Precision News January/February 2015

THIS ISSUE: Looking Forward in 2015 / EPA’s Holiday ‘Gift’ to Manufacturers / Forklift Safety

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The NTMA SW Regional Magazine Featuring Arizona and San Diego

ARIZONATOOLING.ORG JANUARY/FEBRUARY 2015

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TECHNOLOGY . BUSINESS . EDUCATION . EVENTS . DIRECTORY

THE PREPAREDNESS ISSUE

Inside: GLOBAL ECONOMIC REPORT FOR NOVEMBER THE GLOBAL ECONOMY HAS SEEN ITS SHARE OF CHALLENGES THIS YEAR

/// A NEW YEAR, NEW CHALLENGES, AND A CHANGING CLIMATE REQUIRE...

NEW TOOLS

PLANNING FOR THE UNKNOWN A REAL LIFE LESSON ON SUCCESSION PLANNING

FIRE DAMAGE? NOW WE’RE TALKING REAL MONEY! A DISTURBING TREND SEEMS TO BE EMERGING p.18

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You Can’t Roller Skate in a Buffalo Herd

Workers Comp in 2015...

What to Expect

by By Bill Cobb, CompMetrics, Inc.

We hate to be the bearer of bad news, but...

While there will be no substantive law or regulatory changes in 2015, you can expect…

•

Premium increases of 5% or more instead of the 3.2% the WCIRB recommended.

•

An increase in indemnity costs: Temporary Total Disability (TTD) has a built in inflation factor. The delays caused by the new Utilization Review/Independent Medical Review process will extend TTD periods and further increase litigation.

•

The Future of Manufacturing

The ‘activation fee’ to be declared unconstitutional. This will fuel the debate on the ‘filing fee.’

Why don’t you give us a call and let us develop a strategy for saving money on your worker comp premiums.

Call Glenn Van Noy at 760-419-1393 for a no obligation worker comp assessment.

With apologies to Roger Miller, singer and song writer (King of the Road), I’d like to use the title of this song as a metaphor for work place safety. I first heard this song when it hit the charts and was an instant best seller in 1967. I was still in high school. In the Roger Miller style, it was meant to be nonsensical and serious at the same time. The lead-in line in the chorus was, ‘You can’t roller skate in a buffalo herd,’ The last line was, ‘But you can be happy if you’ve a mind to.’

Everyone instantly understands why ‘You can’t roller skate in a buffalo herd.’ It is obviously dangerous. The odds of getting hurt far outweigh the chances of making it through unscathed. Here’s another point (and an important one) – the buffalo aren’t trying to hurt you. They are just wandering around doing what buffalo’s do – eating grass, scratching their back, taking care of their calves. In theory, inside a buffalo herd is the safest place to be.

Eventually, when you have large objects and lots of movement – someone is going to get hurt. It wasn’t intentional, it was an accident. That’s why they are called accidents (an unfortunate incident that happens unexpectedly and unintentionally, typically resulting in damage or injury).

Think about the work place. It’s a lot like a buffalo herd. There are lots of large objects and lots of movement. It was designed to be safe. Management, more than anyone else, has invested a great deal of money and effort in making sure it is safe. Eventually, an accident will occur.

Anyone can decide not to ‘roller skate in a buffalo herd.’ They cannot decide not to go into the work place. That’s where they earn their living.

For the employer, bringing employees into the work place is critical – that’s how they produce their product or service. The work place, and its inherent risk, is the constant. The variable is the employers and the employees. Together they can work to make the environment safer – safer for the employees and less expensive for the employers.

Champion Risk & Insurance Services, L.P. is a proud supporter of the NTMA San Diego and the San Francisco Bay Area Chapters. We provide the NTMA Metalworkers’ Program, a group of competitively priced, specialty coverages that are essential to precision machining operations. This program is not offered by generalist brokers.

For a no obligation evaluation and consultation, contact Glenn VanNoy at 760-419-1393 or gvannoy@championrisk.net.

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The benefit is the employee gets to continue to be a contributing member of the work force and gets to continue to earn a paycheck so they can take care of family and the ones they love. For the employer, work place injuries may mean the difference in whether they can hire one more full time employee.

How can this be accomplished? The answer is ‘communication.’ Employers should talk to employees – let them know their safety is paramount. Employees should talk to the employer – ‘these are the unsafe conditions.’ Employees should talk to one another – tell them we’re all watching out for each other.

The combined effort will be better for all – better than, ‘Roller skating in a buffalo herd.’

Champion Risk & Insurance Services, L.P. An Affiliate of Wood Gutmann & Bogart Insurance Brokers

I’d like to change the last line of the chorus – ‘BUT YOU CAN BE SAFE IF YOU’VE A MIND TO.’ CompMetrics, Inc. is a Risk Management Consulting Company specializing in Workers’ Compensation.

JANUARY/FEBRUARY 2015 VOLUME 5 • ISSUE 1

Contents 11 14 18

Features

Departments

GLOBAL ECONOMIC REPORT FOR NOVEMBER

03 President’s Letter 04 Policy Matters

THE GLOBAL ECONOMY HAS SEEN ITS SHARE OF CHALLENGES THIS YEAR

21 NTMA Initiatives 22 Websites that Work

PLANNING FOR THE UNKNOWN

22 Arizona Chapter Info

A REAL LIFE LESSON ON SUCCESSION PLANNING

26 San Diego Chapter Info 27 NTMA Membership 28 Shop Floor

FIRE DAMAGE? NOW WE’RE TALKING REAL MONEY! A DISTURBING TREND SEEMS TO BE EMERGING

OUR MISSION:

“WE JOIN TOGETHER AS MEMBERS OF THE SW REGION PRECISION CUSTOM MANUFACTURING COMMUNITY TO ACHIEVE BUSINESS SUCCESS IN A GLOBAL ECONOMY THROUGH ADVOCACY, ADVICE, NETWORKING, INFORMATION, PROGRAMS AND SERVICES.”

The NTMA SW Regional Magazine Featuring Arizona and San Diego EXECUTIVE DIRECTOR & EDITOR Chris Mignella

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CONTRIBUTING WRITERS ATMA Safety Team, David Lair, Chad Moutray, Omar S. Nashashibi, Tim Reynolds ADVISORY BOARD Chris Mignella, Glenn VanNoy, Gail Houser EDITORIAL, ADVERTISING & ADDRESS CHANGES Chris Mignella, Executive Director & Editor Phone: 602.388.5752 Email: ExecutiveDirector@arizonatooling.org

Precision News is published bi-monthly by the Arizona Tooling & Machining Association (ATMA). Opinions expressed are those of the authors or persons quoted and not necessarily those of the ATMA. While efforts to ensure accuracy are exercised, ATMA assumes no liability for the information contained in either editorial or advertising content. ATMA assumes no responsibility or liability for unsolicited manuscripts or artwork.

Reproduction in whole or part without the expressed written consent from ATMA is prohibited. Precision News is the registered trade name of this publication.

Copyright ©2015 by ATMA. All rights reserved.

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First Word PRESIDENT’S LETTER

Happy New Year, P.N. Readers! . . .. ..

It is my hope that ALL of you had a wonderful holiday season and enjoyed special time with both family and friends.

2015 is here! 2014 is past. Take the time to reflect on the past year’s accomplishments and challenges, apply what you learn to your upcoming year’s efforts, and plan how to make those strategic business adjustments to improve your results in 2015. I wish all of you continued success in your businesses!

You all know that Super Bowl XLIX is being held here in beautiful Arizona in 2015. We also have the 2015 Pro Bowl, the WM Phoenix Open Golf Tournament, and the 3rd Annual NTMA Southwest Regional Conference. We know the SWRC may not have the glitz and glamour of those other high profile events, but we certainly have a great time and enjoy the weekend with other members from around the southwest. If you can only make one trip to Arizona in 2015, we hope you plan to attend “SWRC III” and enjoy the event! Each year the SWRC has improved and the planning team is working hard to fill the weekend with excellent content and terrific speakers. If you haven’t seen the “Save the Date” cards yet, expect to see them shortly.

DAVID LAIR Vice President, Dynamic Machine & Fabrication Corp. and President, ATMA

In addition to this Arizona event, check out the NTMA website for other national industry happenings across the country. Your participation in these gatherings whether NTMA national conferences, trade show events or legislative conferences, all will contribute to our industry and continue the strong voice industry must have in shaping national policy.

Manufacturing leads the way for economic strength and job creation. Our collective voices do make a difference!

Enjoy your successes in 2015!

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Policy Matters BECOME A VOICE FOR CHANGE

EPA’s Holiday Gift to Manufacturers

by OMAR S. NASHASHIBI

EACH HOLIDAY SEASON, we all step back and remind ourselves what we are thankful for and exchange gifts with friends, colleagues, and loved ones.

However, while most of you are celebrating, the U.S. Environmental Protection Agency (EPA) did not deliver the gift of joy to manufacturers around the country.

The EPA began the day before Thanksgiving when it released what could be the costliest regulation in the history of the U.S. Experts estimate the rule may cost the U.S. economy $3.4 trillion by 2040 and put nearly 3 million jobs at risk each year. The National Tooling and Machining Association (NTMA) is opposing the action to further reduce ground level ozone levels from 75 parts per billion (ppb) to 65 or even 60ppb.

The White House twice forced the EPA to delay the proposal – the first to help the President ahead of his 2012 reelection campaign and the second in an attempt to save several red-state Democrats from defeat in the recent 2014 midterm congressional elections. Now, with the campaigns behind them, the EPA is set to finalize this regulation by October 1, 2015, just ahead of the Presidential primary season.

In December, NTMA and other manufacturers filed official comments opposing another gift from the EPA – guaranteed electricity cost increases of at least 6-12% annually. The EPA released a proposed rule in June 2014 to regulate carbon emissions from existing power plants. Industry groups argue that the EPA is broadly overstepping its authority by forcing states to implement plans reducing emissions initially from coal-fired plants, but also targeting the broader electricitygenerating sector.

Unfortunately, the EPA is continuing to issue these rules behind closed doors using dubious science and failing to take into account the impact of their actions on the broader economy. Especially as we gathered with future generations during the holidays, we were reminded that we want to leave the world a better place for our children and grandchildren. Unfortunately, this regulation will not achieve those goals and current environmental policy is already making a difference.

Projections are that U.S. emissions will remain stable while global CO2 emissions will increase 20% by 2035. Meanwhile, the

regulation of existing power plants will subject many American manufacturers to a 12% electricity cost increase while only achieving cuts the equivalent of 13.5 days of CO2 emissions in China.

The EPA also continued to move forward with its approval of State Implementation Plans and revising the National Ambient Air Quality Standards established in 2012 (NAAQS). The EPA is designating certain parts of the country as nonattainment zones – regions that exceed a certain level of emissions. When an area receives a nonattainment designation by the EPA, this could lead to government restrictions on manufacturing activity and growth.

A nonattainment designation could cripple local communities, subjecting businesses to an endless stream of bureaucratic hurdles surrounding day-to-day operations.

For example, a manufacturer may need to idle some machines to reduce emissions if it plans to expand the facility to compensate for increased pollution. The government is essentially tying the hands of manufacturers who are trying to grow their businesses, hire more employees, and strengthen manufacturing in America. continued on page 06

fyi: The EPA began the day before Thanksgiving when it released what could be the costliest regulation in the history of the U.S. +

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Policy Matters

EPA’s Holiday Gift to Manufacturers continued from page 04

These three regulations alone affect trillions of dollars in economic activity and are not the gift manufacturers had hoped for this holiday season. One might hope the New Year will bring a greater sense of optimism for manufacturers. I wish I could affirm those hopes, but we expect the opposite.

In the remaining two years of the Obama Administration, experts in Washington anticipate a flurry of climate change activity as the President seeks to cement his legacy with the environmental community. As part of the broader Clean Power Plan, the federal government is placing requirements and burdens on the energy industry that do not accurately reflect today’s global marketplace.

The Administration is taking a series of separate, but interrelated, actions, which together create the largest environmental reach in the U.S. history. The EPA is also seeking to expand the federal government’s jurisdiction over the nation’s waterways from 3.5 million miles to over 8 million miles of rivers, streams, and ditches under Washington oversight. Known as Waters of the U.S., the proposed rule will open up thousands of manufacturers, farmers, and other businesses to citizen group lawsuits and lengthy environmental reviews. It will also affect stormwater retention ponds, fire ponds, and on-site impoundments, leading to point source discharge and other permit requirements, causing manufacturers to pay costly permitting costs – where the median

price range comes in at $155,000.

With the holidays now behind us, and a new Congress led by Republicans waging battle with the White House, manufacturers should not lose sight of the Trojan horse gifts sent

by EPA. No manufacturer wants the 10% electricity cost increases, $155,000 permitting expenses, or restrictions on their ability to expand their plants. This is just a reminder that not all gifts are good, and these don’t come with a return policy.

OMAR NASHASHIBI is a founding partner at The Franklin Partnership, LLP, a bi-partisan government relations firm retained by the National Tooling and Machining Association in Washington, D.C. Learn more at: www.franklinpartnership.com

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Feature Story // PrecisionNews

The global economy has seen its share of challenges this year.

GLOBAL MANUFACTURING REPORT FOR NOVEMBER, 2014

BY CHAD MOUTRAY

Reprinted from the National Association of Manufacturers (NAM) www.nam.org

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Feature Story // PrecisionNews

continued from page 11

GLOBAL MANUFACTURING REPORT FOR NOVEMBER, 2014 The global economy has seen its share of challenges this year. These include deflationary worries in Europe, decelerating growth in China and declining activity in South America, among others. Along those lines, the Bank of Japan announced on October 31 that it would increase the amount of its monthly asset purchases, stepping up its quantitative easing program in an effort to spur faster growth. As we noted in last month’s report, the United States fares pretty well in comparison.

The International Monetary Fund slightly downgraded its global outlook, with world output now estimated to expand by 3.3 percent and 3.8 percent in 2014 and 2015, respectively. Yet, it raised its estimates for real GDP growth in the United States in 2014 from 1.7 percent to 2.2 percent.

The good news was that our two largest trading partners appear to be moving in the right direction. The RBC Canadian Manufacturing PMI rose from 53.5 to 55.3, its highest level since October, and the pace of sales expanded at their fastest levels in 11 months. While the manufacturing production data show some softness in August, the latest jobs numbers illustrate a rebound more recently, with the sector adding 33,200 net new workers in October. Meanwhile, the HSBC Mexico Manufacturing PMI also increased, up from 52.6 to 53.3. This marks the best reading for manufacturing activity since January, particularly for sales and output. As a whole, however, the Mexican economy has been subpar as of late, with industrial production growing just 1.4 percent year-over-year in August.

Indeed, the U.S. economy grew 3.5 percent in the third quarter, and manufacturers are largely upbeat about demand and production for the coming months. Still, international sales have continued to be rather sluggish so far this year. U.S.-manufactured goods exports inched up just 2.2 percent through the first three quarters of 2014 relative to the same time frame in 2013, according to Trade Stats Express. This represents a slight deceleration from last year’s 2.6 percent pace. Fortunately, we have seen positive growth in our export sales year to date to our five largest trading partners: Canada (up 0.6 percent), Mexico (up 6.1 percent), China (up 8.2 percent), Japan (up 0.8 percent) and Germany (up 6.9 percent). Moreover, while net exports served as a drag on real GDP in the first half of the year, they added 1.32 percentage points to the headline figure in the third quarter. Hopefully, this bodes well moving forward.

Breakthroughs on the long-delayed Information Technology Agreement and the implementation of the Trade Facilitation Agreement in early November augur well for moving both agreements forward and strengthening the role of the World Trade Organization. U.S. trade talks with Asia-Pacific and Europe continue, as do U.S.–China bilateral investment treaty negotiations and global environmental goods talks. Legislative action on outstanding trade priorities is still sought, as manufacturers also urge action to prevent a West Coast port shutdown.

For those who look at the world with an optimistic eye, October saw signs of progress for manufacturers worldwide. Seven of the top ten markets for U.S.-manufactured goods experienced expanding levels of activity in October, up from six in September.

In addition, activity in each of those countries picked up for the month, which was encouraging. Most notably, Germany shifted from an ever-so-slight contraction to modest growth. On the other hand, there were three nations that continued to see declining sales and output. Indeed, Brazil, Hong Kong and South Korea weakened further in October. Moreover, the J.P. Morgan Global Manufacturing PMI was 52.2 in October, unchanged from September. Yet, the pace of new orders, exports and output eased for the month, with each showing modest growth overall.

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GLOBAL ECONOMIC AND TRADE TRENDS The J.P. Morgan Global Manufacturing PMI was 52.2 in October, holding steady from September. Despite the headline figure staying constant, several of the key underlying data points reflected some easing from September’s report. This included new orders (down from 52.9 to 52.8), exports (down from 52.2 to 51.0) and output (down from 52.9 to 52.8). Of these figures, the most notable is the deceleration in export sales, likely the result of softer global growth in general. Beyond those points, employment (unchanged at 51.2) was also slightly positive.

Looking at the top markets for U.S.-manufactured goods, we saw some signs of weakness in September. For the most part, manufacturing activity improved according to the October data, even as there continued to be some challenges. Seven of the top ten markets experienced expanding levels for manufacturers in October, up from six in September. In addition, activity in each of those countries picked up for the month, which was

encouraging. Most notably, Germany (up from 49.9 to 51.4) shifted from an ever-so-slight contraction to modest growth. On the other hand, three nations continued to see declining sales and output. Indeed, Brazil (down from 49.3 to 49.1), Hong Kong (down from 49.8 to 47.7) and South Korea (down from 48.8 to 48.7) weakened further in October.

Japan shocked markets with more monetary stimulus.

The Bank of Japan announced on October 31 that it would increase the amount of its monthly asset purchases, stepping up its quantitative easing program in an effort to spur faster growth.

This action moved equity markets significantly higher around the world. Since the announcement, the dollar has also strengthened versus the yen, with the exchange rate moving from 108.94 yen per U.S. dollar on October 30 to 115.78 yen per U.S. dollar yesterday.

Japan’s real GDP fell 1.8 percent in the second quarter, with 2014 growing by less than 1 percent as a whole. (Note that third quarter real GDP figures will be released early next week.) On the positive side, the pace of industrial production and retail s ales growth were both higher in September, up 2.7 percent and 2.3 percent year-over-year, respectively. Along those lines, the Markit/JMMA Japan Manufacturing PMI increased from 51.7 to 52.4, its highest level since the imposition of a new consumption tax in April. Activity was higher for several key measures, including new orders (up from 52.4 to 54.6), exports (up from 51.1 to 53.3) and employment (up from 49.7 to 50.3). On the other hand, the pace of production (down from 53.4 to 51.3) eased somewhat for the month, but that could be temporary in light of increased demand.

Europe’s economic growth remains very weak, with some signs of progress in October.

The Markit Eurozone Manufacturing PMI edged slightly higher, from 50.3 to 50.6. Overall activity continues to remain quite soft, with the headline index trending well below its 2014 peak of 54.0 in January. October data were mixed, with output (up from 51.0 to 51.5) and hiring (up from 50.1 to 50.5) increasing slightly, but exports (down from 51.6 to 50.7) easing. More troubling, new orders (up from 49.3 to 49.5) contracted for the second straight month, albeit at a slower pace of decline in October than in September. This suggests that demand within the Eurozone itself remains shaky.

October’s progress mainly occurred in Northern Europe. For instance, Germany (up from 49.9 to 51.4), Ireland (up from 55.7 to 56.6), the Netherlands (up from 52.2 to 53.0) and the United Kingdom (up from 51.5 to 53.2) started the fourth quarter on a stronger note. Production was generally higher in all four of these nations, with exports being the lone weakness, particularly in the United Kingdom. Output in Spain (unchanged at 52.6) also moved in the right direction, but sales growth weakened a bit. Meanwhile, activity in four European nations contracted in October: Austria (down from 47.9 to 46.9), France (down from 48.8 to 48.5), Greece (down from 48.8 to 48.4) and Italy (down from 50.7 to 49.0). Austrian manufacturing sentiment hit a twoyear low, and France has contracted for six consecutive months.

Real GDP is expected to be slightly positive in the third quarter, an improvement from being unchanged in the second quarter.

In addition, industrial production rose 0.6 percent in September, rebounding from the 1.4 percent decline in August. Yet, despite the slightly better figures, consumers remain anxious, and retail sales dropped 1.3 percent from September. The unemployment rate has held steady at 11.5 percent for four straight months and remains quite elevated. At the same time, what continues to worry the European Central Bank is low inflation, with prices up just 0.4 percent year-over-year in October. For what it is worth, that was higher than the 0.3 percent year-over-year pace observed in September.

Chinese manufacturers are expanding slowly, but growth continues to decelerate.

The HSBC China Manufacturing PMI rose marginally, up from 50.2 to 50.4. Yet, despite the slight uptick in the headline figure, many of the key measures of activity eased in October. This included new orders (down from 51.5 to 51.2), output (down from 51.3 to 50.7) and exports (down from 54.5 to 51.7). Note that the pace of exports decelerated more than the other figures.

In addition, hiring (up from 47.5 to 48.9) continued to contract, albeit at a slower rate. On the positive side, these data —while quite soft—reflect stabilization in the Chinese economy from weaknesses in the first five months of 2014.

The U.S. trade deficit widened in September.

The U.S. trade deficit widened somewhat, up from $39.99 billion in August to $43.03 billion in September, reaching its highest point since May. It mainly resulted from fewer goods exports (down from $138.65 billion to $136.07 billion). Service-sector exports were also off slightly, down from $59.92 billion to $59.51 billion. In contrast, imports of goods and services showed little change.

Reduced petroleum prices might have slightly impacted these numbers. West Texas intermediate crude went for $97.86 per barrel at the end of August but fell to $91.17 on September 30.

(It has fallen further since then, closing at $74.33 a barrel yesterday.) This probably impacted the petroleum trade figures, with exports down from $14.13 billion to $12.37 billion and imports down from $27.26 billion to $26.37 billion. Still, the decline in exports went beyond the shift in energy trade figures.

The non-petro-leum trade deficit widened from $45.46 billion to $47.18 billion.

Slower economic growth overseas continues to dampen demand for U.S. goods, with growth in manufactured goods exports remaining quite sluggish so far this year. Using updated data on Trade Stats Express, U.S.-manufactured goods exports have increased 2.2 percent through the first three quarters of 2014 relative to over the same time frame in 2013. This represents a slight deceleration from last year’s 2.6 percent pace.

CHAD MOUTRAY is Chief Economist for the National Association of Manufacturers - Learn more at: http://www.nam.org

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Feature Story // PrecisionNews

STORY BY TIM REYNOLDS

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Planning for the Unknown – A Real Life Lesson on Succession Planning Leaving a legacy at your company means more than just creating great products and/or services that you’ve worked so hard to accomplish. It also means leaving behind a sustainable entity that creates good jobs, is a benefactor for the community, and spurs economic growth for other industries. How will you ensure this continues and what steps are you taking now to address some of the issues you may be faced with?

A succession plan identifies a person, or persons, who can continue running the company when the current owner decides to retire, sell, or exit the business. It also includes updating all legal documents – wills, insurance, corporate documents, buy-sell agreements, trust and estate documents, etc… In addition, and perhaps more importantly, a succession plan helps ensure a smooth transition in the event tragedy strikes with a serious illness, disability or even death. No one likes thinking about their own mortality, and some cringe at the thought of having someone else continue the business without their expertise. As a result, many of the small business owners we work with choose to neglect planning for succession. It is typically considered a low priority or they simply just don’t want to think about “what if I don’t wake up someday?” Failure to properly plan can turn out to be a disastrous mistake….I know because I lived it. continued on page 16

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No one likes thinking about their own mortality, and some cringe at the thought of having someone else continue the business without their expertise.

Feature Story // PrecisionNews

Planning for the Unknown – A Real Life Lesson on Succession Planning continued from page 15

In 1985, after having worked practically all of his adult life working for various HVAC firms, my Father decided to start his own business. I was 15 years old at the time and I was his first true employee, or “gopher” as he liked to put it. There were some very lean years around the house and by the time I graduated high school, my “college fund” pretty much went back into the business. As a result, I continued to work for my Father for three more years until I had saved enough money to enroll in college. It didn’t take me too many “sheet metal cuts” on my hands to figure out that HVAC wasn’t in my future! During that time, my Father continued to run a very successful business.

Word quickly spread around the residential homebuilding community of the timely, reasonably priced, and high-quality work we did. Things were going well for the business and my Father suddenly had a fleet of trucks, a warehouse, and employees.

Throughout these years, my Father didn’t think much about how he would eventually retire, sell, or exit the business. He knew I didn’t want to take the reigns as I had already graduated college and had started my career as a Certified Public Accountant working in Corporate America. He was always “too busy to think about it” he would tell me. At any given moment in time (much like the small business owners I work with) he was dealing with a customer issue, a supplier issue, a cash flow issue and working hard to build the business….who had time to think about retiring or the uneasy thought of what if I don’t wake up tomorrow?

In January 2007, that day came. My Father didn’t wake up.

He passed away at the age of 56 and left behind a successful business to a family that had no clue on how to run it. Aside from the emotional toll that a family endures with the loss of a family member, we now had to deal with the sudden burden of “what do we do with this business”? The emotional stress was not limited to our family. Can you imagine what was running through the minds of the employees when they walked in the shop on Monday morning wondering why my Father wasn’t 16

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there? Will this place close? Will this place be sold? Will we have jobs? These were just a few of the many questions that were being asked.

In the end, we found a way to work it all out, however, the shear emotional and financial stress was enough to make me personally realize the importance of this issue. I learned that a well thought out and planned succession plan could have mitigated much of the anxiety, stress and perhaps provided for a better economic answer for our family. All business owners need to devote the requisite time and energy to developing a succession plan for their small business. It is never “too early” to start this process....I know because I lived it.

TIM REYNOLDS is a Principal with CliftonLarsonAllen and leads the Manufacturing & Distribution practice in the St. Joseph/Kansas City market. Please contact Tim at 816.671.8916 or via e-mail at tim.reynolds@claconnect.com with any questions on how CliftonLarsonAllen can help. To learn more about CliftonLarsonAllen, visit www.CLAconnect.com.

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Feature Advertorial // PrecisionNews

Your Business Could Disappear In A Flash?

The late Senator Everett Dirksen is often credited with saying, “A billion here and a billion there, and pretty soon you’re talking real money.” Of course, he was describing the federal government’s budget. The rest of us seldom deal in billions of dollars. That kind of money is hard for most people to even comprehend.

A million dollars, on the other hand, is a little easier to fathom. And, although a million today doesn’t go as far as it used to in the Senator’s day, it still represents a significant amount of money for most business owners.

Picture that million as an expense in the form of damage from a fire and the resulting insurance claim. Even in today’s dollars, it would take major damage to have an insurance claim reach seven figures. Imagine, then, the scope of a fire that causes a $20, $30, or $40 million claim. Now you’re talking real money.

Unfortunately, the tooling and machining industry has had some fire claims recently that have reached the level of “real money.” And, equally unfortunate, a disturbing trend seems to be emerging.

So, what’s happening? And why is the manufacturing industry experiencing such bad luck? Turns out these massive fires happened because of a chain of events involving wastewater or thermal evaporators.

JUST AS THEIR NAME IMPLIES Wastewater evaporators do just that—through evaporation, they separate water from other materials used during manufacturing processes. To do that, the evaporator heats the mixture until the water boils off, leaving behind the residual material, which is then ready for disposal or recycling.

The problems start when the material being separated out has a flashpoint lower than the boiling point of the water. (The flashpoint is the temperature at which a substance evaporates fast enough to form an ignitable concentration of vapor.) During the process of heating the mixture to 212 degrees, the other material’s flashpoint is surpassed, creating an ignitable vapor. Now all that’s needed for a fire is a source of ignition—like the heating unit on the evaporator.

FIRE AND SMOKE If the vapor is ignited, a fire is almost a certainty. These fires are typically intense, and can spread farther and faster than some sprinkler systems can control. The situation becomes even more dire if other volatile substances are near—the fire can then accelerate beyond just the evaporator. And, even if the fire is contained, the resulting smoke can do substantial damage to electronics on nearby machines, and possibly even damage the rest of the building.

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UNFORTUNATELY, THE TOOLING AND MACHINING INDUSTRY HAS HAD SOME FIRE CLAIMS RECENTLY THAT HAVE REACHED THE LEVEL OF “REAL MONEY.” AND, EQUALLY UNFORTUNATE, A DISTURBING TREND SEEMS TO BE EMERGING.

MAKE THE FIRES STOP! A wastewater evaporator is a sophisticated piece of equipment that needs trained operators and proper installation, just like any other large machine. If your company uses a wastewater evaporator, it must be operated properly and safely, and everyone involved in its operation needs to know what it is and isn’t capable of.

• A materials assessment process will help ensure your wastewater evaporator is used to heat only mixtures that can be safely processed (i.e., no mixtures with liquids having a flashpoint below the boiling point of water).

• Allow only employees who are fully trained on proper operation and safety measures to operate the evaporator.

• Operator training should include information that ensures complete understanding of the materials your company typically processes.

• Require operators to be familiar with the evaporator’s instruction manual, which should always be easily accessible.

• Require operators to read and understand Safety Data Sheets (SDS). SDS provide important product information to help identify potential hazards (i.e., flashpoints), which helps determine if the wastewater evaporator should be used.

• Provide routine safety training for operators. Consider an apprentice program for new operators.

• Check your facility for adequate and operational fire prevention systems, such as fire extinguishers and sprinklers.

• Place the evaporator in a fire resistant room or separate from the main building.

• Store liquids waiting to be processed at least ten feet from the wastewater evaporator.

A SERIES OF ERRORS These large fires weren’t the result of a single, chance happening. They were caused by the accumulation of improper methods and an incomplete understanding of potential hazards. The property damage is almost inconceivable, and the close calls with workers’ lives alarming. What was there yesterday is gone today, affecting employees, owners, communities—and reputations.

Insurance can offer some peace of mind in the event of a disaster, and perhaps help a business get back on its feet, but the best way to protect your business from a life-altering tragedy like a fire is to keep it from happening in the first place.

Want to learn more? Contact the Risk Management Resource Center at 1.888.333.4949 or visit FederatedInsurance.com

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1235 S. 48th Street, Suite #1 Tempe, AZ 85281 480.615.6353 www.arizonacnc.com 20

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PrecisionNews // NTMA INITIATIVES

How Can NTMA Help You Grow Your Business?

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Profitability grows when revenue increases and costs are controlled.

NTMA can help you with both.

Though most of our members are small- to medium-sized companies, the power of the association can help you do business like a large corporation.

REVENUE GROWTH • We organize regular business-to-business purchasing fairs, designed to operate like speed dating for suppliers. We invite 100 or more buyers from large companies and then give you opportunities to briefly pitch your products and services. As a result attendees leave with good contacts and solid leads, leading to increased business. Companies have been awarded millions of dollars in contracts as a direct result of these events. • We offer a program called Members First, designed to help members turn to each other to meet needs. Perhaps your next customer is an NTMA peer? Or perhaps an NTMA member would make an excellent vendor for you? Members First helps make the connections.

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• By interacting with fellow members in your local chapter, you may discover new business opportunities, or ways to work together with peers to increase business or market yourselves cooperatively.

COST CONTROL • We offer discount programs with several large suppliers (including Grainger, UPS and Yellow Freight), allowing you to leverage NTMA’s combined buying power for your own benefit. • Our business insurance program keeps more money in your pocket by offering a necessary product in a low-overhead, notfor-profit manner.

Our decision resources allow you to be smarter about how you use your resources, resulting in greater efficiencies and lower costs. Learn more at: www.ntma.org/initiatives

Get Turned-On to the ATMA! Contact Chris Mignella at: ExecutiveDirector@arizonatooling.org

PUSH OUR BUTTONS ...AND ACHIEVE YOUR BUSINESS SUCCESS THROUGH ADVOCACY, ADVICE, NETWORKING, INFORMATION, PROGRAMS AND SERVICES.

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For more information contact Chris Mignella at: ExecutiveDirector@arizonatooling.org

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PrecisionNews Presents

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Arizona Tooling & Machining Association A Chapter of the National Tooling & Machining Association P.O. Box 3518 Scottsdale, AZ 85271 Office: 602.388.5752

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Arizona Chapter Website arizonatooling.org

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PrecisionNews // ARIZONA TOOLING & MACHINING ASSOCIATION

MEMBER LISTINGS REGULAR MEMBERS David Wright

Accuwright Industries

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THE RIGHT TOOLS. THE RIGHT TEAM. THE RIGHT TIME.

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PrecisionNews // ARIZONA TOOLING & MACHINING ASSOCIATION

MEMBER LISTINGS MARK YOUR CALENDAR WITH THESE

ASSOCIATE MEMBERS

UPCOMING ATMA EVENTS!

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Ty Miller5/11 Safety Meeting Clifton Larson AllenStandards) 11:30 480.615.2320 (General Safety

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Get Turned-On to the ATMA! Contact Chris Mignella at: ExecutiveDirector@arizonatooling.org

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www.SunGrindingUSA.com

For All Your Grinding Needs!

We have the largest centerless grinder in the state!

Blanchard - Our 60 inch chuck will cut stock quickly and allows us to grind parts up to 72” diagonally.

Mattison - 32” wide and 168” long capacity. If it is one part or 100 parts at a time, we can do the job!

Sun Grinding, formerly known as BK Grinding, has been in the Phoenix fabrication industry for over 14 years.

We are the leading surface grinding shop in Arizona.

Family owned and operated. info@sungrindingusa.com / 522 E. Buckeye Rd. Phoenix, AZ. 85004

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When it comes to finding smart tooling solutions, there’s no substitute for world-leading expertise.

The yellow coat is your guarantee that you’ll get both the world’s finest tools and the know-how to make the most of them.

With thousands of proven manufacturing solutions, we have the experience to help you cut cost per part produced, increase machine utilization and improve product quality in your applications.

Sound interesting?

Visit our website at www.sandvik.coromant.com or get in touch with someone in a yellow coat at 1-800-SANDVIK.

january/february 2015

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PrecisionNews

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PrecisionNews // NTMA -SAN DIEGO CHAPTER

MEMBER LISTINGS

SAN DIEGO CHAPTER 2014 BOARD OF DIRECTORS

REGULAR MEMBERS Sean Tillett

Alphatec Spine

760.494.6774

Darryl Chudomelka

Asigma Corp.

760.966.3103

Peter Neville

B&H Tool Company Inc.

800.272.8878

Alejandra Rogue

BMW Precision

760.966.3103

Vice President CLIFF MANZKE Manzke Machine, Inc.

Lyle Anderson

C&H Machine and EDM Services

760.746.6459

Michael J. Brown

Computer Integrated Mach., Inc.

619.596.9246

Erich Wilms

Diversified Tool & Die

760.598.9100

Corporate Secretary and Treasurer HEATHER RUSSELL K-Tech Machine, Inc.

Michael Duffy

Duffy Machine

760.598.7963

Donovan Weber

Forecast 3D

760.929.9380

Nhan Vo

Henry Machine, Inc.

760.744.8482

Jim Piel

J I Machine Company, Inc.

858.695.1787

Heather Russell

K-Tech Machine, Inc.

760.471.9262

John Riego de Dios***

Construction Tec Acad. Kearny HS

858.496.8370

Frank Harton

L.F. Industries, Inc.

760.438.5711

Cliff Manzke

Manzke Machine, Inc.

760.504.6875

Russell Wells Sr.

MarLee Manufacturing, Inc.

909.390.3222

Linda Kurokawa***

Mira Costa College

760.795.6824

Mark Rottele

Roettele Industries

909.606.8252

Beau Haubruge***

San Pasqual High School

760.291.6000

Scott Cormony

Waterjet West, Inc.

760.471.2600

President SEAN TILLETT Alphatec Spine, Inc.

Membership MIKE BROWN Computer Integrated Machining Past President TONY MARTINDALE Martindale Manufacturing BOARD MEMBERS Education Board Member John Riego de Dios Construction Tec Academy, Kearny HS Member at Large Lyle Anderson

*National Associate Members **Associate Member ***Educational Partner

ASSOCIATE MEMBERS

Member at Large Michael Brown

Glenn Van Noy

Champion Risk and Insurance Services

Founder 800.829.0807 x716

Chapter Executive Tammy Tillett

Steve Doda

Aerotek

760.916.1741

Greg Seaholm

IMS Metal Supply

Greg Mercurio

858.602.9297

Shop Floor Automation

619.461.4000 x1001

Chapter Executive Cathy Teal

San Diego - NTMA Chapter EVENTS OUR MISSION “To form an alliance within the San Diego region of the local machining and tool industry and to foster mutual success through education, technology, opportunity sharing and act as one voice with the government and the community.”

San Diego - NTMA Chapter 197 Woodland Pkwy., #104, PMB #148 San Marcos, CA 92069-3020 Phone: 805.558.5830 Email: info@ntmaSanDiegoChapter.com www.ntmaSanDiegoChapter.org

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JANUARY: Jan 02 NTMA SD—Board Meeting Jan 30 NTMA SD—Member Benefits: Get more bang for your buck!

FEBRUARY: Feb 06 NTMA SD—Board Meeting Feb 22 2014 SOUTHERN CALIFORNIA HTEC CONFERENCE Feb 27 NTMA SD—Chapter Member Meeting at Forecast 3D Visit www.ntmasandiegochapter.org for more event listings.

SAN DIEGO CHAPTER

PrecisionNews // NTMA MEMBERSHIP

Why join NTMA? To say it simply, the NTMA gets it.

We understand your challenges in today’s economy. We recognize that many of you face a talent gap, with necessary skills in short supply. And we know that there’s a gap between the reality of our industry and the public’s perception of it.

But even more importantly, NTMA has the resources to do something about these issues. Our educational programs stimulate the talent pipeline. Our resources and roundtables help members share best practices and solve common business problems. And by speaking with one voice, we cut through media-generated perception to communicate reality to policy makers and the public.

American ingenuity isn’t dead. It isn’t in decline. It’s alive and well in the custom precision manufacturing industry.

NTMA stands for the future. We also stand with your peers. Will you stand with us– and your industry–today? JOIN US TODAY!

BENEFITS OF JOINING Networking You don’t have to go it alone. Membership immediately connects you with peers at the local, regional and national levels—opening up conversations that can lead to new opportunities while helping you discover better ways to operate.

Training We offer an arsenal of training programs designed to pick up where American vocational and technical education leaves off, preparing your workers to meet the demands of today’s precision manufacturing environment. These range from informal programs to college-level courses.

Discount Programs You don’t have to be a big company to get big-company treatment from suppliers and vendors. Through association membership, you qualify for volume discounts on everything from office supplies to payroll service to shop components—no matter how small your volume may be.

Online Resources From job postings to a members-only marketplace, from industry news to archived webinars, NTMA members can take advantage of a number of benefits without ever leaving their keyboards.

Market Research Good business begins with good planning. But it’s hard to plan without reliable market intelligence. That’s where our reports come in. We survey the marketplace as well as our members to put useful data in your hands.

Initiatives NTMA is constantly moving forward, seeking new ways to help you grow profitably.

Our programs include everything from the National Robotics League to a constantly evolving set of benchmarks and best practices.

YOUR NEW TOOL OF THE TRADE. PRECISION NEWS READERS ARE KEY DECISION MAKERS THAT YOU AS AN ADVERTISER WANT TO REACH. OUR READERS WANT AN EDGE IN A CONSTANTLY EVOLVING INDUSTRY AND THEY FIND IT IN PRECISION NEWS!

Let your ad be a call to action!

Contact Precision News today for more details at: executivedirector@arizonatooling.org

PrecisionNews

TM

VISIT:

NTMA.ORG 800-248-6862

THE RIGHT TOOLS. THE RIGHT TEAM. THE RIGHT TIME.

arizonatooling.org

january/february 2015

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Shop Floor NEWS FROM THE FRONT LINES

Do your employees receive the proper training to operate a forklift safely?

Guidelines on training for Powered Industrial Trucks from THE ATMA SAFETY TEAM

Each year, more than 20,000 injuries related to powered industrial trucks (PITs), or forklifts, occur in U.S. workplaces. Many employees are injured when lift trucks are unintentionally driven off loading docks or fall between docks and an unsecured trailer. Other common injuries are caused when employees are struck by an industrial truck or fall from elevated pallets or tines. Most incidents also involve property damage, including damage to overhead sprinklers, racking, pipes, walls, and fyi: machinery. According to OSHA, Most employee most employee injuries and injuries and property property damage can be damage can be attributed attributed to lack of safe to lack of safe operating operating procedures, lack of procedures. safety rule enforcement, and - OSHA insufficient or inadequate training.

OSHA rules are designed to prevent such injuries.

Operator Training 29 CFR 1910.178(l) Employees must successfully complete a training program before operating a PIT. All operator training and evaluation must be conducted by persons who have the knowledge, training, and experience to train PIT operators and evaluate their competence. Training should consist of a combination of formal instruction (e.g., lecture, discussion, interactive computer learning, videotape, written material), Practical training (demonstrations performed by the trainer and practical exercises performed by the trainee), and evaluation of the operator's performance in the workplace.

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Refresher training: Refresher training and an evaluation of the effectiveness of that training must be provided when the employee operates the vehicle in an unsafe manner, has been involved in an accident or near-miss incident, is assigned to drive a different kind of truck, or there are changes in workplace conditions that could affect safe operation of the truck. An evaluation of each industrial truck operator’s performance must be conducted at least every 3 years.

Duplication of training: If an operator has been previously trained and has been evaluated and found competent to operate the truck safely, additional training is not required.

Certification: The employer must certify that each operator has been trained and evaluated. The written certification record must include the name of the operator, the date of the training, the date of the evaluation, and the identity of the person(s) performing the training or evaluation.

Learn more at: www.osha.gov or www.atma.org

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THE ARIZONA TOOLING AND MACHINING ASSOCIATION

FOCUSED ON THE FUTURE:

MANUFACTURING IN ARIZONA AND PROVIDING THE CAPABILITIES YOU NEED TODAY!

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THE STATE OF ARIZONA has a broad and capable industrial base committed to providing low-cost manufacturing to OEMs

and Tier Ones around the world. Our agile and entrepreneurial small shops make Arizona’s high-tech manufacturing supply base one of the world’s most capable and cost-effective for machined and fabricated components. Our industry supplies the necessary precision tooling and machining for such vital industries as defense, automotive, aerospace, medical, appliance, business machines, electronics, agricultural implements, ordinance, transportation, environmental, construction equipment, nuclear and many more.

////////////////////////////////////////////////////////////////////////////////////////////////////////////////////// Arizona Tooling & Machining Association

ATMA PRECISION

Contact the Arizona Tooling and Machining Association and discover why doing business in Arizona will give your company the Competive Edge.

CHRIS MIGNELLA, ATMA EXECUTIVE DIRECTOR PO Box 3518, Scottsdale, Arizona 85271 USA / phone: 602.388.5752 executivedirector@arizonatooling.org

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