Industry Watch
What's the magic ingredient often missing in a manufacturer's pursuit of success? Most manufacturers will not like my answer, but I think the missing link is marketing. Marketing is not just glossy brochures and a high-tech website. It is knowing what your main differentiating value is, and then conveying that message to your marketplace. A simple test to assess the health or effectiveness of your company's marketing efforts is to ask yourself the following two questions: • What do we believe are our company's key value differentiating features; and • How would our target customers (existing and desired customers) answer that question? If the answers to both questions are close, then your company has an effective marketing strategy. If they are not similar, then marketing is likely the biggest impediment to your company's growth, and perhaps even survival. A company's long-term success depends on two things more than anything else: its vision and its values. Marketing is key to making sure that the company's purported vision and values line up with the marketplace's perception of its vision and values. In this case, perception is reality. If a company says that "customer satisfaction is our number one concern," but the consensus in the marketplace is that they are just bottom line focused, their marketing is fatally flawed. What is wrong in this case? It is not that they don't have the right message, it's that they don't live the right message. The most common mistake that I see made by manufacturers is that they do very little to create or promote the awareness of their company's actual vision and values in their target marketplace, and it's their vision and values that separate them from their competition. Every purchasing decision by every customer or consumer comes down to one of, or a combination of, three things: brand, relationship and price. Brand takes into account reputation, which includes factors like quality and features. Relationship takes into account the personal contact, distribution, after-sale service and support - anything that involves personal connection with the customer. Although price is also related to marketing, the first two are completely associated with marketing. If a company has a good brand, and if it has good relationships, it doesn't have to win business on price. However, if a company does not have a good brand and its relationships are weak, it has no choice but to win on price, and only one company can win on price - the lowest bidder. My company has a scoreboard division that was successful selling to pro venues across North America, but wasn't successful in the main marketplace - elementary and secondary schools in the U.S. Although our products were good enough for the pro venues, we had no "brand" in the main market and didn't have any relationships with the target customers. The missing ingredient to success was marketing: we believed we were "the choice of the pros," but the marketplace didn't know that, and that's the only opinion that mattered. By persistently conveying this message to the marketplace through tradeshows, in our brochures and on our website, we were able to convince distributors - the people who own the relationships - that our company and our product was sufficiently different, and that difference would be enough to separate us from our competitors. Conventional logic suggests that expansion into a contracting market, with a more expensive product that competes against a half dozen established competitors, is not a recipe for success. But it was for us, thanks to marketing. We had a vision and values that were advantageously different from the rest, and accurately conveyed that message to the marketplace. Does your company have a vision and values that separate you from your competition, and is that what your customers and target customers think? If not, you need to zero in and define that message, and get that message out to your marketplace effectively. If this is your company, it doesn't need more Lean, or cost reduction, or quality improvement, or even more new product development or innovation. It needs better marketing, pure and simple. It's often a tough pill to swallow for many engineering and technically minded people who have started, or now run, most of our industrial companies; but it's true. Sorry to break the bad news. Paul Hogendoorn is president of OES, Inc. of London, Ont., and past chair of the London Region Manufacturing Council. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
While some people seem to have the Midas touch when it comes to realizing their dreams, others aren't as fortunate. It's true that sometimes the difference may be timing or luck, but more often than not, the difference is within the control of the dreamer. Here's my formula for converting dreams to realities: Dreams + Imagination = Possibilities Possibilities + Determination = Probability Probability + Planning = Realization  It's a formula I have followed nearly my whole life - in both business and personal arenas. Everything starts with dreams. It doesn't matter what company you are working for right now - a big one, a small one, a new one, or an old one, your own or somebody else's - at some point, it was just somebody's dream that was converted into a reality. Most companies continue to identify their dreams to keep all the stakeholders on the same page. It's called "their vision". Possibilities, or better put, opportunities, are a company's biggest assets. Opportunities are what you need when facing life-threatening challenges, or when looking to grow a company beyond normal organic growth. When things are going well and the order books are full, the tendency is to keep focusing on what's working well. But when the order book starts to shrink, and the future starts to look a little dimmer, that's when the company needs to draw from a healthy inventory of possibilities. Possibilities are created by applying imagination to the vision. Converting a possibility into a probability takes determination and tenacity. Some might think that planning is the next big step but, actually, it's determination. Nearly every new idea is met with resistance, skepticism, doubt and sometimes even opposition. All the planning in the world can't plan away those things. When it's a new idea that no one else has thought of before, one common reaction is that if it was such a good idea, somebody would have already done it. Another reaction is that it can't be done for the simple reason that nobody has found a way to do it. Some form of proof or base level of performance is needed, and that will take a determined effort. Think of it this way: if it was obvious and easy, others would already be doing it. Because they are not, though, indicates that it was neither obvious, nor easy. Thomas Edison reportedly failed a thousand times before finally perfecting the light bulb. Determination is the main ingredient required to convert the possibility into a probability. Planning is also important. Planning provides a roadmap that keeps you from covering the same ground again and again, or from failing to stay the course. It provides an order and method by which to effectively apply your efforts. It is also the discipline that keeps you from blindly spending all of your resources, or from failing to convert your achievements into positive commercial gains. Because imagination and determination by themselves know no boundaries, good planning is needed to make sure you don't go broke pursuing a dream you don't achieve, or to make sure you profit properly from it if you do.  Of the four ingredients listed, though, imagination and determination are the two most critical for companies today. The dreams are already captured by the company's vision, and effective planning skills can be taught, learned, hired or acquired. But imagination and determination are the unquantifiable intangibles needed for success. They can't be measured, inventoried, mandated, bought or sold. For imagination to be effective, it almost always requires determination. Imagination without determination seldom yields any positive results. Neither does sheer determination without any real imagination. In today's industrial and manufacturing world, most of the emphasis is on refining and improving the processes, protecting profitability (and even viability) in challenging times. It is a bottom line focus and considers the "realities" of the business - input costs, labour costs, competitive situations, and customer expectations. Growing the business however is a top line focus and considers the possibilities of the business - and possibilities are the result of imagination and dreams. Many dreams do become realities, more often than we realize. The proof of this is all around us. All companies that were ever started, including the one you are working for, started simply as somebody's dream.  With imagination, dreams become possibilities. With determination, possibilities become probabilities. And with good planning, probabilities can become realities. Paul Hogendoorn is president of OES Inc. and a founding member and past chair of the London Region Manufacturing Council. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
George Harrison, a Dallas Mavericks' game and a cab ride to the airport. How could these topics have anything at all to do with a column about the manufacturing industry today? The editors of this fine magazine have graciously extended me a lot of latitude over the years - let's see if they let me try to put this one together! Actually, it won't be too much of a stretch at all. In previous columns, I have written about what I believe are the three key ingredients for survival in the manufacturing industry today: adaptability, excellence and attitude. The fourth ingredient, in my mind, is "passion." Last month I was in Dallas and was watching the Mavericks play the Lakers. One of my company's divisions designs and manufactures scoreboards, and Dallas is one of "our" venues. During one break in the action, the camera spotted a couple of celebrities in attendance and put their faces on the big video board. The crowd erupted in spontaneous applause, and the celebrities smiled and waved graciously. I had no idea who they were, so I leaned over and asked a colleague sitting beside me. But, since he was in my age bracket, he was equally clueless. We started polling the people immediately around us until we got to a couple in their late teens or early twenties. "It's Beyoncé and JayZ," they said incredulously, amazed that we didn't recognize these two mega-stars. I had heard the names through my kids and, probably, some of their music too. But it wasn't "my" music, from my era - an era that I would describe as "when music mattered." I don't want to argue that music in my era was the best, or most creative, or most popular, but I think I can make a strong case that music in my era - the late 60s and early 70s - mattered more than music before it or after it. The music of that day tried to actually change the world, a truly audacious objective - and in a lot of ways, it did. There were all the songs about "peace" trying to stop the war in Vietnam; about "love," trying to change society's focus from capitalism to personal enlightenment; about a new generation coming of age, with anti-establishment protest songs heralding its arrival. And then there was George Harrison's classic two-record masterpiece, drawing our attention to the poverty and misery in Bangladesh. My colleague was in complete agreement with me. John Lennon, The Who, CCR - so many of the bands and musicians of that day had something important to say. It wasn't really their music that could change the world, though - it was their passion. Their music was their means of change, but the power that drove it was their passion to affect change. There are many today who suggest that the changes in the U.S.S.R. that led to the eventual dismantling of the Iron Curtain and the tearing down of the Berlin Wall began when the Beatles first toured The Soviet Union and a new generation had been awakened with a fresh sense of their own ideals, ambition and identity. Today, we have many companies in need of life-saving change. They are holding on by their fingernails, hoping for "the economy to turn around," or a life-saving concession from their workforce, or a government guarantee or bailout. But what they really need is what I wrote about in three of my previous columns - an ability to adapt quickly, a focus on excellence, and an all-inclusive change in attitudes. And, they need world-changing passion; a passion strong enough to change their world. The next morning, I took the shuttle to the airport. In a casual conversation with the driver, he told me he was from Bangladesh. "Do you know anything about Bangladesh?" he asked me. "Only what I know from George Harrison," I replied. "Oh, George Harrison," he said, breaking into a reverent smile. "He is a true hero in my country; everyone knows about him!" He went on to tell me that, in his hometown, there is a big museum dedicated solely to George Harrison, because he drew the world's attention to that country. He told me how the country has never been the same, and that there's a picture of George's face covering an entire wall. George Harrison did change their world with his music, but it was far more than his talent for writing words and creating melodies, it was his passion and commitment for that cause. Passion is what makes you go on when logic tells you to stop. Passion is what makes you deaf to unbelievers and blind to distractions. A good idea may attract people to your cause for a quick look-and-see, but passion is what keeps them there. Passion is what makes your efforts powerful beyond simple strength; it's the critical ingredient needed to change a world. Paul Hogendoorn is president of OES Inc. and a founding member and past chair of the London Region Manufacturing Council. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
Most of North America has felt the effects of the downturn in the automotive industry the last two years, but my region - Southwestern Ontario - has been hit harder than most. In fact, I have read many reports and stories about how the London region in particular has been hard hit. But it's not all bad news; it's just that it seems that the bad news is printed quicker, and more often. The other day, I needed to drive from my office to the airport to pick up a colleague. The drive took me east on Highway 401 and then north on Veterans Memorial Parkway - about 16 kilometers. It was a route I have taken many times, but on this particular day, I was more sensitive to the indications of success than I was to the evidence of failure. I noticed a Germany-based seat manufacturing company, in a bright new building with a full parking lot. Following that, I saw an American transmission part factory. And then on Veterans Memorial Parkway, I passed a brand-new food manufacturing facility, a new Korean building-materials facility, two other German Tier 1 companies, a Canadian high-tech environmental company, another advanced manufacturing Tier 1 supplier, a local, family-owned packaging company, and then at the end was an aircraft company that built airplanes entirely from composite materials. There were many apparent differences between these companies, from their places of origin - be it local or from the U.S., Europe, Asia - to the industry they were in -be that automotive, environmental, packaging, food or aircraft. But there were also many noteworthy similarities: they all appeared to be successful, despite the difficult business climate, and they all appeared to have an air of "excellence" about them. After giving that some thought, I realized that I had been in most of those facilities, and they were all concerned with the pursuit of excellence in all that they did. They were concerned about excellence in their products, in their processes, in their staff, in their staff and management relationships, in their buildings, and even in the landscaping around their buildings. Everything about them had to be "excellent"; good enough was never good enough. One company took it to such an extreme that even the shrubs in the front garden had to be the same as the exotic shrubs in the front gardens at its head office in Europe. Common sense would suggest that those would be the first things to be disregarded in a downturn. Gardens, foyers, receptionists, building appearance, etc.; none of those things add value to the product or for the customer. But the evidence, what I tuned into on that particular day, suggested otherwise. These companies weren't spending money in the pursuit of excellence because they were successful enough to afford it - it was that they were successful enough to afford it because they pursued excellence in every facet of their business. One company official told me about how visitors from head office took as much notice of the shrubs and office furniture as they did of equipment on the production floor. I guess the theory is that excellence isn't more important in some areas of the business than in others. If the gardens are well tended, then so are the relationships with the employees. If the office furniture is clean and in perfect order, then the production equipment likely is, too. It made me think of other factories I had toured in earlier years that were no longer around, and it seemed to suggest a correlation between a company's lack of attention to excellence in all areas of their business and their eventual demise. The domestic Tier 1s with the worst gardens, building maintenance and office furniture also seemed to be the factories with the most stressed employee relations and the poorest equipment conditions. And they were the first factories to be closed. So what does the pursuit of excellence really cost, even in supposedly non-critical things like gardens, parking lots and office furniture? Not much, really - maybe only a percent or two of the total revenue of the operation. But what does it return? I'd argue, "Nearly everything": morale, attitude - everybody settling for nothing short of excellence, in virtually everything they do. That's the difference between success and failure, between those London companies that have survived and thrived and all those that failed. History, recent and longer term, suggests that the pursuit of excellence in all facets of a business is a better strategy for success than even a collection of the singular goals popular today, like product quality, production efficiency and cost reductions. Partial excellence isn't excellence at all. Excellence is an attitude that has to permeate everything in order for a company to be truly excellent. Paul Hogendoorn is president of OES Inc. and a founding member and past chair of the London Region Manufacturing Council. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
How will things get done 10 years from now? And will those things even still be done here in North America? So much has changed in the last decade, and if the recent past is any indication, more will change in the next 10 years. The manufacturing industry is facing many challenges. Some of the current threats have been created by external forces, but some of them are monsters we (the industry) have created ourselves. And most of these threats are nothing more, or less, than attitudes. Some of our governments’ attitudes have led to the current weakened state of our manufacturing industry. Although most have changed their tune recently, big damage was done in the years leading up to the current crisis. In Canada, employers carry the burden of the cost of public health care, and manufacturers in particular carry a disproportionate share of the cost of our public education system. The laws in most of our jurisdictions are what many would describe as so “pro-labour,” “pro-environment” and now “pro-safety” it leaves many business owners shaking their heads, asking, “Do they think that I don’t care about my employees, or the environment, or safety?” The assumption is that without the government’s enforcement, employers aren’t interested in doing the right things. This attitude has to change — if there is to be a manufacturing industry in North America in 10 years. I believe a good case in point is the scheduled closing of the Ford plant in Talbotville (St. Thomas), Ont. I’ve read quotes from politicians suggesting that their government offered the biggest incentives they had ever offered before to keep the plant open. And I’ve read quotes from labour leaders saying that they had offered concessions that they never before had been willing to offer. The inference is that these two groups had done all they could to keep the plant open, but that despite that, the company was closing the plant anyway. My point is that if they were doing things right in the first place, you would never have to offer incentives or concessions to get a company to invest or keep it from closing. Ontario has deteriorated from a province that manufacturers chose to invest in to a province where they need incentives or concessions to keep from leaving. This slide didn’t begin two years ago; it began many years before that. Our governments need to change their attitudes about our manufacturing industry: society owes its economic well-being to this sector, it doesn’t need to be protected from it. Labour needs to change its attitude, too. Healthy manufacturers, that make a profit and that reinvest willingly, provide more meaningful jobs, and more secure jobs, than manufacturers that need artificial stimulants to do so. Companies with healthy relationships with their workforce are the ones that adapt more quickly (and more naturally, with less need of incentives) than companies with structured and more rigid relationships. The more adaptive companies are the more proactive ones, and the proactive ones are the ones on which I’d be more comfortable betting my family’s future income. Companies need to change their attitudes, too. Too many companies have placed too much control in the hands of the purchasing department. The engineering department is usually responsible for creating the product that differentiates the company from its competitors, and sometimes for the company’s formation in the first place. And the sales and marketing departments are responsible for the company’s brand acceptance, and for the relationship with the group that matters the most: the customers. Despite this, the purchasing department often has power disproportionate to its real importance in the organization. If cost truly is king (and not a product, or innovation, or customer satisfaction, or anything else), then it becomes a race to the bottom. When nothing has value except cost, we all lose eventually. (Some faster than others, but we will all lose.) Yes, these are challenging times, with many things outside of our control: the economy in general, the value of the dollar, consumer confidence, the cost of energy. If we want to, none of us will have any difficulty finding a reason beyond our control to explain a failure. The government can point to its prime culprits, the economic crisis or other levels of government; labour will point to bad companies or bad government policies, or both; companies will point to foreign competition, or unfair government policies, or shareholder expectations. But the bottom line is, there is no future for anyone by hanging on to these excuses. If we are to have a healthy manufacturing industry in 10 years time, it will be as simple as — or as difficult as — changing our attitudes. Paul Hogendoorn is president of OES Inc. and a founding member and past chair of the London Region Manufacturing Council. He can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
When my grandfather was a young boy, the roads were dirt, the primary mode of family transportation was the horse and buggy and most places he went he travelled on foot. By the time he died, the space shuttle routinely carried humans into space, the roads within earshot of his home were 12 lanes wide, and man setting foot on the moon was already old news. The rate at which changes occurred in his lifetime was unlike any experienced by any generation before — and it has only accelerated since. Building or even just sustaining a business nowadays is not a matter of “survival of the fittest” or even “survival of the leanest” (as many today suggest): it’s a matter of “survival of the most adaptable.” Changes are occurring at an ever-increasing pace, so an organization’s demise is inevitable if its internal changes are not keeping up with the external changes. It’s only a matter of time. Peter Senge wrote in his 1990 book, The Fifth Discipline, that “the ability to learn faster than your competitor may be the only sustainable competitive advantage.” So much has changed in the nearly 30 years since he wrote that book, but collectively, all the changes only fortify the truth of the statement. Organizations today have to be able to adapt appropriately in order to survive — and to adapt more quickly than their competitors in order to thrive. All too often, the systems, structure and processes put in place in growing organizations end up thwarting the organization, and sometimes even strangling them. Their organizational structure, labour relationship and management style is based on tried and proven models of earlier times, led by generals that had fought in earlier wars. This whole discussion challenges one of my favorite historic quotes. Winston Churchill said, “Those that fail to learn from history, are doomed to repeat it,” suggesting we must not fail to learn from the past if we want to succeed in the future. But even that quote holds true in our rapidly changing times: if we examine our industries’ recent histories and their current conditions, we see example after example of successful companies that eventually fail because the rate of their internal changes did not keep up with the external changes. And some, including major industry icons, are on the brink today for the exact same reason. In order to be able to make the right changes, an organization’s leadership group must be allowed to consider all the possibilities and choices. In order to be able to fairly and thoroughly consider all the choices, there must be a high level of trust. And trust, if it doesn’t already exist, takes time — lots and lots of time. Organizations that have made trust an integral core value have a huge advantage in rapidly changing times. They have the opportunity to consider a broader range of choices and possibilities; more suggestions are made by more team members, with fewer (if any) limits and conditions imposed on them. Organizations that have the best options are the ones that make the best changes, and they make them most effectively. No company or organization is perfect, but some have clearly worked harder to establish levels of trust than others: trust between them and their customers, with their suppliers, and of paramount importance, with their employees. Change brings with it levels of uncertainty and even fear, which trust helps alleviate. The Japanese automobile companies have historically done this better than their North American counterparts. Many Tier 1 vendors have told me over the years that the Big 3 are noted for their autocratic and ultimatum style demands; “if you won’t give us what we want, there is somebody else that certainly will.” The Japanese OEMs, on the other hand, are noted for their near absolute loyalty, often resulting in frustration for other Tier 1 vendors; “we had the lowest price. What do we have to do to get their business?” The same holds true for employee relations. The Japanese OEMs are sitting at the same side of the table with their employees when facing new challenges or opportunities while the opposite is true for the North American OEMs. In these most challenging of times, the two biggest stake holders (the company and the employees) are still sitting on opposite sides of the table. Survival requires adaptation. Adaptation means change. Change requires choices. And choices require trust. Many things have changed since my grandfather’s days, far more than just the modes of transportation. But “change” was a constant occurrence in his life, and trust was earned over time. Even in times of rapid change like today, there are still some things that never change. Paul Hogendoorn is president and co-founder of OES Inc. of London Ont., and OES-A Inc. of El Paso, Texas. You can reach him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
People tend to fall into one of two camps when the topic of Lean manufacturing comes up. One camp gets really excited and can’t hear enough about it – or say enough about it. The other camp has heard all they want to hear and can’t bear to hear another word. Which camp do you fall into?     I must admit that up until recently, I fell into the latter. It seemed to me that people (most notably consultants and industry observers) started talking enthusiastically about Lean right around the time the majority of manufacturing companies had completed their ISO or QS certification processes. An entire service industry that was created to assist us with those initiatives now needed something else to convince us to do, and Lean was the next new thing.     My interest in the topic picked up a bit when I started hearing from actual manufacturing companies that were beginning to realize real and measurable benefits by implementing Lean thinking and Lean practices in their factories. But then my interest waned again when I was exposed first-hand to other companies that claimed to be going Lean when in reality it was just their purchasing departments’ excuse to get mean. To some, Lean only means working relentlessly to drive out cost. Give this unqualified mandate to a purchasing agent and you know what that means – there’s only one way to win that company’s business and that is by being the lowest cost provider, regardless of what other value you bring to the relationship, be it innovation, service and support, convenience or even quality. Although all those other things were said to be valued, they only became issues for real consideration after the vendor was selected and the primary selection criteria was price.     Still, despite these experiences, I knew I had to have enough knowledge on the topic to be sure that my company could realize any and all potential benefits that Lean might be able to offer.   The two best simple statements that I have heard describe Lean thinking are “delighting the customer, eliminating waste” and “a systematic approach to common sense.”     One last bastion of skepticism remained. Every convincing testimony that I heard from a Lean convert came from a company that had the luxury of supplying a year’s worth of similar products to a small handful of customers. These company leaders had no sales and marketing force or responsibility, or no R&D department or new product development responsibility. In other words, they were Tier 1 suppliers to the automotive industry and their only responsibility is to manufacture the same products for a very small list of customers. For them, Lean means a continuous focus on reducing the production cost and increasing the product quality. What about companies that have to replenish the order books every single month, or companies that have to continuously develop something different and better just to survive? Lean does not seem as natural a fit for “high mix, low volume” manufacturers, or “design and build” manufacturers, or custom fabrication manufacturers. All of these descriptions could be used to describe my company, where nearly 80 per cent of each month’s sales have to be found, pursued and won every single month.     The two statements that I mentioned earlier hold the key for me. The first half of the “delighting the customer, eliminating waste” statement speaks to one of my company’s core values: do whatever we have to do to make the customer happy, be it superior service, product innovation, holding inventory, or simply rolling up our sleeves and connecting ourselves as directly as possible to help them achieve their objectives.     I soon realized that the second part of that statement was an area where we could make significant improvements, though not necessarily in the same ways as a Tier 1 manufacturer would. For us, eliminating waste could take many different forms, including eliminating mistakes, eliminating wasted engineering time and eliminating unnecessary administration delays. A mistake caught in the design stage would save countless hours in the production stage, or significant costs and manpower compared to if it was not caught until the installation stage. Our engineering department is our company’s most valuable (and expensive) resource, so by making sure we stay focused on connecting its activity as directly as possible to our actual and target customers’ requirements would eliminate wasted engineering time and significantly improve that critical department’s output (both in terms of quantity and quality of work). It also became apparent that reducing the time it took for our sales team to respond to quotation requests or our administration team to process customer purchase orders would result in a dramatically shortened sales inquiry to invoice period – and this can only be a positive for both us and the customer.     Although most of us would claim to rely on common sense, we typically only invoke that thinking process when actually confronted with a problem that needs to be solved. Thinking of Lean as a means to continuously and systematically encourage common sense thinking every day, and in every facet of the business, is a very compelling and intriguing thought. And that is the thought that finally pushed me over the edge and led to my conversion.     Perhaps next month I’ll offer further insights into my own Lean journey and offer an update of our company’s progress. I’m sure some will be excited to read about every new idea and thought in detail; others won’t be interested enough to read past the first paragraph. Either way, I understand. Paul Hogendoorn is president of OES, Inc. and chair of the London Region Manufacturing Council (LRMC). You can reach him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . For more information about the LRMC, visit www.manufacturinglondon.com.
Ontario Premier Dalton McGuinty recently spoke at a luncheon in London about his new "five-point plan for recovery" for the province of Ontario. Like many present, I wanted to hear a message that would offer legitimate hope for an economic recovery – and a plan that I could really believe in.A simple litmus test for any economic plan is to look at two things: where is the money coming from and where is the money going to? Many plans fail the first test by either borrowing from the future or increasing the tax burden today. This plan likely fails the first test and clearly fails the second.
On a spur of the moment whim, I invited a long term employee out for lunch — my treat, no reason in particular. This individual has worked for me for nearly 20 years. He started with the company shortly after escaping from an Eastern European country with his young family. In a casual conversation earlier in the week, I told him I discovered a great little breakfast and lunch diner that specialized in preparing and serving meals with recipes from his homeland. That discussion resulted in the impromptu invitation to take him out to lunch. I thought I was doing something nice for him, but it ended up being something really important and special to me. Over lunch, he reflected on his time in this, his adopted country, and his time in our employ. He started by saying the best single day of his life was the day he found our company. He told me of his routine at the (un)employment office, looking for work; of noticing the ad identifying our company’s needs; of his interview and his first two days of work. He started on a Thursday, and because the following day was payday, he went home with a cheque for two days’ pay in his pocket. He told me that at that time, he had no money in the bank and his cupboards and refrigerator were empty. On the way home, he cashed his cheque and bought some needed groceries. He still recalls the gleeful reaction of his daughter when she opened the fridge and saw the milk. The world was all right that day, and it promised to get even better. He went on to tell me about his two daughters, both now university graduates, both contently employed in their fields of expertise and both now happily married. He also told me of his son, still in university, and shared with me how we helped him (through summertime employment experiences with us) in ways that we never knew. Although I heard about most of these stories individually over the years, I never really heard them all together and hadn’t really considered how much of a role we had played in his and his family’s life. And boy, did I really need to hear that. It’s tough to be in the manufacturing business these days, and being a private sector employer is no piece of cake either. In fact, as I have mentioned in this column before, it is most often a thankless job where the word “rights” is usually associated with the word “workers” and the word “responsibilities” is always associated with the word “company.” With more safety inspectors, more environmental regulations and more responsibilities for the continuing economic well-being of past or present employees, it’s easy to daydream about the days when the company was far smaller and times far simpler. It’s not that employers are against looking after workers or the environment; it is the assumption that they are not legitimately concerned or working towards these goals for the right reasons already. The city in which my company is located is no better. Here, some local politicians are playing up to the voters by suggesting it’s time for “industry to pay their fair share,” even though our property tax rate is nearly five times higher. What I find particularly aggravating (and demoralizing) is that they are casting us in a very negative light, saying we don’t pay our fair share and implying we are takers from, and not contributors to, the society and the communities in which we are located. A colleague of mine summed it up very accurately when he said that whenever he goes to City Hall, he feels like Darth Vader; people look at him like he represents the “evil empire” of industry. It has been a difficult stretch for manufacturers the last few years, and in particular the last few months. As the unavoidable external pressures (the dollar, low cost competition, etc.) and the aggravating internal stresses (the policies of our own governments) continue to rise, the “is it worth it?” question is more frequently asked. And after my lunch with Stan, I can still answer yes. Thanks for lunch Stan, because sometimes I need to be reminded that it is still is worth it. After all, I am human — and I’m not from the evil empire. Paul Hogendoorn is president of OES, Inc. and chair of the London Region Manufacturing Council (LRMC). You can reach him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . For more information about the LRMC, visit www.manufacturinglondon.com.
On a spur of the moment whim, I invited a long term employee out for lunch – my treat, no reason in particular.This individual has worked for me for nearly 20 years. He started with the company shortly after escaping from an Eastern European country with his young family. In a casual conversation earlier in the week, I told him I discovered a great little breakfast and lunch diner that specialized in preparing and serving meals with recipes from his homeland. That discussion resulted in the impromptu invitation to take him out to lunch. I thought I was doing something nice for him, but it ended up being something really important and special to me.
I have heard it said many times that innovation is the key to our success – or even just they key to our survival. Another common belief is that Canada is a very innovative country or, to put it another way, that Canada is a country which strongly encourages innovation and innovative pursuits. I strongly agree that innovation is critical to our future, but would argue that we are not really the innovation nation that we like to think we are. It all depends on your definition of innovation.Last month, I attended a CME dinner in London which featured Jim McSheffrey, president and general manger of 3M Canada, as the keynote speaker. 3M obviously knows a thing or three about innovation. Jim’s favorite way to describe innovation is by saying it’s "where inspiration meets passion." I like that definition. In fact, I am sure that is the exact kind of innovation our manufacturing industry needs to succeed. Many of the other definitions and examples people use to say their company is an innovative company have very little to do with real innovation at all. Take, for instance, the idea of continuous improvement. Sorry, that’s not innovation. Lean manufacturing? Nope, not that either. R&D, product improvements and product engineering? Nope, that’s not it either. Perhaps R&D is, but only if you continue the pursuit until you realize a tangible benefit from it. At the very most, you might be able to argue that all of these things are a form of passive innovation – and it might be enough to help you survive. But it is nowhere near the type of active innovation that our industries really need to succeed.Jim did talk about topics like Lean, Six Sigma and continuous improvement. But he mentioned these as part of his company’s defensive playbook – which using a football analogy, describes its strategy for protecting the profitability and viability of its core businesses. The offensive playbook – the strategy to grow the company – is dependent on true innovative pursuits. These are what Jim referred to as market makers or game breakers. For passive innovation pursuits (the defensive playbook), the basic goal is not to lose. Survival. For active innovation pursuits (the offensive playbook), the goal is to win. Success. Why shouldn’t activities such as Lean manufacturing, continuous improvement and R&D be considered innovative in and of themselves? Because most of your competitors, in every major manufacturing region in the world, are doing those things too! These are the defensive things we need to do just to survive. We need to be more innovative, truly innovative, if we hope to succeed. Think for a moment about the terms "market makers" and "game breakers." If you think of Canada as a truly innovative manufacturing nation, try to identify even a handful of market-making innovations – inventions that changed the world. Alexander Graham Bell invented the telephone and then, many years later, RIM invented the BlackBerry. Please feel free to fill in the gaps for me and tell me what market makers or game breakers I may have missed (Okay, there’s the snowmobile, the Robertson screw driver…). I’m not saying that we have no innovative spirit in our country, but I do believe that most of us are under the illusion that we are more innovative than we truly are. While most of Canada’s manufacturing sector is automotive-related, that industry sector is nowhere near the top of the list as far as research and development investment is concerned. According to Canada’s Top 100 Corporate R&D Spenders List, in 2005, the communications and telecom sector accounted for 26 per cent of R&D investments, telecommunications services for a further 16 per cent, pharmaceuticals and biotechnology accounted for 16 per cent and aerospace for eight per cent. Automotive accounted for only seven per cent of R&D investment, the same amount as software and computer services, and just barely ahead of energy and gas at six per cent. Computer equipment came in at four per cent, and mining and metals at three per cent. It is interesting to note that the country’s two aforementioned major market-making inventions are telecommunications-related, and alarming to note that Canada’s most important sector (as far as the economy is concerned), is near the bottom. Are there market-making or game-breaking opportunities in the automotive sector worth pursuing with passion? You bet there are – just think of our society’s growing environmental consciousness and the ever-increasing cost of oil. The automotive industry hasn’t had a need for invention and innovation this significant since Henry Ford invented the assembly line and, by doing so, created a way to make the car affordable for the masses. I have also heard it said that our manufacturing industry became comfortable and complacent because of decades of enjoying a significant currency advantage with our biggest trading partner. I would agree with that statement. Along the way, we likely also lost some of our entrepreneurial zeal and inventive spirit. Now is the time for our industry and companies to be particularly sensitive to new inspirations, and to be willing to passionately pursue them. We need more than passive innovation; we need game breakers and market makers. Now is the time for true innovations. It really is the key to our survival, and to our future success.Paul Hogendoorn is president of OES, Inc. and chair of the London Region Manufacturing Council (LRMC). You can reach him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . For more information about the LRMC, visit www.manufacturinglondon.com.
Does it ever seem to you like there is a huge disconnect between "rights" and "responsibilities," and that the gap continues to grow? The nature of most things is to ebb and flow or wax and wane. The pendulum swings one way first, and then, when momentum stops, it starts to swing back in the opposite direction. This might be true for the natural systems in the universe, but I’m not too sure it holds true for some of our society’s systems.Why is it that whenever we in industry hear those two words used, the word "rights" is associated with the word "workers" while the word "responsibility" is associated with the words "management," "employer," or "company?" What about the company’s rights and the workers’ responsibilities Is it just my imagination, or is our society increasingly begrudging our private and public companies for trying to make a profit? Is being profitable no longer fashionable, or has it somehow become politically incorrect? Perhaps I’m just being over-sensitive, but I am genuinely concerned that there are far too many initiative-thwarting and investment-dissuading attitudes prevalent in our society at a time when it (our society) really needs us (industry) to make courageous decisions and take leaps of faith. It’s hard to make courageous decisions or leaps of faith with so many simply along for a no-risk ride. Consider municipal taxes. In my community, and many others just like it, the taxes paid on industrial properties are about two and a half times higher than taxes paid on residential property (on an assessed value basis). But the street my business is on doesn’t have street lights, there is no public transit, there is no garbage collection and after a snowfall, the road is not plowed until days after my residential street is plowed (twice!). What would you call people that pay you the highest price but require the lowest service level? You would call them your best customers! How many manufacturing company owners feel like their city or town’s best customer? Yet every year around budget or election time we hear a common refrain: "make businesses pay their fair share!" And unfortunately much of the time, the municipality acquiesces to these uninformed but very persistent petitions. The provinces are no better – particularly Ontario’s government. In the last few years, the province passed several bills that raised significant concerns from manufacturing groups and associations, yet they didn’t change one line. On one particularly concerning bill, then-Labour Minister Chris Bentley ignored all suggestions by the CME, CFIB and the Chamber of Commerce to make the bill more acceptable to manufacturers and instead sloughed off all criticisms, calling it a fairness issue. When Bentley was questioned again on it later (at a manufacturing dinner I attended), he joked that "we thought you would see it our way by now." This was at a time when the economic storm clouds were building and clearly visible for all to see on the horizon; a strengthening Canadian dollar and increasing competition from low-cost regions were certain to stress many of our companies to the breaking point. Yet "workers’ rights" and "management’s responsibilities" was the popular tune of the day. Have you ever tried letting somebody go for what common sense suggests might be reasonable grounds? If you are not willing to give up on common sense, contact your lawyer – he or she will then certainly convince you to let go of it. You can find an individual asleep and sitting propped up in the bottom of his locker numerous times, but don’t think that is grounds to let him go. He has "rights." I recently heard of one employee caught stealing an entire car (he drove it off the line, then right off the lot too). But, he is still employed at that manufacturer because he also has "rights." A friend of mine frequently missed work because of his activities the night before, and sometimes came to work drunk. He was never fired. Instead, his company sent him to a nice place for detoxification – a couple of times. They paid for it and he was paid while he was there. Why? Because, by some stretched interpretation of the word, the company and management had "responsibilities. I’m all for rights and I’m equally all for responsibilities. But the two words go together for everyone concerned. These are challenging times for our manufacturing industry - and our society really needs it to prevail. To prevail, the companies, the workers and all levels of government have to realize that all three parties have rights and all three have responsibilities. And one of the companies’ rights should not be begrudged, but rather encouraged: the right to make a profit and to keep a fair share after taxes. When our industry profits, all of society benefits. For the sake of our manufacturing industry, I hope the pendulum starts to swing in the other direction soon. From my vantage point, the industry’s motivation needle is pointing close to empty.Paul Hogendoorn is president of OES, Inc. and chair of the London Region Manufacturing Council (LRMC). You can reach him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . For more information about the LRMC, visit www.manufacturinglondon.com.
Over the past few years, the metal forming industry in Canada has had to deal with the expense of increased safety standards, while at the same time suffering increased competition from offshore manufacturers. This has made the industry sit back and look at the overall profitability of continuing to manufacture in Canada.Many presses in Canada have older control systems that use outdated technology, limiting their ability to run the sophisticated automation needed to stay current within the modern manufacturing environment. At the same time, these presses often have reliability problems due to the age of the controls and worn out wiring. Since the equipment must be upgraded for safety, it’s also the perfect opportunity to upgrade the overall performance of the pressroom. There are many things to consider when upgrading presses. Of primary importance is determining how to eliminate the risk to the worker when dealing with this type of equipment. If you keep the machinery running with reliable control systems and compliant guarding systems, the worker will rarely become exposed to the hazards presented by the stamping presses and auxiliary feed equipment. Finding a control solution that works with a variety of equipment is a must; standardization of the press controls will allow all the operators to go from one machine to another with minimal training. For example, one of our customers asked us to help modernize an older 1000 ton big-bed press. This particular press was installed in the mid 1970s, and at the time, it was set-up to do a hand transfer operation. The press required six operators and was producing 1200 pieces per shift. It needed a controls upgrade to deal with safety issues, along with the added ability to decrease set-up time and improve the operator interface After looking at the existing control system, we made the decision to start over with a completely new control package, similar to others currently operating in their facility. We designed the press control with die protection, PLS controls, tonnage monitoring and the ability to interface with the existing feed equipment. This interface allows the press control to pass down feed information directly to the servo feeder, reducing overall set-up time. The physical wiring of the press was greatly reduced by using remote Input/Output modules located in areas that contained most of the existing electrical devices. These remote Input/Output modules connect to the main PLC via Ethernet. We then added data collection software to the press control that allowed the company managers to monitor the uptime of the press, giving them a better understanding of what was happening on the shop floor. At the time the electrical system was replaced, the plant also took the time to do a mechanical upgrade on the press, which resulted in the press being able to operate effectively at 20 strokes per minute, up from 12. The plant is now able to produce 9600 pieces per shift compared to the 1200 per shift before the improvements. At the same time, they were able to reduce the number of operators to one. The lesson to be learned here is that manufacturers should not look at safety as a burden, but rather as an opportunity to update older equipment.Walter Veugen is the owner of Veugen Integrated Technologies (VIT), based in New Dundee, Ont. VIT manufactures stamping press controls and peripheral machine guarding systems.
It seems increasingly difficult to be successful in the manufacturing world today. But much of that may depend on how you define and measure success. Simple answers to that question could include one word answers like "profitable" or "growth." Others might expand on those answers using phrases like "responsible growth" or "sustainable profitability." One of my customers has adopted a simple slogan that I really like: "Do good, and do well." It’s an apt slogan for a high tech company operating in the environmental marketplace - every time they sell a system, they make the world a better place. When I first heard it, I wondered if my company, and all manufacturing companies, could adopt a slogan like that.
Much has been said of late about the need for a national manufacturing strategy, including a great article in the September 2007 issue of Manufacturing AUTOMATION ("WANTED: Manufacturing Strategy"). Leadership is certainly central to this topic and has been a favorite subject of mine over the past the years. We need our leaders to do more than simply develop strategies for survival. We need leaders with a better vision of the future; leaders who can find ways to prosper and grow, not just in changing and challenging times, but also in response to the opportunities that arise from those changes and challenges. We need all our leaders to be engaged, not just the company leaders; we need our government leaders, labour leaders, as well as our company and management leaders, to be engaged.
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