Monthly Archives: May 2015

Manufacturing Success-Evolving to adapt to changes in the manufacturing industry

Manufacturing Success

The U.S. manufacturing sector has undergone a massive change in the last several decades. How can we rejuvenate it? And how would career colleges benefit from a manufacturing renaissance?

Manufacturing Success

By Dr. Pietro (Pete) Savo

The U.S. manufacturing sector has undergone a massive change in the last several decades. Both print and online media document new automated technology and outline the lack of competitive advantage to improve operational efficiency. This inefficiency led to many manufacturing plants closing and a climbing unemployment rate. The result is a loss of U.S. manufacturing knowledge and manufacturing jobs. Historically, the manufacturing workforce was often composed of family members who had worked for generations at the same plant. The sharing of manufacturing knowledge occurred at the dinner table. In addition, skilled workers rose through the ranks and held management positions, thereby expanding the knowledge beyond the family. In this way, manufacturing knowledge continued to grow through the sharing of ideas.

As competition increased and methodologies changed, the required skill set changed. Remaining competitive meant hiring managers with university-generated business skills and little or no hand-on manufacturing experience. These highly educated and poorly experienced leaders began encouraging the older manufacturing generation to retire – or simply downsized them altogether. This meant a continued loss of historical and hands-on knowledge over the last 50 years. In 1950, manufacturing was about 35 percent of total employment. In 2004, this number dropped to only 13 percent, according to the Federal Reserve Bank of Cleveland economic commentary “Why Are We Losing Manufacturing Jobs?” In 2014, the number was only 6.6 percent. These changes made learning from the past difficult at best.

I began to write this article over 30 years ago when I was a production manufacturing worker at Sikorsky Aircraft. I witnessed the jobs leaving firsthand. Thirty years later while conducting research for my doctoral dissertation, I discovered that the missing link to that mass exodus of jobs was the devastating loss of manufacturing knowledge. This discovery prompted the need to create a potential solution rooted in two very important U.S. industries: the career college and manufacturing communities. My research identified the career college sector as the community best equipped to support this ground-level important function in our nation.

The career college community is grounded firmly in a context that is best equipped to support the U.S. manufacturing industry, because career colleges, universities and vocational schools are closest to the workforce. Bringing well-paying manufacturing jobs back is critical to the future of our sector. The global labor market has become strong outside the U.S. because of the high labor cost stigma associated with the U.S. economy. Heightened domestic costs empowered millions of people around the world to compete for U.S. jobs. This increased global competition led to downsizing of the manufacturing sector in the U.S. Many products formerly manufactured in the U.S. are now manufactured in part or in whole elsewhere in the world. U.S. companies outsourced manufacturing because the company’s leaders honestly believed American workers held no competitive advantage over cheap offshore labor. This strategy caused great devastation by halting investments in manufacturing technology and education. When companies do not have the additional capital generated from higher revenue to invest back into the business, the result is a loss of competitive advantage and shared knowledge.

The U.S. economy relies heavily on manufacturing, meaning that the sustained growth of the manufacturing industry is paramount to economic stability. The purpose of this article is to introduce the feasibility of a certification to bridge the gap between manufacturing and research in the U.S. by establishing a side-by-side value education partnership that links manufacturing industries and the career college community.

The researcher sought to understand the challenges from both a practitioner’s and researcher’s perspective. Manufacturing leaders participating in the survey for the feasibility study were from Boeing, Lockheed Martin, Rolls Royce, Northrop Grumman, Raytheon and United Technologies; the survey also included supply chain leaders from the U.S. government. Eighty percent of the survey respondents agreed that there is a need for a new manufacturing practitioner certification. Eighty-three percent of the survey respondents agreed that a new certified professional would improve manufacturing productivity through focused career education. Ninety-four percent of the survey respondents agreed that engaging in technology and career education would increase manufacturing opportunities. My study provided the educational capital to identify the need for developing a new joint manufacturing and research career-educated specialist, called the certified manufacturing practitioner (CMP).

The CMP concept simplifies the means to link the past, the present and the future by developing business solutions from shared leaders’ experiences in the manufacturing industries. The new certified manufacturing practitioner program is designed to improve knowledge sharing through case study evaluation that is grounded in where the manufacturing jobs reside. This shared education understanding takes the manufacturing case study out of the university classroom to the manufacturing shop floor. Career-guided steps are necessary to prevent further degradation of the manufacturing knowledge base. Historical literature provides the means to improve the U.S. manufacturing industry’s productivity and competitiveness through past and present case studies. Learning from history can improve the future. Business and manufacturing case studies provide real-life stories of successes and failures in the same industry and should be the basis for knowledge sharing. Students can best obtain and share this knowledge when the career education community is committed to rolling up its sleeves to deliver hands-on career education experience directly from the U.S. manufacturing source: the manufacturing shop floor.

The problem today is that business-manufacturing case studies do not receive adequate attention. It is difficult for a manufacturing business to be competitive in today’s volatile business market without having the means to review, understand, and benefit from experience. Not learning from the past creates a communication disconnect and knowledge loss, which has a direct link to lost manufacturing businesses and jobs. In manufacturing, when learning stems from past successes and mistakes, business efficiency, and competitiveness naturally follow, because an understanding of the past reduces the risk of repeating the same mistake – or, even worse, not learning from or sharing success stories. Success is dependent on the ability to develop and identify manufacturing solutions from case studies. This ability also can provide a heads-up display for market changes, diversity of markets and the ability to adapt to markets with a historical customer perspective that is practitioner-based.

A CMP practitioner can fuel progressive learning across corporate cultures and different leadership styles, and he or she could have the influence to build upon strong team-based relationships that share knowledge. The cost of waiting for old ideas to catch up with modern-day manufacturing practices obstructs new manufacturing market opportunities. Such obstructions represent a stream of wasteful manufacturing practices, making it difficult to be competitive in today’s volatile manufacturing markets. The loss of competitiveness results in lost manufacturing work and higher unemployment statistics. Once people become unemployed, 44 percent remain unemployed for 27 weeks or more, as reported by the Congressional Budget Office. CMP becomes the natural bridge by forming sustainable manufacturing solutions based on experiences, while at the same time observing market changes that provide the means to respond, adapt and capitalize on this market change. Finding the strengths and weaknesses of employees becomes important to rediscovering the company’s value.

CMP career college partnerships work with U.S. manufacturers to help them create and retain jobs, increase profits, and save time and money. Today, the manufacturing industry knowledge base is limited to real-time events that occur daily in the manufacturing industry. The CMP embraces a holistic and unified approach in career education study connected to the manufacturing shop floor, and it creates the means to retain and share manufacturing knowledge.

Imagine the education possibilities when the career college community reshapes the U.S. and global manufacturing industry. So, is the career college community ready to take CMP from a research study concept to a successful manufacturing reality? I think so.   Dr. Pietro (Pete) Savo 

Originally published: Career College Central Magazine, May/June 2014

http://www.careercollegecentral.com/pdf/CCC_May_2014.pdf

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Profit or Not?

profit-or-not

If you can’t beat them, join them. The solution, or perhaps at least a smart business strategy, is to convert from the for-profit sector to the nonprofit sector.

 In an era of increased regulation and speculation, some career colleges have made the jump to nonprofit status. So, is it nobler to be profit or not-for-profit? That is the question only you can answer.

Read the entire article featured in Career College Central Magazine, March 2015  page 28.

This idea causes me to become a little … irrational. Regardless of which flavor institution you might be, forprofit or nonprofit, at the end of the day you have to make more money than you spend in order to stay in business. The more money is called profit, and our modern political society has deemed it the new four-letter word. (Yes, I know profit has five letters, but this is my article and four letters is rational in my irrational world.) In the late 1970s, the federal government began a campaign to encourage equal access to higher education by creating regulations to make college loans accessible to more students. What next occurred in higher education is the business concept called supply and demand. Institutions from both sides of the for-profit/nonprofit aisle could now raise tuition, because more lenders were willing to lend money to more students. A golden business practice for creating more revenue is to raise prices at a time when customers are having no difficulty buying products and services at current prices. So when more money becomes available at current tuition prices – raise tuition. That is exactly what the for-profits and nonprofits did. When the tuition bubble visibly broke around 2011, the nonprofits felt the first sting. The wider availability of higher education to every student did not produce lower tuition costs. Imagine that: The higher-education industry has a strong capitalist business mindset.

When the tuition bubble visibly broke around 2011, the nonprofits felt the first sting. The wider availability of higher education to every student did not produce lower tuition costs. Imagine that: The higher-education industry has a strong capitalist business mindset.

The money problems quickly began to unfold. The states were the first to pull back funding. In 2011-12, college appropriations were reduced by 7.6 percent, the largest recorded decline in a half century, according to William Elliott, Melinda Lewis, Michal Grinstein- Weiss and IlSung Nam in their article “Student Loan Debt: Can Parental College Savings Help?” In 2010, the Obama administration, seeing the potential impact of the grumbling that was occurring in the states, attempted to reduce the effects of the anticipated state funding cuts by releasing the highly controversial Gainful
Employment Rule (GER) and a strategy to overshadow the effects of the easy money from the 1970s that resulted in higher tuition costs.

The Gainful Employment Rule was designed to create career colleges and training programs that could better prepare students for gainful employment – a great idea, but one that did not materialize. What happened instead was that the U.S. Department of Education decided to track the relationship between the debt students sustained and their earned incomes after graduation, as well as their rate of student loan repayment.

A catch-22 is an unreliable situation from which an individual cannot escape because of contradictory rules. By this definition, the GER is a catch-22. Under it, if a higher-education program graduates a large number of students with high debt-to-income ratios, that program may become ineligible for participation in federal student funding. Yet this higher-education debt-to-income ratio requirement is unfair.

The American Association of Community Colleges (AACC) comprises nearly 1,200 two-year colleges, according to the AACC. Many of the students at these colleges are part-time students working full time or full-time students working part time. Many of these students’ employers provide education benefits that significantly offset the student’s tuition costs. Because of this, the ratio between the level of debt these students sustain and their earning incomes after graduation is spectacular. The rate of student loan repayment is equally spectacular for only a fraction of the for-profit community.

The nonprofit public sector was measured by the U.S. Department of Education to be twice as good as the for-profit private sector. I would hope so, because in reality, the nonprofits and for-profits are in two different leagues. The metric itself is out of control and would not pass under any real scientific scrutiny, but again, this is government and politics. It is like the joke about the job-seeking accountant: Two plus two equals whatever you want it to. But the reality is that whoever owns and controls the metric manages the results, and the for-profits receive less-favorable marks in the higher-education catch-22.

The economy has been in decline, and institutions of higher learning are indeed businesses. Now with a decline in public institution enrollment and fighting for market share, the government comes to the rescue with the GER. Don’t take it personally – it’s just business mixed with politics. Further fueling the drama, college tuitions are still trending up, lenders are
lending less, and declining family incomes are making even less money available for students attempting to enroll today.

Now we have the perfect storm in higher education, including the decay of the purchasing power of financial aid. Again from the Elliott article, just 10 short years ago, the maximum allowable Pell Grant covered 98 percent of the average tuition and fees at public fouryear institutions; in the 2012-13 academic year, this figure dropped to 64 percent. All we really know is that the current system of debt-to-income measurement does not match reality, because again, nonprofit and for-profit institutions are not in the same league.

Even so, the metrics are driving change, and the GER holds for-profit programs to a higher standard than nonprofit programs. The U.S. Department of Education’s own performance data indicates that the average debt-to-earnings ratio for all Bachelor’s degree graduates in their first year of repayment is 13 percent, versus 12 to 16 percent for nonprofits. Yet under the GER, for-profit colleges and universities would be held to an 8 percent standard. Why the different standards? The Association of Private Sector Colleges and Universities (APSCU) challenged the GER on exactly that issue, and the court agreed, throwing out the rule. In its comments, APSCU cited the U.S. Department of Education’s use of “misleading” statistics in formulating the rule, including the claim that 72 percent of for-profit college graduates earn less than high-school dropouts. This casts doubt on the U.S. Department of Education’s neutrality. In my opinion, there is no conspiracy theory here; it is simply an example of the manner in which the government conducts business – nonsensically
and inefficiently, all while creating regulations that keep it in the regulation-creating business.

If you can’t beat them, join them. The solution, or perhaps at least a smart business strategy, is to convert from the for-profit sector to the nonprofit sector.

Rupert Murdoch said, “The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.” Our for-profit private sector understands moving fast to market, and fast is the countermeasure that negates the catch-22 every time.

by AMERICAN WRITER
Dr. Pietro Savo © 2015