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1 9:30 a.m. Registration and Coffee 10:00 a.m. Welcome David Shaw, Vice President of the Office of Research and Economic Development, Mississippi State University (MSU) 10:10 a.m. MSU s Reshoring Coalition: Challenges and Opportunities Clay Walden, Director of CAVS Extension, MSU 10:30 a.m. Introduction Allen Greenwood, Professor, Department of Industrial and Systems Engineering, MSU Accelerating Reshoring Harry Moser, President and Founder, Reshoring Initiative 12:00 noon Luncheon Introduction Lori Bruce, Associate Dean for Research and Graduate Studies, Bagley College of Engineering, MSU Reshoring: A Manufacturing Strategic Perspective Jay Moon, President and CEO, Mississippi Manufacturers Association Chairman, International Economic Development Council Board of Directors 1:00 p.m. Strategies for Success Panel Discussion Moderated by Bill Martin, Director, Franklin Furniture Institute, MSU Panel Members: Natasha Baughman, Quality Manufacturing Dewel Brasher, Navistar Defense Guy Lipscomb, Southern Motion Paul Jones, Multicraft Ray Purnell, Southwire Company Glenn Dennis, CAVS Extension, MSU John Moore, CAVS Extension, MSU 2:30 p.m. Introduction Robert Sheely, Manager, Business Systems and Information Technology, CAVS Extension, MSU Supporting Reshoring in Mississippi Brent Christensen, Executive Director Mississippi Development Authority 2:50 p.m. Recap of Key Points Clay Walden, Director of CAVS Extension, MSU 3:00 p.m. Break 3:15 p.m. Total Cost of Ownership Calculator Workshop Harry Moser, President and Founder, Reshoring Initiative (optional Bring your laptop if you plan to participate)
2 MSU s Reshoring Coalition: Challenges & Opportunities Dr. Clay Walden, Director, CAVS Extension Robert Sheely, Manager Business Systems & Information Technology, CAVS Extension Dr. Allen Greenwood, Professor of Industrial and Systems Engineering Bill Martin, Director of Franklin Furniture Institute Industrial & Systems Engineering 2
3 Employment Level The Challenge: Loss of Manufacturing; Offshoring as a Major Driver Manufacturing Employment Trends Variable State (per 10,000) Furniture (per 1,000) Mississippi 30% drop in Furniture Jobs; 20% drop overall since Overall U.S. lost 2.8 million manufacturing jobs to China between (Economic Policy Institute, September 2011) Based on U.S. Department of Labor Year Based on a study conducted by the Alliance for American Manufacturing However, companies are re-examining according to a recent study released by MIT, while 37% planned or were actively considering reshoring, while 14% of U.S. companies definitely plan to move some of their manufacturing back home. (Wall Street Journal, July 18, 2012). Yet, the literature little emphasis in the scholarly literature methodology for sourcing decisions overall and reshoring in particular. (Note: Recent attention in the popular business press thanks to Mr. Moser). Industry needs better tools to help them make effective shoring decisions. 3
4 The Challenge: The Shoring Decision Transportation Currency Exchange Rates Material Labor Warehousing Inventory Carrying Cost Corporate Tax Rates Geo-Political Changes Re-work Lead-Time Harry Moser. Total Cost of Ownership groundbreaking work showing impact of many of these factors Tariffs Obsolescence (Parts, Final) Intermodal & Containerization Warranty Flexibility Responsiveness Quality Risk Intellectual Property Coordination Accountability Product Development Too often off-shoring decisions are based on limited, myopic cost analyses ignoring total cost drivers and the critical element of time. When all costs are taken into account, certain U.S. states, such as South Carolina, Alabama, and Tennessee (insert: Mississippi?) will turn out to be among the least expensive production sites in the industrialized world… The early evidence of such a shift is mounting. Made in America, Again; Boston Consulting Group, August
5 The Opportunity: Closing the Reshoring Cost Gap Advantage: Domestic Advantage: Offshore Apparent Gap (30%) Ignored Costs Hidden Costs Time Variation Qualitative Factors Best Practices 5
6 The Opportunity: Reshoring, Best Practices, & Research Major Reasons for Reshoring Reduce Time to Market Respond Faster to Customer Orders Savings from Warehousing / Transportation Improved Quality Protection of Intellectual Property Reference: Research conducted by MIT (Simchi-Levi) based on a survey of 108 U.S. based manufacturing companies with multinational operations Some Firms Opt to Bring Manufacturing Back to U.S., Wall Street Journal, July 18, 2012 Close the Gap Best Practices (e.g., Lean and Six Sigma) and appropriate technologies (e.g., Simulation); workforce training within an increasingly competitive manufacturing environment. Research: Develop a holistic framework for the shoring decision that properly recognizes both total costs and risks/uncertainties
7 Engagement: Summits, Seminars, and Case Studies Focus: Automotive and Furniture Clusters Research: Modeling and Analysis, Systems Engineering Focus: Modeling & Decision Support Systems Approach Our approach links university, federal, state, community college resources to address the re-shoring opportunities with key industries. Engagement includes leveraging strong Workforce Development partnerships, examples include recent work with 7
8 Reshoring National Center of Excellence Industrial Engagement Enable process improvement and disseminate best practices through direct engagement and training automotive, furniture, etc. Research & Development Design and develop decision-support (DSS) models and systems Provide assistance and support to industry Understanding of industry practices, needs Initial sourcing decision taxonomy Conduct sourcing and reshoring literature review Engagement plan Research Plan Industrial & Systems Engineering Application of Best Practices Automotive Application of Best Practices Jobs created Furniture Deep Dive Engagement Case studies Best practices & tech. transfer Deep Dive Engagement DSS components Other Industries Identify and define decision support needs Identify and define decision support needs Define use cases Develop & test models DSS architecture Jobs created Case studies Best practices & tech. transfer DSS components
9 Current Research Projects Understanding Managerial Decisions About Global Sourcing: Offshoring and Reshoring of Production, Masters Thesis Ray Purnell, May 2012; Thesis Advisor: Allen G. Greenwood, Department of Industrial and Systems Engineering Simulation Modeling of Domestic and International Intermodal Supply Paths Principal Investigators: Allen G. Greenwood, Travis Hill, Mississippi State University Industrial Partners: Nissan, Bauhaus USA, Flexsteel 9
10 Broad Support for the Initiative Sample of responses from Mississippi manufacturers. Automotive Supplier I was excited to hear about the possibility of your group working on re-shoring of manufacturing jobs as it relates to my industry. As a small-sized, regional automotive plastic components supplier, I feel there are many opportunities for my company to gain business within the supply chains of the various carmakers in and near Mississippi Scott Harrison, CEO/Owner, Harrison Manufacturing Jackson, MS I was glad hear about the possibility of the institute doing research and study going forward in the area of “re-shoring We would certainly support and be very interested in detailed research that looks at all aspects and costs of this practice. We feel such a study is needed to gain a through understanding of the impact this is having on the U.S. furniture manufacturer as well as the retailer and the ultimate consumer. Mark Franklin, President Franklin Corporation, Houston, MS Furniture OEM Leveraging strong partnerships with other Key Stakeholders MAMA 10
11 Engagement Track Record & Capabilities Lean & 6 Sigma projects Industry training 5.3 Billion in Economic Impacts and Over 2,300 jobs created or retained Based on 3 rd party survey conducted on behalf of Us Department of Commerce, NIST-MEP (completed projects since 2006). Enterprise assessments Research Cost modeling DSS Development Simulation modeling Enterprise systems engineering $11.2 million in funded research, 101 peer reviewed publications, 7 Dissertations Based on data reported since 2007 to the American Society for Engineering Education. MSU has the expertise and partners to enable this effort to be a model for the nation. 11
12 Challenges & Opportunities: Reshoring Defined Need, Robust Capabilities, and Statewide Support Engagement: Exploit opportunities for Mississippi manufacturers working with OEMs and those small and medium size manufacturers (SMEs) that may become the re-shoring solution. Assist in providing access to best practices like Lean, Six Sigma, Simulation, Moser s Total Cost of Ownership Research: Leverage the above opportunities such that a strong contribution in order to impact regionally and nationally the shoring decision research. Looking for opportunities to partner with Mississippi s SMEs and larger OEMs to facilitate significant growth in manufacturing jobs through re-shoring! Our Goal position MSU through collaborative partnerships to become a national leader in reclaiming critical manufacturing jobs through re-shoring. 12
13 EXTRA SLIDES 13
14 The Opportunity: Current Situation: Nationally 1,900,000 manufacturing jobs lost to China. At 10% Re-Shoring to re-claim lost jobs: 190,000 jobs nationally 2,000 jobs in Mississippi (the size of landing Automotive Assembly Plant) 14
15 The Opportunity: Reshoring Decision Outsourcing Decision Made Sourcing Decision Change? Yes Re-Shore Decision No Decision Support System When all costs are taken into account, certain U.S. states, such as South Carolina, Alabama, and Tennessee (insert: Mississippi) will turn out to be among the least expensive production sites in the industrialized world… The early evidence of such a shift is mounting. Made in America, Again; Boston Consulting Group, August
16 Best Practices Summit Problem Research Case Studies Field Research Engagement Problem Taxonomy Enterprise Assessment Pilot Studies Model Development Training Decision Support System Re-Shoring Evaluations Re-shored Jobs Summit Industrial & Systems Engineering Theses & Dissertations Research Scholarly Publications Advancing Knowledge Our approach tightly couples research & outreach to improve shoring decision making piloting in Mississippi and the region. model for the nation, leading to jobs. 16
17 Cost and risk over time Analyses through Re-shoring Decision Support System Total off-shore total costs $ On-shore costs Apparent off-shore costs $ time Research team is targeting supporting 5 graduate students; primarily Ph.D. time Savings Apparent off-shore savings time $ Available $ for re-shoring investment time Real off-shore total savings Careful analysis can clarify re-shoring opportunities. 17
18 Trade Related Manufacturing Job Losses in Mississippi Congressional District 1 8,500 Congressional District 2 3,100 Congressional District 3 4,000 Congressional District 4 3,800 Total = 19,400 jobs Source: Alliance for American Manufacturing ( ) 18
19 Holistic Total Cost of Ownership Decision Tools Education & Training Project Deployment Re-shoring jobs through better decisions Re-Shoring Jobs Improved Sourcing Decisions Research Outreach Sourcing decisions can be improved through effective research and outreach. 19
20 Research Capability: Proposal Team Sponsored Research A Decision Support System for Rapid Comparison of Lean-to-Batch Systems, USDA. Nissan/Canton Production System Simulation Modeling and Analysis, State of Mississippi (CAVS). Nissan/NA Logistics Modeling and Analysis, State of Mississippi (CAVS). Development of an Integrated Decision Support Environment, NASA, John C. Stennis Space Center. Pathfinder 2: Insitu Design Cost Trades (IDCT): A Life-Cycle Support Trades Tool, Air Force Research Laboratory, Materials and Manufacturing Directorate. Theses and Dissertations A Taxonomy-Based Assessment Methodology for Small- and Medium-Size Manufacturers. Improving the Formation of Virtual Enterprises Through a Systematic Approach for Managing Key Broker Activities. Academic courses: Enterprise Systems Engineering, Logistics Engineering, Engineering Economics I and II, Systems Simulation I and II, MSU has significant research experience in areas related re-shoring decision support. 20
21 Outreach Capability: Proposal Team Making a Difference Economic Impact: $4 Billion 1,600 jobs created or retained Through On site Projects and Professional Development Workshops (e.g., Lean Six Sigma, Problem Solving, Kaizen Events, Simulation Modeling, Solid Modeling, Finite Element Analysis ) Recent Successes Simulation Modeling: Plant Start-Ups Prototype to Full Scale production (9 mo.) 80% Improvement in Plant Quality 400% Increase in Plant Throughput (3 mo.) 2010 Recipient of University Economic Development Award of Excellence MSU has a long and solid track record of industrial outreach and economic development. 21
22 Strong Track Record: Competitive Funding NIST-Manufacturing Extension Partnership (8 contracts); $2,205,000; Timeframe ; C. Walden-CAVS Extension, Annual contract to assist CAVS Extension in providing technical assistance via on-site projects and professional development workshops which target the needs of Small and Medium size Manufacturers. Department of Labor Mississippi Department of Employment Security; $500,000; Timeframe: April 2010 March 2011; Walden, Sheely; CAVS Extension, Enhancing on the Job Problem Solving targeting the development of problem solving skills throughout the automotive workforce as a result of a three way partnership between Holmes Community College, Nissan North America, and Mississippi State University. Navistar Defense (8 contracts): $1,134,000; Timeframe ; G. Dennis, CAVS Extension, Led manufacturing system design and implementation for MRAP vehicle launches supporting Department of Defense (covers 15,000 units across 12 vehicle platforms). Bad Boy Enterprises, $145,000; Timeframe : August 2009 Present; G. Dennis, R. Sheely, CAVS Extension, Provided technical assistance which resulted in the implementation of best practices in dramatically increasing plant capacity; performing R&D analysis of vehicle safety, and electric vehicle range extension. U.S. Forestry Service, $35,000; Timeframe 2006; C. Walden, CAVS Extension, Simulation based training introducing Furniture plant managers to lean manufacturing principles. National Shipbuilding Research Panel (NSRP), $99,000; Timeframe: 2009-Present; C. Walden, A. Greenwood, CAVS Extension; Dept. of Industrial & Systems Engineering, project work working with Mid-tier shipyards to explicitly link CAD models with Shipyard simulation. Office of Naval Research, $589,000; Timeframe , C. Walden, A. Greenwood; CAVS Extension, Dept. Of Industrial & Systems Engineering; shipyard wide simulation decision support system used during the regeneration of the Pascagoula shipyard after Hurricane Katrina, $589,300. NASA Stennis Space Center (5 contracts), $170,000; Timeframe ; A. Greenwood, Dept. of Industrial and Systems Engineering, Provided technical assistance for the analysis, design, and management of an agency-wide center of excellence for propulsion testing; involved enterprise modeling for the integration four NASA test sites. Air Force Research Laboratory (5 contracts): $364,000; Timeframe ; A. Greenwood, Dept. of Industrial & Systems Engineering; Researched, designed, and developed methodologies and application prototypes to address total cost of ownership early in the systems design process. U.S. Small Business Administration (SBA); $80,000; B. Martin, Franklin Furniture Institute; to fund various programs of the Franklin Furniture Institute – to establish an Export Assistance Center to enhance Mississippi exports. Small Business Administration (SBA); $1,285,924; B. Martin, Franklin Furniture Institute; Timeframe 8/31/2006 7/31/2009; Furniture Outreach Program used to provide outreach to the Mississippi furniture industry. Small Business Administration (SBA), $509,000; Timeframe July June 2009; R. Sheely, CAVS-Extension, Development and Delivery of Engineering Engagement Workshops focused on the needs of improving productivity, quality, cost competitiveness of Small and Medium Size Manufacturers. Borg Warner; $47,712; Timeframe July 2010 June 2011; J. Moore, CAVS Extension; Comprehensive Lean Training for Water Valley, MS automotive supplier. Faureica, $70,000 (4 contracts; MDA, Entergy, SDPDD, Faureica); Timeframe March January 2007, C. Walden, R. Sheely, CAVS Extension, provided technical assistance which resulted in playing a substantial role in helping the company achieve dramatic improvements in quality and productivity. 22 Hol-Mac, $12,000, Rear Bumper Design, Analysis, & Testing, Timeframe August 2010-Novemebr 2010, G. Dennis, D. Oglesby, CAVS & CAVS Extension.
