Manufacturing Industry: U.S. Manufacturing Is Surging

By the BF Staff

From the September/October 2018 Issue

According to The Brookings Institution, there has been a resurgence of manufacturing growth in the United States. Brookings recently released the 2018 version of its “global manufacturing scorecard” that looks at key factors impacting on the manufacturing sector, including: overall policies and regulations; tax policy; energy, transportation, and health costs; workforce quality; and infrastructure and innovation.

For the analysis, Brookings compiled data on 20 indicators and scored 19 leading nations on a 100-point scale. The countries analyzed included Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Netherlands, Poland, Russia, South Korea, Spain, Switzerland, Turkey, United Kingdom and the United States.

The top-ranked nations in overall manufacturing environment in Brookings 2018 scorecard were the United Kingdom and Switzerland (both with 78 points out of 100), followed by the United States (77 points), Japan (74 points) and Canada (74 points). Lower-scoring nations included Brazil (51 points), Indonesia (53 points), Mexico (56 points), Russia (56 points) and India (57 points).

When measured in terms of the percentage of its national output generated by manufacturing, China leads the pack in manufacturing output, according to Brookings. Poland has the highest percentage of its workforce employed in manufacturing, followed by Germany, Italy, Turkey, and South Korea, the Brookings report said.

FL: IN THE TOP 10 FOR MANUFACTURING

Thanks in part to its pro-business policies, strong workforce and trade infrastructure, Florida ranks among the nation’s top 10 states for manufacturing. The state is home to more than 19,000 manufacturers employing more than 331,000 workers. Florida’s manufacturers produce a wide variety of goods including aerospace products, batteries, communications equipment, pharmaceuticals, semiconductors, boats and more.

Advanced Impact Technologies recently chose the City of Largo in Pinellas County, on Florida’s Gulf Coast, to expand manufacturing operations and relocate its international headquarters. The move is expected to bring 90 new jobs to Pinellas County, and was encouraged by the partnership of the City of Largo, Pinellas County Economic Development and Enterprise Florida.

The company is a leading provider of innovative laminated glass and polymer products for detention facilities, the U.S. Government and the Armed Forces, as well as the architectural, automotive, aviation, marine, entertainment, security and industrial sectors. As a vertically integrated organization, the company manages the process from start to finish, with design, clean room and production facilities designed to deliver reliable, high-quality products.

Jeff Besse, Advanced Impact Technologies’ CEO, shared that the business-friendly climate, the market potential of his products in the region and the advantages of Florida’s tax structure were key elements in his decision to establish a Pinellas-based headquarters, even as the company continued manufacturing operations in Massachusetts.

“The City of Largo and Pinellas County were excellent partners in helping us ramp up our operations quickly in our new location,” shared Jeff Besse, CEO of Advanced Impact Technologies. “We have been successful in finding great staff for our facility launch, and being based in Florida as we expand internationally certainly made sense for our company.”

Advanced Impact Technologies joins global leaders Honeywell, Lockheed Martin, GE Energy, Johnson Controls, Monin Gourmet Flavorings and Conmed Linvatec, with significant operations in Pinellas County, FL.

Pinellas is home to over 1,300 manufacturers, and has the largest manufacturing employee base in Tampa Bay with over 58,000 professionals employed in the community. With this established workforce, easy entry to foreign markets, competitive tax incentives, collaborative permitting and a business-friendly culture focused on success, Pinellas County and the State of Florida are the perfect home for growing manufacturers.

St. Johns County, located in northeast Florida, is one of the top 20 fastest growing counties in the United States.

Home to an eclectic blend of small businesses and major employers, St. Johns County manufacturers produce a diverse range of products ranging from military aircraft and aluminum fencing to acoustic wood panels and power supply systems. Many of these companies are involved in international trade, and export their products worldwide. Among the county’s leading exporters are Northrop Grumman, Rulon International, iDeal Aluminum, David Dobbs Enterprises, Solar Stik, Optimum Springs Manufacturing and German-based 2G Energy.

Northrop Grumman, in particular, has established a new Aircraft Integration Center of Excellence at its existing facility in St. Augustine. The Florida location is one of five centers of excellence nationwide. Northrop Grumman produces its E-2D Hawkeye surveillance aircraft at this location.

Another firm, iDeal Aluminum, rapidly has grown to more than 100 employees since their relocation to St. Johns County in 2015. In 2016, Governor Rick Scott recognized the company as an example of a successful local manufacturer that has excelled at creating quality paying jobs for Floridians.

St. Johns County works to provide local companies with export assistance and other resources to help support the business community. Through a partnership between the county and the Florida Small Business Development Center at the University of North Florida (SBDC), local companies are able to work with a business consultant housed in the county’s Permit Center to receive no-cost business advice.

SBDC also provides “new-to-export” assistance, in partnership with Enterprise Florida and the U.S. Commercial Service, to assist in developing customized export marketing plans for businesses interested in developing international growth strategies.

Moreover, world-class beaches, golfing, fishing and other recreational opportunities help business owners and their employees achieve an enviable work-life balance.

The Maverick Boat Group recently produced the first boat built in the company’s new 106,000-square-foot manufacturing facility in Fort Pierce. St. Lucie County approved the master site plan in just eight weeks.

Maverick’s groundbreaking ceremony was held in January 2018 and the facility was operating by July. The project represented a $6.68 million capital investment and will result in at least 100 new employees being added to Maverick’s previous payroll of 273. The company manufactures a suite of boat brands, including Maverick, Hewes, Pathfinder and Cobia. CEO Scott Deal founded the company in Fort Pierce in 1985.

Dirt already is on the move at the future headquarters of City Electric Supply (CES) in Tradition Commerce Park, Port St. Lucie, ahead of a fall groundbreaking. The company’s subsidiary, TAMCO, employs 210 workers at several nearby facilities. After considering relocation offers from Dallas and Charlotte, CES elected to remain in St. Lucie County. After completion of the 400,000-square-foot manufacturing facility and office complex in 2019, an additional 50 employees will join the existing workforce. The company’s investment of $28 million in new construction and $10 million in equipment forms the cornerstone of Tradition Commerce Park.

Concurrently, the City of Port St. Lucie, with assistance from an economic development grant from the State of Florida, is building a new roadway and infrastructure in Tradition Commerce Park. The project will assist in providing direct access to 100 acres and indirect access to more than 1200 acres of prime commercial property adjacent to the I-95 corridor. Working together, the city, county and Economic Development Council of St. Lucie County are actively seeking manufacturing and commercial development opportunities for the Commerce Park.

BUSINESS-FRIENDLY CLIMATE ATTRACTS GLOBAL PROJECTS TO KENTUCKY

Two days before one of Kentucky’s most regionally transformative announcements of the year, China’s ambassador to the U.S., the honorable Cui Tiankai, met quietly in Lexington, KY with a Chinese executive from Global Win Wickliffe LLC. In the face of national friction over tariffs, trade imbalance and intellectual property, the ambassador related to the businessman his experiences of the past couple days during his inaugural trip to Kentucky—Southern hospitality, Midwestern practicality and a firm commitment from the Governor on down to creating a leading environment for businesses, both for the good of companies and the state’s residents.

Global Win’s executives had all but made their decision. However, that brief lunch meeting reflected positively on Kentucky as a must-see location for international manufactures considering new locations. It provided the final puzzle-fit reassurance for an investment decision that would directly benefit hundreds of laid-off paper mill workers on the far western side of the state.

The announcement unfurled on a bright Thursday afternoon at the former Verso Corp. paper mill in Wickliffe, a city of 670 along the banks of the Mississippi River in West Kentucky. The mill, shuttered more than two years earlier in an action that furloughed 310 employees, would change owners, see $150 million in facility and equipment upgrades and create 500 new full-time jobs.

Executives with Global Win signed the initial contract with Verso as Gov. Matt Bevin sat between them. Global Win’s leaders plan to start production in early 2019. Part of their investment will ready the mill to produce brown paper for packaging—a product in demand thanks to Amazon and so many of today’s delivery-based products and services—as well as wood pulp. Under Verso, it manufactured glossy magazine stock, a paper whose market shrank as the Internet grew.

Asked if Kentucky’s January 2017 passage of right-to-work legislation played a role, Gov. Matt Bevin said it absolutely did. The Kentucky Cabinet for Economic Development worked closely with Verso’s site manager to market the plant following closure. Across more than two years, multiple suitors made various steps toward purchasing it. With prior union contracts not an issue post right-to-work, corporate interest in the facility increased.

That legislation and numerous other efforts, including cutting red tape that unnecessarily holds back businesses and the state’s workforce-training revolution, stand as pillars of Kentucky’s commitment to creating a leading business climate nationally.

Kentucky is focusing significant attention on workforce development, a top initiative of Gov. Bevin’s administration, to ensure businesses can hire the skilled workers they need and Kentucky residents have clear pathways to quality careers. Multiple state-sponsored programs are deepening that employee pool by helping connect individuals with training opportunities.

Through the Work Ready Skills Initiative (WRSI), Kentucky awarded $100 million in legislatively approved bond funding for 40 public-private projects statewide to better equip workforce-training facilities.

WRSI brings together private employers, higher-education institutions, high schools, technical schools and community, regional and state development organizations on projects that will train and enhance their region’s workforce. The state’s $100 million leveraged another $111.7 in matching local funds.

The 40 projects announced throughout 2017 are now beginning to train what will be tens of thousands of Kentuckians annually in five core sectors: advanced manufacturing, healthcare, IT/business services, construction trades and transportation/logistics.

Through its Registered Apprenticeship programs and the Kentucky Federation for Advanced Manufacturing Education, the state dramatically is increasing enrollment and employer participation in workforce training programs that provide students with in-demand careers and participant companies with custom-trained employees.

The Red Tape Reduction Initiative encourages businesspeople, state employees and residents to identify burdensome regulations and offer suggestions for improvement by submitting them via www.RedTapeReduction.com. Approximately half the state’s 4,700-plus administrative regulations have been reviewed and approximately;

450 regulations have been repealed

425 have been amended

60 percent of reviewed regulations targeted for repeal or amendment

The Kentucky General Assembly, in addition to right-to-work legislation, abolished prevailing wage and promoted Public-Private Partnerships (P3) among other accomplishments.

The state recently linked efforts with the Kentucky Association of Economic Development to help communities identify and prepare sites and buildings for corporate investment and job-creating projects. Separately, the state entered a P3 program to connect the Louisville International Airport to the East and West coasts through direct flights. The program, Louisville Regional Airlift Development, offers to backstop airline any losses in developing these routes, which are key for executives considering office and facility locations as well as the convention and tourism industries.

Additionally, Kentucky earlier this year was among the first states to receive and announce federal Opportunity Zones. The state’s 144 zones span 84 counties, covering rural, suburban and urban areas, small towns and the largest metros. Opportunity Zones are low-income, distressed and contiguous districts where investors can receive significant federal tax breaks and deferrals for investing in a variety of economic development projects from retail and restaurants to infrastructure and industrial facility expansions.

Those efforts combine to great effect with Kentucky’s natural advantages—access to the Ohio and Mississippi Rivers, a central U.S. location a day’s drive from 66 percent of the U.S. population and abundant resources including water and power—to put the state on the short list for many companies.

As a result, Kentucky is seeing record corporate investment. Between December 2015, when Gov. Bevin took office, and August 2018, the state announced approximately $16 billion in corporate investment, an amount exceeding any previous four-year administration. As well, Kentucky is experiencing:

Outstanding job growth

More people entering the labor force

Large and small communities across the state with renewed economic vitality

And families with financial stability and security

Wickliffe—located at the confluence of the Ohio and Mississippi Rivers—and indeed several of the eight constituent counties of West Kentucky, will likely feel the updraft from Global Win’s purchase of the paper mill in the coming months.

That’s a scenario playing out across Kentucky. Existing companies are committing to expansions and new recruits are announcing facilities, as business climate improvements give employers the tools and confidence they need to invest and create jobs.

Although sometimes spurred by quiet conversations, Kentucky’s results speak with a megaphone.

And the world is listening.

ORLANDO: MORE THAN VACATIONS

3D-printed prosthetic arms inspired by Marvel comic characters, high-performance sealants and adhesives custom made in record time and even masterfully crafted corn tortillas and chips—what do these very different products have in common? They are manufactured in a place traditionally known for the mass production of great vacation experiences: Orlando.

The theme park capital of the world, Orlando’s capacity to move people and products keeps its industries strongly positioned for success and growth and that includes a growing manufacturing cluster.

“Our ability to build product here is just as good as any other place that we could consider,” says Pat Lavelle, president and CEO of VOXX International, Orlando. “We have the ability to bring in parts from all over the globe and any of the ports are far more accessible than many parts of the United States.”

A worldwide leader in the automotive and consumer electronics industry, VOXX International chose to build its manufacturing facility in Orlando’s Lake Nona in 2015 because of the local-based talent pool for expansion; proximity to major transportation hubs, including Orlando International Airport, Port Canaveral and two major interstates; and business friendly climate.

Access to transportation was also a key factor in another company’s decision to build in nearby Kissimmee. Easy Foods, a producer of corn and flour tortillas, chips and other snack products, required easy access to rail lines. The company’s $14 million state-of-the-art facility is located next to the CSX railroad, giving Easy Foods immediate access to national freight transportation.

“The new facility allows Easy Foods to triple its capacity to serve markets in the U.S. and internationally,” said William Isaias, president of Easy Foods.

Similarly, Frito-Lay’s recent expansion into Osceola County required close proximity to the SunRail commuter train line so workers could travel to downtown Orlando and parts further north with ease. Its new site “provides a strategically good location for Frito-Lay’s distribution in Florida,” according to Kathy Alfano, senior director of economic development for Frito-Lay, in an interview with the Orlando Business Journal.

Coreslab, a premier producer of hollow core concrete plank products, had very specific needs for its facility—which is why building a new facility made sense for the company. After analyzing its customer base, Coreslab found that the new site would enable the company to deliver its products throughout Florida from its centralized location in Orlando. Coreslab Structures broke ground on its $10 million manufacturing facility in 2015 and completed the 60,000 square foot facility in January 2017.

When initially choosing the site, Coreslab took advantage of the Duke Site Readiness Program—a program that identifies, assesses and improves industrial sites in Florida. Throughout the seven county Orlando region, Duke has assessed and evaluated eight properties, a total of 2,436 acres of pad-ready industrial sites.

Hernon Manufacturing, founded by Israeli Air Force veteran Harry Arnon, moved from New York to Orlando in 1995. The company—which manufacturers sealants and dispensing equipment—choose to expand its presence in 2015, adding 27,000 square feet of additional space and 20 new jobs. Today, the company employs over 70 people and exports its U.S.-made products to over 60 countries around the world.

“Orlando is a major gateway for merchandise trade between Latin America, the Caribbean, and the world, which helps Hernon to export to 67 countries worldwide,” says Arnon. “Orlando serves as an excellent corridor for businesses looking to expand in Latin America.”

In addition to top-ranked infrastructure and a strong workforce, Florida has eliminated the manufacturing and equipment sales tax on manufacturers, paving a path the manufacturing of a wide range of goods including aerospace products, food and beverages, communications equipment, pharmaceuticals, semiconductors, boats and more.

Orlando’s centralized and accessible location in one of the nation’s fastest growing states makes it the right destination for many manufacturing firms.

POWERING INNOVATION: BRIGHTVOLT

Nestled among rolling hills and farms of southwest central Indiana is a unified community focused upon long-term benefits of economic development for their area. Only an extensive level of cooperation across multiple state, regional and local agencies could facilitate what is happening today in this region of the Midwest.

“Our area does a good job of moving the needle, we are not limited by boundaries, our interest is for our region to thrive, we are here to help people,” says Doug Childs, CEO of the Utilities District of Western Indiana (UDWI) Rural Electric Member Cooperative. “We collaborate to help our community get ahead.”

Southwest central Indiana’s long-term plan included the extension of a new terrain interstate highway (I-69) bridging the state’s capital to the southwestern corner of the region and the designation of a tech park near the Naval Surface Warfare Center (NSWC) Crane, which accounts for $2M per day into Indiana’s economy.

CNBC ranks Indiana’s infrastructure 2nd in the nation. An excellent example of this is the utility infrastructure placed near NSWC Crane, which included Hoosier Energy installing an electric substation, and a water tower constructed with the financial backing of UDWI. Both UDWI and Hoosier Energy are proactive with renewable energy sources and recently installed a solar field in the general area.

The technology park designation and subsequent opening of the Battery Innovation Center (BIC) has fostered additional collaboration of a variety of organizations, including civic and philanthropic.

“The innovations coming out of the BIC may further fuel the renewable energy efforts,” says Childs. “So it’s win-win.”

The creation of this concentrated innovation ecosystem, which boasts the 4th highest concentration of STEM-related professionals in the nation, brought together groups from diverse backgrounds, including: engineers, technicians, military, entrepreneurs, defense contractors, utility partners, philanthropic groups and government agencies. Their collective efforts required listening carefully in order to discover the opportunities for collaborations. One such consideration was engineering a substation to handle the BIC’s requirements and that of their partners.

The BIC is a facility designed to provide multiple means of testing, prototyping and designing for energy storage devices. They also provide staff expertise.

True to its roots, this region of the Hoosier state remains relatively humble, with each organization graciously acknowledging their counterparts for their efforts. The preference is to celebrate the accomplishments collectively and acknowledge all of the moving parts involved in creating an innovative ecosystem in the region.

This innovative ecosystem attracted the attention of BrightVolt, a technology corporation headquartered in Seattle that is revolutionizing safe, efficient energy storage.

“When they [BrightVolt] were ready to move into a new form of technology and looking for the best place to expand, they chose to come to Indiana,” says Jeff Quyle, CEO of Radius Indiana, an eight-county regional economic development organization responsible for attracting growth.

As BrightVolt searched for optimal locations for expansion, Southwest central Indiana popped up on their radar as a contender. The Battery Innovation Center offers the ideal conditions: a dry room and an intel clean room.

“Lithium and humidity are not the best of friends, which gave the BIC an edge over the location we were considering in Florida for our expansion,” explains BrightVolt CEO Todd Peters. “We also like the proximity to Crane. Jeff [Quyle, UDWI] and the folks at the IEDC (Indiana Economic Development Corp) were superb to work with. My team appreciated their efficiency and expediency. The relationship evolved very nicely, and the facility [BIC] fits our needs.”

The BrightVolt energy storage platform enables devices the size of a medical patch to larger drones to be more efficient and consumer friendly. BrightVolt engineers a thin film using flexible lithium-ion technology and they require a specialized environment in which to research and develop their technology.

The Regional Opportunity Initiative plays on the region’s assets, which include Indiana University, Purdue University, the University of Notre Dame, the Westgate area and a generous grant from the Lilly Foundation. The grant supports workforce development and talent attraction, in addition to the creation of an advanced research institute. The institute bridges the commercialization of technologies from Crane.

Childs, who has extensive experience with utilities in the Midwest, says he hopes the Battery Innovation Center continues to grow and attract businesses like BrightVolt.

REDUCING FOOD WASTE IN ARKANSAS

Arkansas food and beverage manufacturers reducing food waste, saving money. Reports indicate up to 40 percent of food grown, processed and transported in the United States is never consumed, yet one in eight Americans suffers from food insecurity. The average four-person family loses $1,500 a year on food they purchase but discard or don’t eat, often due to forgetfulness or fear of spoilage. In manufacturing and packaging, food waste costs corporations an estimated $2 billion each year—and about $15 billion for farmers—while dumping an estimated 52 million tons in landfills.

The impact of food waste is social, environmental and economic—children and elderly are going hungry, natural resources are being squandered and ever-rising costs of food affect both businesses and consumers. However, several Arkansas food and beverage industry leaders are taking steps to eradicate food waste, from changing policies and logistics, to rethinking how to use previously discarded foodstuff.

Tyson Foods launched “¡Yappah!” this summer, bite-sized chicken crisps made from upcycled chicken breast, rescued carrots and celery puree from juicing or malted barley from beer brewing. Founded in Springdale, the world leader in poultry and beef is dedicated to seeking new ways to make more and better food while helping to build a more sustainable food system.

Rizal Hamdallah, head of Tyson Innovation Lab said, “The ¡Yappah! brand mission is unique, important and far-reaching. It was created to inspire people and partners to rethink their relationship to food and how it impacts society. Through this launch, we intend to address global food challenges such as food waste.”

The chips come in four different flavors—chicken celery mojo, chicken carrot curry, chicken IPA, and white cheddar and chicken sunshine shandy beer—and are packaged in recyclable aluminum cans. The crisps should be available to consumers in October.

Bentonville-based Walmart has introduced Eden technology that focuses on tracking the freshness of produce as it travels from farm to wholesaler, to retailer to table. Sensors measure and report temperature, moisture and metabolite data, which is then converted to carton-level freshness and shelf life assessment using FDA standards, among other data.

For example, bananas travel from seven Latin American countries to some 4,000 Walmart grocery stores in the United States. When placed in a container truck, the sensor system would determine if a shipment of fruit should be rerouted to a closer store to optimize freshness for consumers. Walmart seeks to eliminate $2 billion in waste over the next five years and has already prevented $86 million in waste by using Eden in 43 of its distribution centers.

ConAgra Brands—which makes Bertolli and P.F. Chang’s frozen meals in Russellville—has been leading food waste reduction efforts for nearly a decade and achieved an 81.7 percent landfill diversion rate in 2017 corporate-wide.

“Waste reduction is critically important to our company,” said Gail Tavill, ConAgra Brands vice president for sustainable development, “and we are dedicated to making improvements throughout our operations as part of our zero-waste strategy.”

Its strategy focuses on strategically reducing the amount of waste generated in our facilities and avoiding the need to transport valuable materials for discard in landfills. “By characterizing materials that don’t make it into finished goods as “by-products” instead of ‘waste,’ we create a culture that allows a shift in thinking, away from disposal and towards value creation,” Tavill said.

The success of the state’s food manufacturers in production is what has helped them lead the efforts in waste reduction. Available workforce is one reason for the industry’s success. Arkansas has almost 50,000 people employed in the food manufacturing industry and 14 percent working in the manufacturing industry. Tyson is the third largest employer in the state, followed closely by Simmons Foods. Both companies, along with many smaller companies throughout the state, benefit through the state’s many agriculture and food science-related research facilities.

The Competitive Communities Initiative (CCI) was launched in the spring to help Arkansas improve four specific areas of community development, with a focus on funding, workforce narratives, and product readiness. Meetings with local officials, business leaders and economic development professionals helped shape the program, put in place the evaluation process, and will determine which cities and towns meet the criteria for a CCI designation and set the standard in Arkansas.

A handful of communities have completed the evaluation so far, addressed any shortcomings in workforce and funding streams, and are ready to welcome new business to their town.

In fact, food and beverage companies wanting to locate new and expanding facilities will find everything they need in Arkansas with sites that are ready to build and/or ready for occupation. With low industrial electric costs, one of the nation’s lowest costs of doing business, and a central location in the midst of an intricate intermodal system of roads, rails, water, and air, Arkansas has many advantages for manufacturers wanting to produce and distribute products quickly and efficiently at the lowest possible costs.

PEORIA, AZ IS WHERE PEOPLE WANT TO LIVE

AND BUSINESSES WANT TO GROW

Why sacrifice three hours of your day? That’s the commute from the place where people want to live to the place where companies have chosen to cluster. But what if it were different for your company.

Flip the script, why can’t you experience life in the same place where you earn the right to have those experiences. Get off work and drive for 90 minutes in traffic or play the back nine at Blackstone. Spend 90 minutes with your family or with the radio. Love where you live, work where you live.

A cluster starts with one, are you going to lead or follow? One of many, or the one that leads the many. Untapped is cliché but real. The labor force is clamoring for a new place, a close place. They want their three hours back. You are not listening.

Why cluster in a hyper-saturated area with a depleted labor pool and a textbook example of sprawl. We have the workforce, the sites and, most importantly, the lifestyle you crave.

Why Peoria?

Stunning natural beauty, talented workforce, activity-centered lifestyle, premier development sites and a business forward city leadership—Make the SMART choice.

Why Arizona?

Peoria is a low-cost option for both business and workforce attraction when compared to Austin, Dallas, Denver, Salt Lake City, San Diego, San Francisco and Los Angeles.