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Pete Bigelow · Three Michigan Universities Tout Economic Results from Research Collaboration, but Leaders Wary of Closer Alliance
October 5th, 2011
An alliance between Michigan’s three largest research universities has produced an economic impact of more than $15.2 billion across the state over the past four years, according to a report issued Tuesday by the Anderson Economic Group.
Members of the University Research Corridor have invested more than $1.8 billion in research, which represents growth of approximately 30 percent, according to Anderson Economic Group. In the same time span, the URC, comprised of the University of Michigan, Michigan State University and Wayne State University has cultivated the launch of 131 start-up companies.
The results are “an indicator of how truly world class these research universities are and what a tremendous asset they are to the state of Michigan,” said Jeff Mason, the URC director, in a written release. But the success of the collaboration does not necessarily mean the three universities want to grow closer together.
On Tuesday, presidents of the three universities appeared at the Detroit Economic Club and argued against the possibility of consolidating them into a single statewide system, the goal of a bill that has been referred to committee within the Michigan state Legislature. Currently, Michigan’s 12 public universities are operated autonomously.
A commission made up of 11 people appointed by Gov. Rick Snyder could analyze the current higher-education structure in the state and make recommendations on how to cut costs, up to and including consolidating some universities, according to a report today in the Detroit Free Press.
Michigan president Mary Sue Coleman said the universities have responded to economic conditions and been “fiscally responsible.” Michigan State president Lou Anna Simon questioned whether consolidation would really save money. “If you add layers, you add cost,” she told the newspaper.
Pete Bigelow · Midwest Memo: Ford Reaches Agreement With UAW, Wisconsin Aims to be Energy Industry Leader, Coal at Crossroads
October 4th, 2011
Three stories making news across the Midwest today:
1. UAW and Ford reach tentative deal. The United Auto Workers union has reached a tentative agreement with Ford Motor Co., announced Tuesday, that calls for $6,000 in signing bonuses and the creation of 5,750 new jobs at plants in the United States. Workers could vote on the agreement by the end of the week. “The American auto industry is on its way back,” UAW President Bob King said in a statement, adding the jobs will be added by the end of 2012. Crucial to the deal was consensus on entry-level wages of approximately $17 per hour. The tentative agreement means that Chrysler is the only automaker of the Big Three without a deal.
2. Coal at a crossroads. Coal produces nearly half the electricity used in the United States, but benefits associated with coal are outweighed by pollution and health problems that cause more economic harm than good, according to a recent study from the American Economic Review. Our partner station Ideastream begins a multi-part series today examining the economic impact of coal and its future in the Midwest. First up in the series: the natural gas boom has given coal added competition. Coal’s share of the nation’s electricity production was at its lowest level in more than 30 years through the first quarter of 2011.
3. Wisconsin announces microgrid project. On Monday, Wisconsin officials announced a new project that aims to make the state a national center for energy microgrids, according to the Milwaukee Journal Sentinel. By using energy storage devices and battery systems, microgrid “energy islands” maximize the use of energy from renewable sources, according to the newspaper, and could help if main power grids are disrupted. Several Milwaukee-area companies and the state’s four largest engineering schools are among the participants in the project.
September 30th, 2011
Back in June, President Obama came to Pittsburgh to tout something called Advanced Manufacturing. He created a group to work on it, made up of government officials, academics, and industry. The point, the president says, is to promote innovation, make the country more competitive. But, we wanted to know:
What is advanced manufacturing anyway?
“Oh goodness,” said Mike Molnar when asked just that. “That’s one of those questions I should probably have a ready answer to.”
Molnar is the Chief Manufacturing Officer at the National Institute of Standards and Technology. Advanced manufacturing is kind of his focus. But as I found, most people can’t agree on what it is.
It can be about new ways of making things, says Erica Fuchs of Carnegie Mellon University.
“It can be robots; it can be 3D printing,” Fuchs said.
Or, maybe it’s just companies building high tech products for newer industries.
“It could be just that brand new battery company, that brand new sensor company,” Fuchs added.
Some like Ned Hill of Cleveland State have a more flip answer.
“Advanced manufacturing is any manufacturing company that’s survived over the last twenty years,” he said.
Molnar of NIST took a second to come up with his own definition.
“Advanced manufacturing is the ability to make something nobody else can,” he said.
The President offered this definition back in June.
“It means how do we do things better, faster, cheaper to design and manufacture superior products that allow us to compete around the world” Mr. Obama said.
However we define it, advanced manufacturing has become a priority for Mr. Obama. He was speaking in front of a yellow robot at Carnegie Mellon University. The occasion was to announce a new partnership.
“All with one big goal,” he said. “And that is a renaissance of American manufacturing. We’re calling it AMP, A-M-P, the Advanced Manufacturing Partnership.”
The point says the administration, is to find and support new technologies that could create jobs and make American manufacturing more competitive. AMP is made up of engineering schools like Carnegie Mellon, plus industry and government officials. They’re having their first meeting this month.
And, when I visited Carnegie Mellon in Pittsburgh recently, I could see why the President came here to talk about the future of manufacturing.
“At the end of this robot is a projector!” said David Bourne, as he showed me the frame of a military-grade Humvee. He’s a principal scientist at CMU’s Robotics Institute.
An orange, robotic arm equipped with a welding torch, and, yes, a projector sits idly by. But this robot has no intention to replace humans. Bourne says it has a nobler mission: it’s going to help the human workers do what they do better.
“If we can get robots and people to work together,” he said, “then the economies come back into line because it’s easier to program robots to do what they’re good at, and we can project any kind of information onto the product in the right place so the person can go over and tighten something in exactly the right spot.”
Robots still don’t have opposable thumbs.
This friendly robot gets funding from DARPA, the same part of the Department of Defense that helped create the internet. And, like how the internet has grown to pervade nearly all aspects of our life, Bourne sees big implications for his technology.
“We’re going whole hog across the product spectrum, Bourne said. “I’m doing this kind of research for everything from cell phones, to this DARPA project for military vehicles, I’m working with Boeing for airplane wings. Same technology, different uses.”
And, that’s what this advanced manufacturing partnership is supposed to be about: helping emerging technologies that can help lots of industries and companies. Bourne thinks more manufacturers will switch from mass production to mass customization. That means churning out small batches of highly customized products, instead of thousands upon thousands of a single design.
The idea is that if America can get good at this high end manufacturing, and push into new materials and technologies, we can continue to have high paying jobs, even if it’s not as many as manufacturing’s heyday.
“It’s instead most likely going to be something where there are fewer people on the manufacturing line itself, but we need those people in order to have the jobs that are in innovation and for our country to continue to stay ahead,” said Erica Fuchs of Carnegie Mellon.
Fuchs’s specialty is engineering and public policy. And, she’s found that when we lose manufacturing, we also lose research and development. She says that’s because they go hand in hand. The person designing something often needs to walk next door to the factory to make sure it all comes together.
“The engineer needs to be there to figure out why the oven isn’t working today,” she said.
In June, the President’s Council of Advisors on Science and Technology said [PDF link] that the US is losing the ability to make things invented here, like LED lights and components for TVs and smartphones. And, something else important: robots.
David Bourne at Carnegie Mellon’s robotics lab noted that the robot he showed me actually came from Switzerland.
“We’ve already done a pretty good job losing the robotics industry,” he said. “We haven’t lost the software part yet. It shows you just how fragile this is. If we fall asleep—this is a crossroads for American manufacturing. If we miss this one, it could be a generation before we have another opportunity like this. This is a big deal.”
And, that’s why those who care about making things are closely watching the President’s Advanced Manufacturing Partnership, hoping something comes out of it that will make the Midwest and America a manufacturing power again.
September 28th, 2011
This winter, President Obama took the unusual step of naming Ron Bloom his assistant for manufacturing. But Bloom stepped down in August to return to his family in Pittsburgh. He hasn’t been replaced. This comes as manufacturers in our region are clamoring for attention. Many want a sign that manufacturing policy is a priority.
They say it’s time for a national manufacturing policy.
Germany has one. So do Japan and China. And, many manufacturers in the US think we need one too: one document that puts all the existing policies together and says manufacturing matters.
“There needs to be some sort of coordination at the top level that says all of these things add up to something bigger. And, right now we don’t have that,” says Bill Rayl, who heads the Jackson Area Manufacturers Association near Ann Arbor, Michigan.
He was at a meeting in Lansing the other week where the topic of a national manufacturing policy came up. Rayl says most of his members are eager for a cohesive strategy that says “that manufacturing is important to national defense and our national economy.”
Jim McGregor agrees. He’s Vice Chairman of McGregor metalworking in Springfield, Ohio.
He says there’s just too much uncertainty in the manufacturing sector: uncertainty about regulations, legislation, and policy.
One reason businesses aren’t spending and hiring more is fear. And, he thinks a cohesive national manufacturing policy could help change that.
“I think there’s a lot of talk and no action,” McGregor says. “And, we’re passed wishing and hoping.
“For a long time, I think the preponderant view in Washington was that the decline in manufacturing was number 1, inevitable, and number 2, just fine,” says Ron Bloom.
If there was anyone in government who could have pushed a manufacturing agenda, it’s him. Until August, he was President Obama’s assistant for manufacturing policy. You might know him as one of the key players in the government’s bailout of GM and Chrysler.
Injecting taxpayer dollars into the auto industry was one of the most aggressive government actions in decades, but what about before companies fail? What about promoting and helping the ones that can succeed?
“I don’t think we have a formal, capital-P policy in the sense of something you can look up—a bound volume, as it were,” Bloom says. “We did not think it was a good use of our time to try and formalize a capital P policy.”
What we do have, Bloom says, is an administration that has pushed a number of initiatives that help manufacturing, if not exclusively.
“The President pushed very hard and hopefully we’re going to get patent reform. Is that a manufacturing policy? Two thirds of all patents are filed by manufacturing companies. Export promotion, infrastructure spending, allowing capital spending to be depreciated, all areas that are not absolutely to manufacturing, but the preponderance of their benefits go to manufacturing,” Bloom says.
Unlike Japan and China, American leaders tend to be reluctant to get too involved in private industry. That’s a big reason why the administration doesn’t want to create a document that looks like Industrial Policy. To many, even the term reminds them of something like China’s Five Year Plan or suggests the government picking winners and losers. The flap over the taxpayer losses in failed solar company Solyndra shows what happens when the government gets too involved in one company.
Ron Bloom says, in general, the government’s role is to help where the market won’t. He says actions like the auto bailout should be the rare exception. Instead, he says government should boost research and development on technologies that might not see a payoff for many years to come.
The closest thing the administration has to a formal policy is its promotion of so-called advanced manufacturing as an engine for innovation and productivity.
“Now, that does mean that the aggregate number of jobs per se in manufacturing is not going to be huge,” Bloom says. “But that’s the price of a productive sector. That’s not a bad thing.”
He says the jobs that do remain will have a bigger effect on the overall economy. After all, he says Walmarts follow auto plants. Not the other way around.
September 27th, 2011
Especially in hard times, people look for ideas that will be “magic bullets,” big ideas touted as economic saviors able to restore wealth and jobs and to transform the economy. What are some of the “magic bullets” you’ve seen come and go, or that you’ve heard about? What did they promise and how did they deliver?
September 26th, 2011
Nathan Oostendorp is a successful open-source entrepreneur living in Ann Arbor, Mich. He is the founder of Ingenuitas, a company that uses Open Source software to improve quality control in manufacturing.
He shares his thoughts on why he thinks the future of manufacturing depends on factories working together to improve their industry.
As we soul-search for what manufacturing needs to reinvent itself, there is a light in the darkness. We can look to a sector that has drastically impacted the way we live and communicate.
Mobile devices, online social networks, and the Internet have changed the way we interact — but they also show us a new, more open, way to innovate in manufacturing.
Companies like Google, Apple, and Facebook created immense value for their shareholders and users. But one thing they have in common, is they have all used open innovation, often in the form of Open Source software, to bring products to market quickly and cheaply.
Open Source is software and code that’s freely distributed over the Internet. This lets people use it in their own way.
There would be a lot fewer web companies if it still cost $10,000 for a server and the software to run it, like it did in the early 90’s. Today it costs a few bucks, if you pay anything at all.
Walk in a factory today, there’s a lot of computers being used on the floor. But they’re usually expensive and you can’t upgrade them yourself. With an Open Source system, anyone could make improvements as they adapt them to their needs for safety, quality control and data management. The result would be something that’s low-cost and creates a lot of value.
If you want to see at what the future of manufacturing with open source could look like, go no further than the Maker Faire Detroit at the Henry Ford Museum.
The exhibitors, or “Makers”, figure out ways to manufacture their own designs, in a way that is very similar to Open Source: They publish designs for their prototypes. They use Open Source software and off-the-shelf hardware. They blog, and tweet every dead end and every small victory.
Sure, at the Maker Faire there’s dragon trucks, life-size games of mousetrap, and souped-up micro race cars – but they’ve also produced some pretty impressive machines – Open Source Computer Controlled Routers, Laser Cutters, and 3D Printers were all on display. All things used in manufacturing today.
Some are sold by as kits by profitable businesses, some are works in progress and many are merely extensively documented weekend projects. But these developers of “Open Hardware” and doing just what the Open Source Software hackers did, only with electronics and machines.
It may seem like a big leap from a few Open Source machines to a massive change in how things are made, but if you look automation’s history, big things can happen when entire industries decide to collaborate.
For 30 years Henry Ford’s automobile manufacturers association required automakers to share their patented innovations with each other, and the result was the golden age of Detroit.
Today, with our means of communication and the pace of global innovation, Open Source collaboration on automation technology represents a way for an entire sector to create much more value to their customers.
In the US, the era of manufacturing turning massive amounts of unskilled labor into a production system is over. Technology can move manufacturing towards an industry where the best innovators, not the cheapest workers, will reap the rewards.
This story was informed by the Public Insight Network.
Pete Bigelow · Midwest Memo: Michigan Governor Off to Asia on Trade Mission, Wisconsin may Ease Mining Laws
September 23rd, 2011
Three stories making news across the Midwest today:
1. Michigan governor’s trade mission. Gov. Rick Snyder and an entourage of administration and business officials head to Asia this weekend as part of his first trade mission while in office. Snyder will spend two days in Tokyo, one day in Beijing, one day in China and one in Seoul, according to our partner station Michigan Radio. He will emphasize the state’s business tax structure and workforce in his attempts to entice overseas leaders to invest in Michigan, though downplays any expectation of immediate results. “I don’t have high expectations there,” he said. “This is more about starting the relationships and then looking six months, a year out.”
2. Manufacturing’s one key trait. In a short essay for Bloomberg Business Week, General Motors CEO Daniel Akerson writes the key to saving the American manufacturing industry is adaptability. In the wake of bankruptcy, he points toward an agreement the United Auto Workers made to lower wages at a plant in Lake Orion, Mich., as one that hailed the arrival of a more flexible cost structure. “If you don’t prize adaptability, whether it’s industrial relations or it’s in how you view, perceive, and react to your competition, you’re going to be a dinosaur,” he said.
3. Wisconsin could ease mining laws. A special legislative committee in Wisconsin will examine proposals to minimize state laws that regulate the mining industry, according to the Milwaukee Journal Sentinel. “We need to focus, one, on the environment and, two, on job creation,” Republican State Sen. Neal Kedzie told the newspaper. Regulation became an issue recently when Gogebic Taconite announced it would delay plans for an iron-ore mine near Hurley until state laws eased. Gogebic said the mine would employ 700 workers.
September 20th, 2011
MacArthur Geniuses: The Midwest abounds with geniuses, at least where the John D. and Catherine T. MacArthur Foundation is concerned. The Chicago-based foundation awarded three of its $500,000 genius grants to women faculty members at the University of Michigan, and another to Chicago architect Jeanne Gang. You can read the list, and see an interview with Gang here.
Chicago River Development: Chicago Mayor Rahm Emanuel says he is eager to reverse the
impression that many visitors and residents have of the Chicago River. So, he’s planning to invest in recreational facilities up and down the river, starting with new boathouses. There will be new launches for paddlers, as well as picnic areas and concession stands.
Say Nice Things About Union Members: This fall, Ohio voters will consider whether to repeal Senate Bill 5, which curbed the collective bargaining ability of unionized state workers. Opponents of the repeal effort still want to see that ability cut, but they’re trying a novel tactic: saying nice things about union members. Here’s the story from our partner station ideastream in Cleveland.
September 16th, 2011
In 2007, entrepreneur Brad Keywell co-founded a company that intended to build a critical mass of online consumers and leverage their collective purchasing power with local merchants. The company, originally called The Point, was a quick failure.
“You could have called it ‘What’s the point?,’” he joked Friday, while delivering the keynote address at the University of Michigan’s “Entrepalooza,” a two-day seminar on entrepreneurship at the Ross School of Business.
Forced to retreat and reinvent the company’s business plan, he and two partners simplified the concept and re-launched as Groupon. Since then, the Chicago-based company has seen its workforce mushroom from 37 employees to 3,600 and grown from 152,000 subscribers to approximately 115 million. Forbes Magazine recently called it the fastest-growing company in history.
Per Securities and Exchange Commission regulations, Keywell could not comment on the company’s upcoming initial public offering, tentatively slated for October or November, nor its recent decision to delay the IPO due to what it termed “market volatility.” But in general remarks, he attributed the company’s position to its willingness to embrace failure.
“The surest thing you will experience in life is failure,” he said. “But talking about that is a taboo. We take classes in accounting and everything else. How much time do we spent talking about failure? Zero, usually.”
Keywell graduated from Michigan in 1991 and earned his J.D. from the university’s law school in 1993. In addition to Groupon, he has co-founded Lightbank, a venture fund that invests in disruptive technology businesses, Echo Global Logistics, a transportation management firm and MediaBank LLC., a tech firm that provides integrated tech platforms.
While noting that more than half of the companies currently among the Fortune 500 were started either in a recession or bear market, he lamented that U.S. policies and businesses were primarily concerned with risk avoidance during the most recent downturn. He believes they should instead concentrate on intelligent risk-taking.
That position left Keywell in a quandary recently. Illinois Gov. Pat Quinn asked him to serve as chairman of the state’s Innovation Council. “My reaction was that I’m happy, but I don’t know how much government can do, other than get out of the way,” he said. “Cheerlead, connect and get out of the way.”
In his closing remarks, he said current conditions make now the “best time in the history of the human race,” to start a business, noting that capital markets are more efficient, real-time data is available and technology is cheap or often free. Groupon, he noted, started on WordPress.
Since he believes failure is inevitable, he said that entrepreneurs should not view their business success as win or lose, as much as “win or learn.” He defined a three-step entrepreneurial business process as: taking risk, inevitably failing and then, hopefully, emerging stronger.
Keywell advised would-be entrepreneurs in the audience to avoid a common mistake in writing their business plans.
“Too many entrepreneurs write business plans to convince themselves how they’ll defy gravity,” he said. “The best thing you can do is have an idea and convince yourself it’s not a good idea. You’ll save yourself the aggravation. … Write down your idea and beat it up.
“Precious few (ideas) get through that process.”
September 14th, 2011
Imagine going home out at night while your computer keeps doing your job. That’s the basic idea behind a trend in manufacturing called “lights-out machining.” You punch out. The machines keep working. It’s a way to make a lot more product with a lot fewer people … and fewer jobs. Here’s the story of two Michigan companies that are trying to boost productivity and stay competitive by turning out the lights and going home.
First, a little perspective. Man’s love/hate relationship with automation has been around a long time. Take the 1936 classic Modern Times.
Charlie Chaplin is in a frenzy. He’s tightening bolts on the factory line. The boss straps him into a person-feeding machine, so his hands can keep working while his mouth eats lunch. It’s a nightmare of productivity, where men are captive to machines. But manufacturers today have a different vision.
“At the end of the shift, my operators go home. Their machines continue running in the building with nobody in it,” says John Hill.
Hill owns a small business called Midwest Mold Services. The company designs and builds metal molds for plastic parts. These parts wind up in cars, medical devices, and even as the emblem on the back of a Cadillac. Hill says in the old days, shaping these metal molds was a job for one machine and one operator.
Now one operator programs multiple machines to carve steel almost continuously. Largely unattended. Lights-out. This is only part of John Hill’s business, but it’s the part that puts his productivity per actual employee on steroids. He says that productivity keeps his prices competitive and keeps 30 people in good jobs.
“If I was more, you know, it’s all about me, I could get rid of five more guys and buy two more machines and say life is good,” he says. “But it’s hard to tell somebody they don’t have a place here anymore.”
When it comes to manufacturing, productivity and jobs are two lines that don’t play together well on a graph. Corey Greenwald learned that the hard way. Twenty years ago, he got a degree in automated manufacturing technologies, but found that people fought it. They said it would take away jobs. And you know what?
“They were right, they were absolutely right,” he says. “What they didn’t know is that it wasn’t going to be their biggest enemy. Their enemy was gonna be developing countries around the world that had really cheap labor.”
Over those same twenty years, the U.S. lost about six million manufacturing jobs. Today, Corey Greenwald has restored a few of them. He runs a lights-out machine shop called Hard Milling Solutions, in Romeo, Michigan. He says the technology gave him his life back.
“Now, we don’t even have to check in on the machines unless they call us,” he says.
Take the other weekend. Sunday afternoon.
“I’m on Lake Michigan at the beach with my kids,” he says, “and my phone starts going off. And I’m thinking what is that?”
Check the blackberry … it reads something like:
“V56-1, email notification.”
Which means that particular machine has stopped. Greenwald can then go online and look at the machine through a surveillance camera. He can log into the machine itself and diagnose the problem. He can recalculate and reload the program, from Lake Michigan or Bangladesh. The only he can’t do remotely is press start. Someone still has to go in for that.
Back at Greenwald’s machine shop, 5:30 p.m. rolls around and Jeff Bond closes up for the night.
“Just shut the lights off for lights-out machining,” he says. “Actually, it’s a good feeling when you go home and they’re all running like that. It’s almost like having a night shift crew without having one.”
As all the workers leave for the night, I stay for a minute, just to listen. The shop hums with the sound of the new manufacturing: machines running through the night, though I’m the only person here.