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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
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11
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
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??
22
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.
33
44
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
How does it fit into the How does it fit into the economy?economy?
55
66
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
77
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
88
MaterialsMaterialsProductionProduction
FinishedFinished GoodsGoods
ProductionProductionDistributionDistribution
ConsumersConsumers
Service ProvidersService Providers
Manufacturing is Key to Economic Viability!Manufacturing is Key to Economic Viability!
??
99
MaterialsMaterialsProductionProduction
DistributionDistribution
ConsumersConsumers
Service ProvidersService Providers
Materials are not consumed locally.Materials are not consumed locally.
1010
MaterialsMaterialsProductionProduction
DistributionDistribution
ConsumersConsumers
Service ProvidersService Providers
No warehousing or shipping of Utah finished goods.No warehousing or shipping of Utah finished goods.
1111
MaterialsMaterialsProductionProduction
DistributionDistribution
ConsumersConsumers
Service ProvidersService Providers
Substantial reduction in demand for servicesSubstantial reduction in demand for services
1212
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
??
1313
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!
What is Manufacturing What is Manufacturing like in Utah?like in Utah?
1414
15151515
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
st
Con
st
Healt
hH
ealt
h
Tra
vel
Tra
vel
Reta
ilR
eta
il
Ed
ucati
on
Ed
ucati
on
Tra
nTra
nss
Scie
nc
Scie
nc
ee
Real
Real
Min
inM
inin
ggUti
lit
Uti
lit
yy
Wh
ole
Wh
ole
Info
Info
Fin
an
cFin
an
cee
Mg
Mg tt W
aste
Waste
Rec
Rec
Oth
er
Oth
er
Un
cla
ssifi
eU
ncla
ssifi
edd
16161616
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
1717
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%
1818
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
19191919
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
20202020
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%
21212121
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
2222
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
23232323
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
How does How does Manufacturing relate Manufacturing relate
to technology to technology development?development?
2424
2525
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)
2626
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
2727
New Technology does not Automatically New Technology does not Automatically Result in Economic DevelopmentResult in Economic Development
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
2929
Rapid New Product Deployment
3030
Rapid New Product Deployment
How will we incorporate new technologiesinto new products If we don’t have a critical
mass in manufacturing in Utah?
3131
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?
3232
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
3333
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
3434
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
How do How do Manufacturers Manufacturers
improve products?improve products?
3535
3636
3737
Ice Tray Parts & Ice Tray Parts & ProcessesProcesses
TotalAssembleFinishFormPunchStampQtyPart
411111Front Fin
411111Rear Fin
40888888Center Fin
3699999Cross Fin
721818181818Hinge Plate
5418181818Hinge Pin
31111Tray
213555627373856
3838
3939
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
4040
4141
4242
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!
What is the potential What is the potential for Manufacturing?for Manufacturing?
4343
4444
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
4545
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
4646
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.
4747
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
4848
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
4949
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
What should we be What should we be doingdoing??
5050
5151
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
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
5353
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
5454
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!
5555
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
5656
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.)
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
5858
““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!
5959
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
6060
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
Recommended