agricultural diversity, agricultural exports account for more than $1 billion annually and supports almost 15,000 jobs. In fact, export-supported jobs linked to manufacturing account for an estimated 6.4% of Michigan’s total private-sector employment.

A recent article by Site Selection magazine highlighted Michigan as 4th in the US in major new corporate facilities and expansions in 2012. New manufacturing facilities and/or expansions accounted for 74% of the 337 reported locations.

So statistics and studies are great – but what do they mean for Michigan’s manufacturers? What are the “action items” for Michigan’s manufacturers based on these trends?

It means that now is the time for manufacturers to capitalize on our industry’s improvement and implement changes to support business growth! Operating in a lean and efficient way should always be a top priority. However, maintaining “normal productivity” and doing “business as usual” shouldn’t be the only objective – companies need  to develop new business!

Manufacturers can do this in numerous ways such as:

As Ben Franklin would put it, “In this world, nothing can be said to be certain but death and taxes.” But the swing towards American manufacturing pride is different this time – America is certain that it wants products made in the U.S… and our state’s residents want products made in Michigan! There is a renewed energy around U.S. manufacturing that we haven’t seen since the manufacturing boom of “the greatest generation.” In a recent NBC news report, of the growing pile of American-made goods, an increasing number are those made with recycled materials. Apparently, it’s easier to manufacture green products domestically because recycled materials including plastic are particularly plentiful here.

If you are a Michigan manufacturer, it is critical to invest in changes and initiatives to grow now. MMTC can provide assistance in numerous ways. For more information, click here to check out a list of our business development services.

Image by Workforce Intelligence Network.