Enterprise Minnesota Magazine November 2013

Enterprise Minnesota convenes the first-ever statewide CEO Peer Council

HR guru Tim Doherty

Helping Manufacturing Enterprises Grow Profitably

november 2013

Can do!

The ‘farm kid culture’ reigns at Rotochopper

Inside:

Flex Craft puts the lean in lean The ROI of developing your soft skills Schabel showcases Alexandria’s manufacturing partnership

RiteWay’s Inspiring Comeback Doubling its profits just a year out of Chapter 11

Strategic Problem Solving Enterprise Minnesota 310 4th Avenue S. Suite #7050 Minneapolis, MN 55415

www.enterpriseminnesota.org

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How employees can identify and address challenges

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NOVEMBER 2013

Features 14 Can Do!

The ‘farm kid’ culture reigns at Rotochopper.

18 Happy Ending

Just a year out of Chapter 11, RiteWay Manufacturing has already doubled its projected sales.

22 Building an ideal problem solving culture

With strong CEO support, companies are finding countless benefits when employees— from the shop floor on up—are trained and encouraged to identify and address problems through a thoughtful, step-based process.

28 A Peerless Gathering

More than 75 of Minnesota’s top small and mid-sized manufacturing CEOs recently attended the first statewide CEO Peer Council conference at the Crowne Plaza Minneapolis West. The conference was Enterprise Minnesota’s first annual statewide day-long gathering designed exclusively for the members of its eight regional CEO Peer Councils.

photograph by patrick kelly

38 PM

contents

CEO Denise Johnson and her team at RiteWay

Subscribe to our e-Trends newsletter today! Get updates on the people, companies, and trends that drive Minnesota’s manufacturing community. To subscribe, please visit http://www.enterpriseminnesota.org/Resources/ Magazine-eNewsletter/Subscribe.aspx.

Visit the Enterprise Minnesota Web site for more details on what’s covered in the magazine at www.enterpriseminnesota.org.

in every issue:

Bob Kill:

Innovations:

Innovations:

Final Word:

Continuous improvement is something you can do now to build the quality of future workers.

Page 2

Central Container rebrands itself as Central Package and Display.

Page 8

The new owner/CEO of Midwest Fire tries to balance the company, another career and two young children, from 270 miles away.

Page 10

Effective team leadership can be taught.

Page 32

ENTERPRISE MINNESOTA NOVEMBER 2013 1

bob kill

Tomorrow’s Workforce Bob Kill

Continuous improvement is something you can do now to build the quality of future workers

Helping Manufacturing Enterprises Grow Profitably Publisher Lynn K. Shelton

Your current workforce is your

competitive and strategic advantage. Are you investing in, motivating and compensating to take advantage of that value?

It won’t surprise anyone when I say that manufacturers face a significant task to attract the next generation of skilled and qualified workers who will enable them to grow and retain their role as the backbone of the American economy.

An equally important challenge is maintaining and growing the skills and competencies of your current workforce and this is a greater challenge outside of the metropolitan area. I always say that every mile you drive outside the Twin Cities the Bob Kill is president and CEO workforce issue gets progressively more of Enterprise Minnesota. challenging. Communities in Greater Minnesota are already facing the myriad difficulties of a shrinking workforce.

Likewise, this challenge looms most ominously for the smallest Minnesota communities. To them, the local manufacturing plant often represents the economic foundation of these communities, in some ways, their heart and soul and brain. Removing a manufacturer from some of these towns would be like shutting down the high school.

The main street would shrink away.

We do need to continue our public focus on preparing the next generation of manufacturing employees by giving them the education and training they’ll need to succeed. And we also need to focus on current skilled employees, many of whom are extending their work-life beyond traditional retirement age. Over the past few years, many Minnesota manufacturers have banded together and formed public/private partnerships that extend a community-wide appreciation for the need to provide outside training. And I’m proud that Enterprise Minnesota plays an ongoing role in those activities, particularly through our annual State of Manufacturing® poll.

But Enterprise Minnesota also plays a quieter role by helping manufacturers work from within their plants to use continuous improvement to train, inspire and retain the workers they already have. And this is vitally important. Companies that say they’re “busy” and don’t have time for continuous improvement (CI) may be short-changing their opportunities to turn the good workers they have into great workers.

An essential characteristic of tomorrow’s quality employees will be that they are practiced CI disciples. Today’s active, thoughtful, continuous improvement efforts (beyond harvesting the near-term business results that come from leveraging productivity) are critical to recruiting and developing a prized workforce. Solid CI fundamentals will build a workforce/culture that: · “Sees” waste; · Has learned to evaluate and select solutions to eliminate waste; · Believes that small improvements add up to worthwhile benefits; · Accepts that every process (shop floor, front office, engineering, sales, more) is a candidate for improvement; · And knows the true measure of “value” is defined by the customer.

Such a CI program relies on the overt promotion and support of a strategic keydecision-maker and leader.

2 ENTERPRISE MINNESOTA NOVEMBER 2013

Custom Publishing By

Contributing Writers John Connelly Kate Peterson Photographer Patrick Kelly Art Director Amy Bjellos

Contacts To subscribe subscribe@enterpriseminnesota.org To change an address or renew ldapra@enterpriseminnesota.org For back issues ldapra@enterpriseminnesota.org For permission to copy lynn.shelton@enterpriseminnesota.org 612-455-4215 To make event reservations events@enterpriseminnesota.org 612-455-4239 For additional magazines and reprints contact Lynet DaPra at lynet.dapra@enterpriseminnesota.org 612-455-4202 To advertise or sponsor an event jim.schottmuller@enterpriseminnesota.org, 612-455-4225 To pitch a story tmason@mason-publicaffairs.com

Enterprise Minnesota, Inc. 310 Fourth Ave. S., #7050 Minneapolis, MN 55415 612-373-2900 ©2013 Enterprise Minnesota ISSN#1060-8281.

All rights reserved. Reproduction encouraged after obtaining permission from Enterprise Minnesota magazine.

Additional magazines and reprints available for purchase.

Contact Lynet DaPra at 612-455-4202 or lynet.dapra@enterpriseminnesota.org.

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INNOVATiONS

The ROI of Internal Communication

“Non-desk” employees can access PDP terminals throughout the plant.

PDP’s employee engagement software uses touch screen terminals to communicate with ‘non-desk’ employees.

The Gallup research

organization this year produced a statistic that literally defines the market place for Mankato-based company People Driven Performance, PDP: Gallup says 70 percent of U.S. employees are not engaged, which costs the U.S. $450 to $550 billion per year on lost productivity.

PDP uses a software product to help standardize effective internal employee communications via touchscreen terminals throughout the company.

Through these terminals, employees can access performance metrics, company news, and an enhanced employee directory.

“We know that effective internal communication helps engage employees and really drives organizational performance,” says Lou Dickmeyer, PDP’s president. “We’re focused on helping everyone in an organization understand their role in the system.

PDP is primarily interested in enhancing internal company communication with production employees, its “non-desk” workforce. Offsite employees can access the software through laptops, digital tablets, or even phones.

The spirit of PDP has its roots in the early ‘80s when an economic downturn forced Denny Dotson to seek some concessions from his employees at Dotson Iron Castings, a Mankatobased foundry.

They turned him down flat, the story goes, telling him that “you never communicate with us unless there is a problem.”

From that moment Dotson commit4 ENTERPRISE MINNESOTA NOVEMBER 2013

ted to weekly communications sessions and went to great lengths to transparently share performance metrics throughout the organization.

And when Dotson was contemplating his transition out of the CEO position in the early 2000s, he asked his brother Jerry to write a computer program that would further fortify transparent communications into his company’s culture.

But it soon became a standalone business.

Today, PDP operates 30 sites in eight states, in manufacturing, health care, and banking. “The interest is growing significantly,” Dickmeyer says.

PDP’s sweet spot client is probably between 150 and 500 employees. Even companies that have 75 or a hundred employees can begin to lose track of who’s who, Dickmeyer says.

On top of that, Dickmeyer says their best opportunity for success is to work with CEOs “who are willing to own their culture.” But often HR professionals are looking for effective communications tools. If they are viewed as a strategic part of their organization, she says, “that is a great indicator for us.”

To manage the process, clients typically designate one administrator that becomes the key liaison to PDP. PDP trains clients about how to determine what needs to be communicated which

can include a CEO message, customer service highlights, safety messages, training events, new products, and human-interest stories.

Company performance metrics can include any measureable process a company wants to track in real time, such as daily goals for shipping or tracking returns or defects. Employees can view metrics in rolling or calendar modes, from information gathered automatically from the company.

“It is fascinating the breadth of content and the granularity that companies begin to communicate about what’s happening,” Dickmeyer says.

News content is typically driven by an internal group that Dickmeyer calls an editorial board that convenes for a 15-minute weekly meeting -- which can be a nationwide teleconference or an in-office meeting.

PDP produces a kit called Shop Talk that provides a prescriptive editorial calendar and content library to help facilitate the production of information.

Dickmeyer says that recruiting someone internal to be “keeper of the message” has been relatively easy.

“There is always someone who is outgoing enough to get out there and get content. With some clients a lot of dif-

s nt.

ferent people contribute content.

To follow up, PDP sends each client a weekly report that tracks how many times the system has been accessed and how many times the news has been read.

Among PDP’s most satisfied clients is Sarah Richards, president and CEO of Jones Metal, the Mankatobased custom metal Lou Dickmeyer fabricator with 80 employees.

“Before PDP we had a secretive culture,” she has said. “It was very top down driven.” The CEO and CFO at the time were guarded about sharing financial details or company goals, she told a PDP videographer.

PDP, she says, transformed the company culture.

“Our whole personality has changed since we implemented the PDP system,” she says. That personality change encompasses what they share with employees, from finance, financial planning, even personal information. Personal information: knowing more about each other and caring more about each other.

Jones now shares key performance indicators with all employees. “Even if we still have some that are left only for the CFO and CEO, the majority are shared by both the management team and the employees – and the information is easily accessible to them.”

Richards says the company once would have rejected sharing metrics about dollars shipped. “Everyone here thought that was some giant secret that would change everybody’s feelings about the company.”

People would stop working hard, they thought, if they knew the company was making more money.

In fact, she says, when the company started communicating those numbers, the opposite has occurred. “People were actually looking forward to meeting milestones, keeping track of how we were doing, based on how we were billing out customers.”

Not only did they not react negatively and work less, she says, “they worked even harder, because they knew from history that we had some milestones that we were trying to get back to as we were recovering from the recession.”

The cost of poor internal employee communication Companies that take time to strategically engage employees are more productive and more profitable The cost of poor employee communication is well illustrated through information collected by PDP. • Companies that have highly effective internal communications had 47 percent higher total returns to shareholders over the last five years, compared to companies with the least effective internal communications. (Towers Watson) • Companies with high levels of employee engagement reported an average improvement of 19.2 percent in operating income, while companies with low levels of employee engagement declined an average of 32.7 percent. (http:// www.thankgoditsmonday.com/blog/2013/06/09/connectingengagement) • Organizations that improved engagement by just 10 percent increased profits by an average of $2,400 per employee per year.

And the “engaged” organizations grew profits as much as three times faster than their competitors. (The Work Foundation, Lancaster University) • A business with 100 employees spends an average downtime of 17 hours a week clarifying communication, which translates to an annual cost of $528,443. (360 Solutions) • Unengaged employees cost an average of $392 per employee safety incident, compared to just $63 for an engaged employee.

What’s more, engaged employees were five times less likely than non-engaged employees to have a safety incident and seven times less likely to have a lost-time safety incident.

(MolsonCoors) • Employees with the highest level of commitment perform 20 percent better and are 87 percent less likely to leave the organization. (Paulson Training) • The U.S. national turnover for disengaged employees is 23 percent. The cost of replacing an average worker equals 50 percent to 100 percent of annual salary and up to 150 percent annual salary for highly skilled employees.

• 71 percent of employees feel managers do not spend enough time explaining goals and plans.

• Two thirds of employees do not receive enough information during corporate change; poor communication during change increases misconduct by 42 percent. (The Holmes Report)

To learn more about PDP Solutions visit www.pdpsolutions.com ENTERPRISE MINNESOTA NOVEMBER 2013 5

INNOVATiONS

The Alexandria Model

As customers still fret about worker shortages, Tom Schabel uses his annual Customer Leadership Conference to showcase the Alexandria model of public/private collaboration.

From left to right: Lynette Kluver, Kevin Kopischke, Tom Ellison, Jacob Kulzer and Al Sholts. photograph by patrick kelly

The urgency of of attracting quali-

fied workers to American manufacturing was underscored again this fall when the marquee event of Alexandria Industries’ annual Customer Leadership Conference was a showcase about how Alexandria, MN is earning a national reputation for its results-oriented public/private partnership effort to find and retain employees for area manufacturers.

The annual conference was held earlier this fall at the Best Western Plus Hotel in Bloomington, across the street from the Mall of America.

Tom Schabel, CEO of Alexandria Industries, says that including a workforce panel represented an easy decision when he developed the meeting’s agenda. He had already completed about 25 of his annual customer visits (which this year will number 43). “I always ask, what are the challenges you

6 ENTERPRISE MINNESOTA NOVEMBER 2013

are running into? What are the biggest obstacles (you face)? This year, twenty-five out of 25 said one of their key problems was a shortage of skilled workers.”

The 75-minute panel that fascinated conference attendees consisted of five leaders of the Alexandria manufacturing coalition.

• Jacob Kulzer, Minnesota Army National Guard.

• Kevin Kopischke, Alexandria Technical and Community College • Tom Ellison, Alexandria High School • Lynette Kluver, Alexandria Industries • Al Sholts, Alexandria Industries Schabel admitted he was “kind of surprised” by the rapt audience attention for the panel discussion. But in

the end, he concluded, the Alexandria showcase provided a transferable case study that attendees could bring to their own community.

The conference represents an element of what Schabel calls his company’s holistic approach to customer relationships. “The more ways we can build our relationships, the better chance we are going to succeed with more business,” he says. In addition to day-to-day transactions, the company will travel to customers and conduct a presentation that teaches the extrusion process. Add to that the fact that Schabel personally visits scores of clients each year.

When Schabel set up the first of his annual customer conferences, he figured the subject matter would be technical. His company CFO, Marc Illies, had returned from a conference about how trends in the aluminum industry

y

Innovations would affect pricing.

“It would be good for our customers to know this,” he told Schabel.

Schabel agreed. “We’re in a competitive industry and it is very material intensive,” he said. So the more our customers understand the better they can react to help their customers.

The first conference, held at the Bloomington Marriott, attracted 15 customers. It was a difficult sell: “I think they were fearful that it would be a commercial. All the companies we deal with — the multinationals — their budgets are tight for travel and their time is even tighter. It has been and still is a bit of a tough sell because we’ve got to fit into their schedules. But what we have seen is that those that come, become repeaters, because of the content.”

Each subsequent year he has expanded the meeting’s content and increased the number of participants. This year 45 customers spent a day listening to an economic outlook by John Elmore, vice chairman at U.S. Bancorp; insights from Jorge Vazquez, a national guru about global aluminum markets, and talk about innovation by Carmo Perrella, a technical support manager at Alcoa Primary Metals.

This year’s conference was Schabel’s fourth. Each year, attendees also have the option of visiting his plant in Alexandria for a second day of meetings.

“When we first put it together, we thought, we’d love to have in it Alexandria. We’ve got great facilities. We have exceptional employees and to get them to mix with our customers a bit more, certainly would have been beneficial.

But logistically, we wanted to have it someplace close to the airport. So a customer could fly in and fly out the same day.”

The purpose of the yearly conferences is, Schabel says, “to make our customers smarter and to have an opportunity to develop our relationship on a whole different level than on a transaction basis.”

That said, can he tie the conference to a hard ROI? Maybe. “We know that it is down the middle of the fairway, when it comes to effectiveness, Schabel says. “As we started to plot the customers that had been there a number of times, we did see

growing sales volume. Can we peg it to the seminar? I don’t know. That’s kind of hard to do.”

At the same time, Schabel recounts one customer who attended the conference for the first time last year. “We had a project we had quoted for them a while back. It was supposed to be a huge project and it just never took off.

But we continued the communication.

Then the company sent people to the conference last year.”

“And right now we are probably budgeted to do with them in excess of $10 million next year,” Schabel says. I don’t know if I can give all credit to the seminar, but it does engage us with our customers at whole different level than a transaction.”

To learn more about Alexandria Industries, visit www.alexandriaindustries.com

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ENTERPRISE MINNESOTA NOVEMBER 2013 7

INNOVATiONS

Repackaging Central Container rebrands itself as Central Package and Display.

Last February, as Jim Haglund and his wife were celebrating their wedding anniversary with a trip to Tahiti, he got a call from his son, Mike, who told him that he’d been diagnosed with bladder cancer.

“So you can imagine it was a long ride home,” said the dad.

Jim was CEO of what was then called Central Container, a Minneapolis-based packaging company that he’d been involved with since he bought half interest in the company for $15,000 in 1975. Mike had taken the company reins and Jim had begun the process of disengaging from the company.

That would have to wait. When Jim returned from vacation and while his son convalesced, Jim began to manage the process of a major marketing overhaul with the company that began with a name change to Central Package and Display.

Having evolved from a small producer of corrugated brown boxes to a “total packaging solutions” provider, the company serves customers in multiple industries who depend on its design studio and material options to create products ranging from foam-lined packaging for delicate instruments to exquisite gift packaging, jewelry boxes, and game boxes; consumer packaging for cereal to golf balls; retail-ready packaging and POP displays, as well as Central’s original product--corrugated boxes and partitions. The new name, Central Package and Display, better describes this broad range of capabilities.

Medical device and high-tech manufacturers work with Central’s structural design staff to produce protective packaging for delicate instruments and goods. The engineered packaging may use flexible cushion foams or fluted plastics, among other materi8 ENTERPRISE MINNESOTA NOVEMBER 2013

Jim and Mike Haglund alongside their newly rebranded images

als. The company also makes staticcontrol products, and distributes related items, including ESD-safe static shielding bags.

Central’s investment in manufacturing capabilities ranges from large-format, multi-color, direct print and die cutting to litho label mounting and specialty gluing geared to the display and shelf packaging markets. Packaging engineers and product managers work with Central’s packaging and display designers to develop custom designs that are eye-catching, innovative, and highly functional.

“In the markets we serve, success depends on diverse capability, driven by innovative design, and executed with outstanding customer service,” Jim said at the time of the remake.

“With the new name, Central Package and Display, we’re emphasizing our core competencies of protective packaging, consumer packaging, and point of purchase (POP) displays, better describing who we are and what we do.

Coming off a recession, some folks in the company talked about whether it was the right time to endure the investment in time and money on redoing the company’s signage, trucks and vans, and collateral materials.

Jim decided there just wasn’t a good

time to do it. “I just decided to pull the trigger,” he says now.

“We had talked about how ‘containers’ didn’t describe who we are any more,” he said. At the same time, he didn’t want to reduce the brand identification of “Central” in the marketplace. Packaging, he thought, had become too ordinary; Package and Display, on the other hand, seemed to roll off the tongue better. Especially when it was coupled with the tagline produced by Central’s vice president: Delivering More Than Packaging.

Jim says it is difficult to gauge the immediate ROI of a total rebrand, but the visibility and publicity around the project yields clear feedback from an image standpoint, he says. “People always like to deal with companies that are moving ahead. The winners.”

The good news is Mike has a clean bill of health and is back regaining the helm.

As for Jim, he went back on vacation, and has just returned from China, Hong Kong, and Macau.

“If I’m travelling, things are going well,” he says. If I’m not travelling, I’ve got some issues.”

To learn more about Central Package and Display, visit www.centralpackage.com.

Enterprise Minnesota welcomes new employees Left to right – Diane Bressler, Joel Scalzo, MJ Patterson.

Missing are Pat Voyles and Christopher Morse.

Does your accounting/ERP software do this?

Reduce your manufacturing cycle time

photograph by patrick kelly

Improve customer service Provide real time information Streamline operations Reduce administrative costs

Pat Voyles is a business growth consultant. Voyles brings a wealth of experience in talent acquisition, talent management, and leadership development. Prior to joining Enterprise Minnesota, Voyles served MTS Systems as its talent acquisition manager, Seagate Technology as a senior program & project manager, CHIMES/UnitedHealth Group as a program director, a recruiter with GE Capital Fleet Services, and at Kforce as a senior recruiter and business unit manager.

1 entmnjune08_toc_edltr_19e.qxd 6/26/08 8:12 PM Page 2 She earned a Bachelor of Arts Degree in Business Administration from Lewis University, Romeoville, IL and a Master’s Degree in Organizational Leadership from St. Catherine’s University, St. Paul, MN. Joel Scalzo is a business development consultant. Scalzo brings a deep resume of strategic business planning and new business development from companies throughout the Twin Cities. Before joining Enterprise Minnesota, Joel was president and CEO of the Twin Cities-based management consulting firm Business Management Associates Inc. Prior to that he served as a business performance advisor at Insperity Inc., director of marketing at 2nd Wind Exercise Equipment New NameJoel holds a Bachelor and sales and marketing manager at KurtAManufacturing.

Reflects Ourfrom More of Arts Degree in Business Administration and Economics the University of Focused Mission Minnesota-Morris.

Editorial

In

Call Rob or Russ at Solution Dynamics, your local Microsoft NAV manufacturing experts at 952-854-1415 or sales@solutiondynamics.net

Reserve Your Ad Space TODAY! June 2008

Helping Manufacturing Enterprises Publisher Grow Profitably Lynn K. Shelton Daktronics Scores in Minnesota

PHOTOGRAPH BY CRAIG BARES

Inside Enterprise Minnesota® will find in-depth magazine youEditor Tom Mason information and unmatched Contributing Writer In 1991 Minnesota Technology, Inc. debuted with Andrea Strand MJ Patterson is a business growth consultant.

Patterson has worked 13 years at the mission to help Minnesota manufacturers insights into the latest their productivity and efficiency through and a production employee, training Pearson in Owatonna, where she served asimprove innovations, business successes, automation and technology. Over the years we development coordinator, and a process engineer/development facilitator.

She and ingenious company leaders introduced clients to lean manufacturing processes Bob Kill earned an Associate of Arts degree in graphic Range Commuamong Minnesota’s to helparts them from become Mesabi more efficient.

We focused on improving operational Managing Editor Sarah Asp Olson that would lead to costDeVry reduction and an improved competitive position. management from University, nity and Technical College, a BS in technicalprocesses manufacturing community.

Water Heater

Art Director Overseas competition was for real and efficiency was vital to our state’s and an MBA from the Keller School of Management.

The magazine reaches Shari Schumacher

Waterous Surges into 125th Year

•

•

Page 1 Printers’ TWI Success

Helping Manufacturing Enterprises Grow Profitably

AUGUST 2011

Blazing Trails to the

ToP

Women leaders in Minnesota’s manufacturing industry tell us how they got there, what it’s like to be a woman at the top in a historically male-dominated industry, and why women today can thrive within it.

Also:

With the recession fading, companies look to hire new talent. 18

Innovations

Traci and Lori Tapani, co-presidents of Wyoming Machine

Contract manufacturer LouRich takes a unique approach P Ranks • 22 to exporting.

Zierke

Joins MNSHAR

Built Triumph

s with ISO

How Enterprise Minnesota’s Business Problem Solving course energizes continuous improvement efforts. 26

• Dual Languag

e Training at

St. Paul Brass

www.enterpriseminnesota.org Helping Manufac turing Enterprises Grow Profitab ly SEPTEMBER 2011

manufacturers.

Advertising Sales over 42,000 readers, As the world has become flatter we expanded our view from lean manufacturing THE NEw Laura Cohen to lean enterprise. We now complement our operational efficiency expertise to NoRMa including CEOs and 612-373-9562 l include programs for sales, marketing, product development, and supplier and advertise@enterpriseminnesota.org additional key also: customer relationships. We truly have evolved to help our clients across their Editorial Director, Custom Publishing 12 Sarah Wyatt Elbert extended lean enterprises. To celebrate this evolution, we are renaming and decision-makers.

22 rebranding our organization Enterprise Minnesota.

Design Director, Custom Publishing 26 Geoff Kinsey What does that mean to you and your company? We are not abandoning our focus on manufacturing; in fact it is stronger than ever. We have developed Project Manager Anna Rivard Biss programs that capitalize on the effectiveness of “leaning an organization” through new products, markets and sales channels. >> Jim Schottmuller, One example, Training Within Industry, helps companies develop needed Enterprise Minnesota Relationship Manager training for supervisors and first line managers. Another relatively new program, >> jim.schottmuller@enterpriseminnesota.org Accelerate, works with clients on creating and managing an effective supply chain Enterprise Minnesota, Inc. process. Finally, we are helping clients develop, test and market new products >> 612.455.4225 310 Fourth Ave. S., #7050, Minneapolis, MN 55415 612-373-2900 through unique programs such as Eureka! Winning Ways®. This program applies >> www.enterpriseminnesota.org Enterprise Minnesota helps manufacturing enterprises grow hard data to growth strategies through a three step process: idea engineering, profitably. market research and an action plan designed to bring products to market. The ©2008 Enterprise Minnesota ISSN#1060-8281. program employs quantitative methodology to product development and trains All rights reserved. your key staff members how to take new sales, market and product ideas from Reproduction encouraged after obtaining permission from Enterprise Minnesota magazine. concept through introduction. We are excited about the many client testimonials ENTERPRISE MINNESOTA NOVEMBER 2013 9 Additional magazines and reprints available for purchase.

Contact Laura Cohen at 612-373-9562 or for these new products and services advertise@enterpriseminnesota.org.

So, welcome to Enterprise Minnesota. And welcome to the first issue of Enterprise Minnesota magazine. Just like many of our clients, the changing nature Enterprise Minnesota magazine is published eight times per year by Enterprise Minnesota of business has led us to add new capacity and expertise. We grow and thrive by 310 Fourth Ave. S., #7050, Minneapolis, MN 55415 helping our clients do so. Please read on to learn more about these clients and our

Diane Bressler is a senior accountant. Bressler has over ten years of accounting experience, most recently as a senior accountant at the Minnesota Children’s Museum and at the University of Minnesota. She has also served on the accounting staffs at Carlson Companies, Anoka County, and Archway Marketing.

She holds a Bachelor of Science Degree in Accounting from Metropolitan State University.

Christopher Morse is public relations manager. Morse recently graduated summa cum laude from Hamline University with a Bachelor’s Degree in Political Science-Public Service. While at Hamline, Morse worked in the University’s strategic communications office and also served as a digital marketing associate in Hamline’s student-led marketing agency. His background includes positions in retail and hospitality management as well as in telecommunications sales.

New appro aches manufactur that will help ers prospe r

Toyota Way discusses the expert David Meier benefits of Practi Problem Solvin cal g How strate gic thinking can refocu your operat s ion and target new customers Seven tips to improve skills from your leadership the inside out

www.enterprise minnesota.org

INNOVATiONS

Serious Multi-Tasking

The new owner/CEO of Midwest Fire tries to balance the company, another career and two young children, from 270 miles away Sarah Atchison,

the new owner and CEO at Midwest Fire in Luverne, MN, might combine the most uniquely diverse set of job responsibilities in American manufacturing today. Or maybe ever.

When Atchison headed an investor group that acquired Midwest Fire and Equipment last August, she took on the title of president and CEO. But she also retained her part time job as a dental hygienist at a clinic in Moorhead – at least for now.

“It is an interesting combination, isn’t it,” she said from Midwest Fire’s headquarters situated along Interstate Highway 90, in Luverne, MN, a community of about 4500 people in the extreme southwest corner of Minnesota.

“There is a lot to learn about the product and the business,” she says, “while also trying to show the customers and my teammates here that we add value to this company.”

And she does it while commuting from Moorhead, tending to her dental 10 ENTERPRISE MINNESOTA NOVEMBER 2013

job and the responsibilities of raising two children, aged 10 and 7.

“A lot of my work is done remotely,” she says. “I try to get down here as often as I can. I know that it is important that I be here. It is all about relationships with employees and building relationships with old customers and new customers. It has been challenging.”

To help bridge the transition, Sarah works closely with Dean Atchison, her business partner, mentor, and husband. “Dean has been a really great mentor in guiding me along this path,” she says.

Dean is president of Spectrum Aeromed, a Fargo, North Dakotabased company that designs and manufactures air ambulance equipment.

Dean brought Spectrum Aeromed from near bankruptcy in 2007 to revenues today of $10 million, and nearterm growth projections of 30 percent.

Dean had been a community banker for 20 years before purchasing Spectrum Aeromed. He credits some of

Sarah Atchinson

his company’s turnaround with the consulting work of Enterprise Minnesota’s Bill Martinson.

“Even in the face of some challenging economic times, we figured out a way to turn it around.” Dean says. “A big part of that was learning how to be lean and how to do continuous improvement and take our team to the next level in terms of being able to compete internationally.”

Spectrum Aeromed has been named to Inc. magazine’s list of America’s 500

fastest growing companies for three consecutive years.

“It’s really a nice company,” Dean says. “We’re profitable and debt free.”

But, says Dean, he suffers from “serial entrepreneurship – a disease for which there is no cure.”

“We thought if we could turn this around in a punk economy, maybe we should try this again,” said. “My hands were full with Spectrum Aeromed, so with Sarah in the lead, Midwest Fire really found us.”

It took six months of deliberation after a broker first suggested Midwest Fire, but in the end it seemed a good fit.

The company’s financials were healthier than Spectrum Aeromed’s early days, it had a reputation manufacturing high quality fire and rescue vehicles – and it was in the business of saving lives. All told, Midwest Fire has manufactured more than 600 trucks over the past 20 years.

Today, Midwest Fire has 30 employees who work in a technically sophisticated 30,000-square foot facility.

The company builds fire equipment from the ground up. After buying raw chassis from International, Freightliner, or Kenworth and then adding tanks, pumps and storage – “everything else that goes on that truck is something that we design and build, with our vendors’ help, into a finished product that a fire department will be able to use for probably 15 or 20 years,” Dean says.

Sarah hopes to double revenue in the next three to five years, mostly by increasing its customer base in the western U.S. and Canada. Dean says the state-of-the-art facility earns his greatest enthusiasm. “It is one of the things that allows us to say we can double this business.”

The other reason, according to Sarah, is her employees. “The previous owners had been looking to sell for quite some time,” she says. “I was really surprised at how well employees are handling change. They are really excited about it.”

She says they are particularly enthused about strategic planning, training and the education they will get from Enterprise Minnesota.

“They are definitely ready to bring

this company to the next level,” she says.

Sarah says her mission is to deliver that next level through a company-wide sense of balance. “I really want to promote balance – of career and family life. And give my employees flexible hours and a team environment,” she says.

“I need to work Scott and Pam Schneekloth sold on that as well.” the company to Sarah and Dean Sarah was asked Atchison in August. what her colleagues back at thing ever? the dental office thought of her new “That’s probably true,” she admits. gig. Do they think that having a co- “ I think it’s cool, too.” worker who also happens to be presiTo learn more about Midwest Fire, dent of a company that manufactures visit www.midwestfire.com. fire-fighting equipment is the coolest

Are you

driving IT? Or is IT

driving you?

Power comes from being understood.® When you trust the advice you’re getting, you know your next move is the right move. That’s what manufacturing professionals can expect from McGladrey. That’s the power of being understood.

Experience the power.

View our free technology newsletter at www.mcgladrey.com/techbulletin.

ENTERPRISE MINNESOTA NOVEMBER 2013 11

INNOVATiONS

Leaning up

Lean

Flex Craft produces flexible material handling products to provide greater flexibility to lean innovation The fellow who once said “simplicity is the ultimate sophistication” would undoubtedly give a thumbs up to Flex Craft’s CEO Doug Sparks, who has adapted the basic concept of an erector set to build a company that has grown an average of 50 percent every year since its founding in 2007.

Based in tiny Houston, MN, Flex Craft manufactures a modular material handling product that enables companies to easily construct modular workstations, carts, flow racks, tables, fixtures and other manufacturing devices. The product is assembled with a standard nut and bolt and can be taken apart and reconfigured, using a single wrench, as a company’s manufacturing needs change.

Sparks, a 25-year veteran of manufacturing operations, began to sense the need for the product while spending time implementing lean improvements in companies throughout the HON office furniture network nationwide.

“I saw so many companies struggle,” he said. “Once you start a continuous improvement process, you start to solicit ideas and input from employers about what those improvements might look like.”

He perceived a shortage of “lean” tools that employees could use to implement them, “especially from dynamic of flow,” he says.

For years, he says, he built prototypes using a popular product that uses a friction-based joint.

“The product was great for creating ideas, but it wasn’t lean at all,” he says.

He had to cut it down to diverse dif12 ENTERPRISE MINNESOTA NOVEMBER 2013

Q

Terri Sparks, CFO, and Doug Sparks, president/inventor.

ferent sizes. “And it required multiple joints -- and I always seemed to run out of the joiner I needed to use. It was a point of high frustration. I don’t want 20 joints, I want one. And I want it to be a joint I can get at a hardware store. Plus, I don’t want to have somebody from assembly running a chop saw to cut these things down to size every time I need one.”

The mother of all invention is necessity, as they say.

To remedy the situation, Sparks conducted his Production Preparation Process (3P) and emerged with the Flex Craft system.

His system is based on a one-inch square tube that is delivered in a variety of standard lengths. Tubes can be bolted together using one uniform joint, one uniform bolt and a single half-inch wrench. “The only thing you’ve got to bring to the table is your creativity,” he says. “One joint, one bolt, one tool: You’ve got a system with endless possibilities.”

You can go out there with just one tool and create many different ideas, within minutes. That’s the true nature of Kaizen, being able to implement rapid change.

Sparks first opened a sales office in a rented 300-square foot principal’s office in an empty schoolhouse in Wabasha. He sub-contracted production

of his material to a contract manufacturer in Iowa – until in November 2007 when it caught fire and burned to the ground.

“We were out of business as quickly as we got into it,” he said.

By January 2008, he and four employees were manufacturing the product themselves, this time out of a 3000-square foot facility in a Wabasha industrial park. Flex Craft outgrew that facility in 2009, deciding to move to Houston, a town of 1,000 in Minnesota’s extreme southeast corner, where he found a 5,000-square foot site.

Sparks recently built a 12,000-square foot facility in Houston and expects to need another 20,000 square feet in two years.

Today his customers include Toyota, General Electric, and John Deere.

Plus, it is currently being used by many Minnesota companies such as Honeywell, Toro, Thermo King, and Medtronic. In fact, Sparks says companies like Red Wing’s Capital Safety (manufacturer of personal fall protection equipment) use the Flex Craft product exclusively from one end of their massive manufacturing plant to the other.

To learn more about Flex Craft, visit www.flex-craft.com

Innovations

Innovations with HR Guru Tim Doherty

Questions

Position: Tim Doherty is owner, founder and chairman of Doherty Employment Group, headquartered in Minneapolis, Minnesota.

A graduate of the University of Minnesota, Tim started Doherty Staffing Solutions in 1980 and then founded the HRO (Human Resource Outsourcing) division, Doherty Employer Services, in 1993. At that time, Doherty Employer Services was Minnesota’s first and only HRO.

What’s behind the deepening skills gap in Minnesota?

Right now there are three jobs for every available machinist.

Unemployment is still high, but employers can’t find people. What’s going on?

The skills gap has multiple causes. Changes in high school funding mean that students are concentrating on core subjects and taking fewer shop classes. And after graduation, they’re steered toward traditional four-year degrees rather than the trades.

Hiring practices have changed dramatically. According to CareerBuilder, nearly 30% of employers hire college graduates for jobs that were previously held by high school graduates. Background checks and credit screening rule out candidates who may have been accepted in previous generations. Immigration enforcement is up and drug testing is nearly universal. While all of these safeguards help employers mitigate risk, they also narrow the talent pool.

How has employment changed since 1980?

Modern job seekers are changing more rapidly than the companies that hire them. Few employees expect to stay with one job for life now. In fact, 70% of fulltime employed workers regularly look into new job opportunities.

In addition to job fluidity, workers expect a greater range of options in their work life—flexibility when they need it and advancement when they feel they’ve earned it. Millennial workers often lack a real understanding of manufacturing’s career potential.

Wage stagnation is a concern. On ABC this week, I read that U.S. corporate profits are just below a 60-year high, while wages are near record lows. Every week we help clients review their wages and adjust upwards to boost recruitment.

Other big issues in Minnesota are the Affordable Care Act, EEOC regulation changes, and Ban the Box legislation. Each presents a unique challenge to Doherty’s business and to our clients. My wife and our CEO, Val

Doherty, has successfully led our legal team through many bureaucratic tangles, so our strategies for addressing these are well underway.

How can manufacturers find and retain skilled workers?

I feel strongly that the only solution to a skills gap is to help job seekers cross it. In Northern and Southern Minnesota, we work collaboratively with area chambers, manufacturers, and schools to attract students to the manufacturing trades.

We’re proud to help fund scholarships at MNWest and Riverland Community Colleges, but it must be part of a wider business response.

I was surprised to read that nearly half of U.S. companies spend less than $68 a day on training. Developing a new generation of skilled workers is a great goal, but companies must eventually make room in their budgets for training programs.

To achieve the best retention outcomes, we encourage our clients to hire the right person for their organization and then train to the job.

How do you keep a talent pipeline flowing?

Doherty focuses on reaching job seekers where they are, not where they used to be. Our calendar is filled with faceto-face and social networking events, including working with MNSCU schools and colleges to build connections with students and new grads.

Our new responsive-design website now welcomes visitors on any kind of phone, tablet or desktop computer.

And, in addition to traditional print advertising, we also recruit via text, email, Facebook, Twitter, and LinkedIn. Only 42% of companies maintain their own talent pipeline. Doherty takes over this role for our staffing clients, and it’s part of our full HR service for clients in our HRO division. A strong pipeline is a major undertaking requiring commitment to ongoing dialogue with job seekers at every stage of their career. After 30 years, it’s something we do well and take great pride in.

ENTERPRISE MINNESOTA NOVEMBER 2013 13

photograph by patrick kelly

Can Do! The ‘farm kid’ culture reigns at Rotochopper

From left to right: Keith Burg (Assistant Manufacturing Manager), Patrick Burg (Manufacturing Manager), John Babcock (President of Rotochopper), Nick Lieser (Research and Develpment).

Manufacturers, especially in

Greater Minnesota, frequently lament shrinking availability of “farm kid” employees in their operations.

With almost rote-like repetition, they venerate the values that those employees have traditionally brought from the farm to their production floors. They are task oriented, not just putting in hours. They don’t know the meaning of a sick day. If something is broken, they fix it. And if they don’t know how to do something, they figure it out.

But now, as the number of farms 14 ENTERPRISE MINNESOTA NOVEMBER 2013

gets smaller, and the size of farm families shrinks, there are fewer and fewer of these all-star employees on the manufacturing marketplace.

Not so at Rotochopper, a company that manufactures recycling machinery from its plant in central Minnesota. The company extols its farm kid roots and its farm kid culture.

Doug “Spike” Meyer, the customer service manager at Rotochopper, recalls vividly when the essence of the company’s can-do culture was pressed upon on him. It was 20 years ago, one of his first days on the job and Fred

Peltz, the company’s founder gave him a task.

Peltz asked him to program a variable-frequency drive that was hooked up to the company’s one pole with 480-watt power. The challenge, a pretty serious one, Meyer recalls, was “I didn’t know anything about electronics.”

Peltz said, “you can figure this out.”

He did and before long he was building all the control panels for the Rotochopper grinding equipment.

“I remember that to this day,” Meyer says. “Freddy made me do it.

“

”

“That mentality comes from the top down. And people see that in the way we do things.”

He made me sit there and figure out how to program that VFD.” Notwithstanding the fact that most of Rotochopper’s employees have a farming background, it is the farm kid mentality that dominates the plant’s culture.

Rotochopper’s 85 employees work in a state-of-the-art facility the in the tiny town of St. Martin, MN, a community of 309 people about 20 miles west of St. Cloud. “You literally have to be going there to get there, says Harry Larson, a business development consultant at Enterprise Minnesota. “Because there is no highway that goes past it.”

Rotochopper designs, builds, and support a complete line-up of horizontal grinders, wood chip processors, asphalt shingle grinders, and mobile bagging systems.

Spike and others credit the company’s “farm kid” ethic to Fred Peltz, the company’s founder. In many ways, Peltz was the uber-farm kid, whose story is well told in company materials. Raised on a dairy farm, Peltz displayed an “astonishing ability for building, repairing, and designing machinery.” At 18 he was already designing, making and fixing machinery from his own workshop on the family farm. At 24, by now in his own facility, he founded Peltz Manufacturing, which produced Peltz-designed machinery.

About that same time, Vince Hundt, after leaving his family farm in rural Wisconsin was developing his own machinery. In 1988, he cleverly matched up the supply-and-demand of two wildly diverse market forces to create the first prototype of what would evolve into Rotochopper. On the demand side, a severe drought had generated a need for new sources of animal bedding on farmsteads nationwide. On the supply side, federal recycling decrees had produced a glut of newspaper waste in the hands of waste haulers.

Hundt matched up the two market

An Honorary Farm Kid Babcock did grow up on a farm but he embraces the values

Doug Meyer,

Customer Service Manager, Rotochopper

forces by designing a machine that incorporated a John Deere hay baler, a wood chipper, and a sheet metal cyclone that produced farm-ready bales of chopped newspaper. The PCR Newspaper Bedding System proved to be an instant hit and was sold all over North America.

Peltz saw the machine and decided he could build it better. He called Hundt and the two men soon became partners, with Hundt moving his operation to St. Martin.

Peltz’s renovation of was unveiled in 1990, under the new name, Rotochopper. By 1992, the company was producing a machine designed to grind wooden pallets into boiler fuel with a uniform particle size in one pass.

Then, in early 2000, tragedy stuck.

Peltz fell from the roof of his factory, while checking out completion of a factory expansion. A few days later he died from his injuries. The loss devastated the company and its devoted employees. But a week later, true to Peltz’s work ethic, 12 company representatives with four machines showed up at a major trade show 1,000 miles away.

“It has been 13 years since Freddy passed away. I still show up every day working for him,” Meyer says. “He was an amazing guy. That mentality comes from the top down. And people see that in the way we do things.”

John Babcock, the company’s current president says the farm kid values were in their DNA. “He brought a lot of young people into the business who were intelligent and skilled, but maybe frustrated by the traditional process of book learning,” Babcock says. “Rotochopper gave them a path to fulfill their capabilities.”

By 1994, the first Rotochopper horizontal grinder was producing boiler fuel and animal bedding from pallets and other wood waste. The company says its Rotochopper hori-

For a company that thrives on its rural roots and “farm kid” culture, CEO John Babcock’s background would seem, at first, to encompass none of that. But not being a farm kid hasn’t prevented him from embracing the farm kid culture.

Babcock grew up in Minneapolis, got a degree in accounting from the Carlson School of Business at the University of Minnesota, got his law degree from the University of Washington in Seattle and spent the first part of his career as a tax accountant for the Seattle office of Touche Ross, where he did client work for Nordstrom, Boeing, and Microsoft, among others.

But, he admits,“It wasn’t home. Our families were back here in Minnesota.”

In 1990 he relocated to St. Cloud where for the next 20 years, he practiced business and tax law for a local law firm.

Among his clients was Rotochopper.

Three years ago, the company asked him to help with a search for a new CEO. Instead, he put his own name into the hopper and got the job shortly thereafter.

“I feel like I bring the best of both worlds,” says. “First, as an accountant, I know the numbers. I know money. And money is the oxygen of a business. I think my legal background gives me critical thinking skills that are helpful in the business every day.”

John Babcock, President of Rotochopper

photograph by patrick kelly

y

zontal grinders were the first portable ENTERPRISE MINNESOTA NOVEMBER 2013 15

Rotochopper’s massive B-66 Horizontal Grinder

“

”

“You are taking this thing that was an environmental liability and you are making a product that can extend a much more useful product.”

John Babcock,

President, Rotochopper

‘Green and Economical’ Rotochopper’s shingle grinder transforms scrap shingles into a road additive Rotochopper is extending its “green” footprint by developing the RG-1 Asphalt Shingle Grinder, specifically designed to break down asphalt shingles – the residue of which is today added to bituminous products, most prominently as an additive in roadway asphalt.

More than 11 million tons of waste asphalt shingles are generated in the United States every year, according to the EPA. “Tear-off shingles are loaded with very high quality oil,” says Rotochopper president John Babcock. “The old way of getting rid of them was to bury them in a landfill. I don’t care what anybody says, it is just a matter of time before that oil seeps into the groundwater.”

Babcock says this trend is “very green and extremely economical.

You are taking this thing that was an 16 ENTERPRISE MINNESOTA NOVEMBER 2013

environmental liability and you are making a product that can extend a much more useful product.”

Manufactured shingles consist of about 40 percent asphalt therefore offering a cost-effective alternative to virgin asphalt and aggregate used in paving projects. The use of RAS in hot-mix asphalt applications can reduce the overall cost of paving a road. Industry experts agree that the oil-based shingle derivative actually strengthens road asphalt. It makes the road less brittle in the winter and will make it stiffer in the summer when most asphalt roads might start to ooze because of the heat.

Recycled asphalt shingles may be ground and mixed into the gravel used to cover rural, unpaved roads.

The two primary sources of shingles are the tear-off shingles, but also a surprising number of new ones that are created when manufacturers switch between color dies.

“They run perfectly good shingles, but they look horrible,” Babcock says.

systems are capable of producing a uniform finished product from pallet waste in a single pass. Rotochopper grinding equipment played an integral role in the development of the pallet recycling market, allowing customers to make high-value end products from waste that had previously been a huge financial liability.

Today its B-66 Horizontal Grinder is Rotochopper’s biggest seller. The company sells about 30 per year at of price of between $450,000 and $650,000 each, depending on accessories.

Although he won’t confirm or deny, the company is thought to generate between $30-$40 million in revenues.

Babcock predicts the company will double its revenues within five years.

“It is tremendous growth,” he says. “I can’t outline exactly how it is going to happen. But I know it will happen.”

To learn more about the Rotochopper, go to www.rotochopper.com.

The companies don’t want to sell them, so they destroy them.

The RG-1 works like this: asphalt shingles get dumped in and come up a conveyor, which drops them onto a rotor. Water is sprayed into the chamber to keep the heat down and to reduce and eliminate friction.

Product then falls onto a magnetized belt which picks nails out of the product and drops them into a hopper.

Rotochopper sells about six shingle grinders each year at about $500,000 apiece. “There is a lot of potential,” Babcock says. “It’s not like this machine is going to spread beyond the bituminous industry, but the market grows as each state or local jurisdiction approves the use of the shingle additive in its road construction.

“I look at this almost like an annuity. As these states adopt it, we’re going to sell two or three machines at a time,” he says.

What a Comeback

Happy Ending

photograph by patrick kelly

Just a year out of Chapter 11, RiteWay Manufacturing has already doubled its projected sales

On February 14 last year, De-

nise Johnson, president of RiteWay Manufacturing, climbed into the cab of her dad’s 2006 Chevy Silverado pickup to begin her annual six-hour drive from the company’s Lester Prairie headquarters to the Milwaukee office of FedEx SmartPost, by far her biggest customer. With her was Mark Zimprich, a trusted 10-year employee who was the company’s director of operations.

RiteWay had been manufacturing and installing conveyor equipment for FedEx Ground since Johnson’s 18 ENTERPRISE MINNESOTA NOVEMBER 2013

dad founded the company in 1999, based almost entirely on his idea to help FedEx deploy good-as-new refurbished conveyors to its growing network of hubs -- at about half the price. The Phoenix Program, as it was called, had propelled RiteWay to more than $10 million in revenue by 2008 as FedEx’s sole-source vendor.

RiteWay’s relationship with FedEx, she remembers, remained strong, but the occupants of the truck that day were filled with dread.

That morning, Minnesota federal bankruptcy Judge Robert Kressel had

formally rejected Johnson’s final proposal to help RiteWay emerge from Chapter 11 bankruptcy, apparently eliminating the last hope of rescuing her once prosperous company from a three-year spiral of surreally bad news and rotten luck. With Chapter 11 off the table, Johnson now had to contemplate the prospect of liquidating RiteWay, leaving local vendors unpaid and 38 employees looking for work.

She was deflated. “It’s over,” she told Zimprich. “We’ve done all that we can do.”

“”

“My dad was of a generation that you didn’t throw anything away, you just don’t.”

RiteWay founder Bob Green and daughter Denise Johnson

Zimprich was numb. “What am I going to do?” he thought. “I own a house in Lester Prairie. There isn’t a lot of opportunity out here.”

Worse yet, he thought, RiteWay’s business prospects were actually quite promising. As the economy improved, and FedEx started expanding again, he saw RiteWay rebounding well.

“I could see all these new customers coming,” he remembers. “We had an opportunity to build a lot of stuff and succeed.”

Zimprich implored Johnson to keep battling.

“You are so much more of a fighter than this,” he told her. “There has got to be something you can do … there’s always something. I can’t believe you’re going to give up.”

“Bob wouldn’t,” he added, finally.

There was silence.

The reference to Bob – as in Bob Green, RiteWay’s founder and Johnson’s dad – was Zimprich’s trump card. And he knew it.

When Green succumbed to bladder cancer in late 2010, it affected Johnson deeply. Green was her business partner in a mentor relationship she frequently characterized as being “best friends more than father/ daughter.”

Green had a reputation as a charismatic and determined fighter. Zimprich was right, Green wouldn’t have quit – and Johnson wouldn’t quit on her father’s memory or the company that embodied his lifelong dream.

Johnson placed a cellphone call to her lawyer to see how they could appeal the judge’s ruling.

And they proceeded to secure the relationship with the SmartPost client in Milwaukee.

“I never planned to tell them the plan was denied by the judge,” she

Denise Johnson,

President, RiteWay Manufacturing

says. “I knew there had to be something we could do.”

Bob Green was a willful,

creative and sometimes impetuous innovator who came to entrepreneurship relatively late in life. He grew up in the family milling operation in Kensington, Minnesota, and held a variety of learn-as-you-go jobs along the way, from farming to truck driving. In 1999, at 59, he had decided to ease into retirement by installing conveyor equipment for offices of HomeDelivery, a fast-growing subsidiary to FedEx Ground that enabled companies to ship to residential customers.

One assignment that year was to dismantle an existing conveyor at a facility in St. Petersburg, Florida, and then install a new one.

He called an engineer at FedEx and asked what he was to do with the old equipment, just two years old.

“Toss it in a dumpster,” he was told.

Green was speechless, according to his daughter. The discarded equipment should have had a 20-year service life.

“My dad was of a generation that you didn’t throw anything away,” she says. “You just don’t.”

He quickly followed up with his client. “You know,” he said, “I can save you money by reconditioning this equipment good as new. For half the price.”

Intrigued, FedEx teamed Green with an engineer to create the “Phoenix Program” and made RiteWay Manufacturing its sole-source vendor.

In 2003, encouraged by FedEx’s promise of more business, Green made two significant upgrades to his business. First, he ditched the drafty Quonset hut that had served as

RiteWay’s headquarters and purchased the current facility which then consisted of 14,000 square feet and 10,500 feet of cold storage.

Second, he persuaded his daughter to join him at RiteWay. Company insiders quickly recognized the almost preternatural Ying and Yang of capability and temperament between father and daughter.

Green provided the vision, combining the curiosity of a self-taught engineer with an entrepreneurial zeal for customer satisfaction; Johnson provided computer skills, business acumen, and a talent for customer service.

Johnson, ever the curator of her father’s impact on RiteWay’s culture, remembers how Green taught himself to use the sophisticated laser and lathing equipment on their shop floor by coming in weekends and experimenting, or how he’d use napkins to sketch out ideas to improvement various pieces of equipment, always saying they should be done the “RiteWay.”

The saga of RiteWay’s financial

struggles began in January 2008, ironically, with some very good news.

Make that spectacular news.

A couple engineers representing an Atlanta-based equipment integrator (a sort of general contractor) arrived in Lester Prairie for what appeared to be a routine vendor visit by a relatively new customer. (Johnson prefers not to name the company).

They announced that they were entering the conveyor business and wanted RiteWay to manufacture their new equipment. They told the astounded father-and-daughter team that they intended to spend $30 million with RiteWay over three years, a number that would double the comENTERPRISE MINNESOTA NOVEMBER 2013 19

photograph by patrick kelly

CEO Denise Johnson

20 ENTERPRISE MINNESOTA NOVEMBER 2013

pany’s current annual revenues.

“If we wanted to take on that business,” Johnson remembers, “they said we needed to expand and get inventory.”

“Dad was ecstatic,” Johnson recalls.

This contract would not only generate mind-boggling profitability, but it would stabilize RiteWay’s vulnerability of working with just one major client. They would now be manufacturing equipment for UPS and DHL, through the integrator.

RiteWay used its line of credit at Associated Bank in Red Wing, to build a $1.8 million, 24,000 square foot addition to its facility, as well as renovating 8400 square feet of the existing facility.

They moved in on October 17.

A month later — ­­ the day before Thanksgiving — the Atlanta-based integrator called Johnson to say that unpredictable turbulence in the U.S. economy had forced them to reverse their plans to enter the conveyor market.

There would be no $30 million contract. There would be no contract at all. But there would still be the long-term expense of their nowempty $1.8 million expansion.

Johnson vividly recalls of telling her father as he sat at the small conference table in front of her desk. “I can still see his face,” she says, “It was a look of sheer devastation. It said, what are we going to do?”

The news would get worse. FedEx was also feeling the squeeze of the bad economy. It announced that that their business would be off by 60 percent, Johnson recalls. “And it was actually worse than that.”

As he cast about for solutions, Green panicked.

In May 2009, a consultant persuaded Green to buy his company, Sebeka Tool and Engineering, a 15-person machine shop in central Minnesota. He said the company’s work in telecommunications and aerospace, he said, would diversify RiteWay’s customer base.

Eager to reverse RiteWay’s financial slide, Green bought the company -- without conducting a minute of

financial due diligence.

“Dad had a type-A personality,” Johnson says. “When he wanted to do something, he was going to do it.

He wouldn’t wait for anybody.”

The acquisition was a disaster. The company’s financials were bad, Johnson says, and their processes were unsophisticated.

It “sucked us dry,” Johnson said.

“They were a good bunch of people, but it was terrible.” Plus they were three hours away.

Things worsened. In January 2010 Green suffered a relapse of bladder cancer, which was originally diagnosed in 2003. By late September, doctors gave him only weeks to live.

The family buried him on October 28.

“Cancer loves stress,” Johnson says.

Near his end, Green privately counseled his daughter to get ready for demanding days ahead at RiteWay. “Dad told me, you have a company to run, you don’t have much time to grieve,” Johnson says.

He was correct. Within a week of her father’s funeral, Associated Bank petitioned for a court-ordered receivership against RiteWay; on November 7, the receiver showed up in Johnson’s office, with the sole objective, she says, of liquidating her company. The combination of the steep decline of FedEx-driven revenue and the additional debt from the building had brought RiteWay’s borrowing base out of compliance.

Within a couple weeks, Johnson filed for Chapter 11 bankruptcy protection and set out on what became a two-year journey to sell off what she could, find new investors, open up more revenue streams and wait for the FedEx business to rebound.

By June, Johnson had made some small incremental moves to improve RiteWay’s financial picture. She auctioned off little-needed equipment.

Later that month, she sold Sebeka.

Not big improvements, but they “gave us enough to keep the bank at bay,” she says.

And then she looked for investors.

Johnson chronicled that over two

“

”

“This started as a story about perseverance, but this year it has become a big comeback story.”

Mark Zimprich,

Director of Operations, RiteWay Manufacturing

conveyor equipment from RiteWay. Zimprich says RiteWay this year will ship 76 new conveyor drives, a 700 percent increase over the company’s previous sales high.

All told, RiteWay expects revenues of about $7 million in 2013, about twice what Johnson predicted in her bank projections a year ago.

“This started as a story about perseverance,” Zimprich says. “But this year it has become a big comeback story.”

For Johnson, it is also a story about personal loyalty. While her current workforce has grown from 38 to 60 to accommodate the growth, it should also be noted that RiteWay did not lay off a single person over the past two years.

On a recent tour through her plant she pointed to Roger Neubarth, a middle-aged worker, who was operating a break press.

“In some ways, this was all about him,” she says.

Sometime during the Chapter 11 process, Neubarth stopped Johnson on the manufacturing floor and asked, “Why are doing this? Why not just give up?” It was not criticism, more of a statement of gratitude.

“It would have been so easy for her to just throw up her hands and say, why bother?” Neubarth says now.

But he wasn’t surprised.

“Denise’s dad was a fighter. He wasn’t someone who would give up.

Denise has got a lot of that in her, too. She wouldn’t give up.”

So for Neubarth, the spirit of Bob Green lives on at RiteWay. “She and her dad work the same way,” he says. “It doesn’t feel like I’m working for Denise. It feels like I’m working with her. “ To learn more about the RiteWay, go to www.ritewaymech.com.

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years she made pitches to 67 investors of all stripes, pulled from a master list that included “anybody and everybody,” she says.

Her efforts included some longshots. She reached out to Oprah and Ellen, whose television programs sometimes publicize and help unique individuals and business, but got nowhere.

“I even sent a letter to Cliff Claven from Cheers,” she admits. Johnson had once heard actor John Ratzenberger tell a business audience in the Twin Cities that more young people should train for jobs in manufacturing. He didn’t respond.

“I just wanted somebody to help me,” she says. “It was frustrating. I could see what we had here. Why would anybody want to pass on it? I thought I had a gold mine here.”

Although her lawyer had successfully gained a temporary reprieve of the judicially mandated end to Chapter 11, the receiver eventually returned – this time representing PPL Group in Chicago, which had purchased the debt from Associated.

As the receiver asked her to show prospective buyers through the plant, she continued to seek her own financing. Help finally came from Heritage Bank in Willmar which helped find loan guarantees from the USDA, SBA, and the Southwest Initiative Fund in Hutchinson – enough to satisfy the previous debt and begin again.

I really did give it all to the Lord,” she says. “Otherwise, it would have sent me over the edge.”

Johnson’s perseverance and confidence have paid off. The FedEx business rebounded and has grown into other product areas. The company also works with all related integrators, throughout the market, who have now also started purchasing new

10 Marketing Trends for Manufacturers

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ENTERPRISE MINNESOTA NOVEMBER 2013 21

Building an ideal

problem solving Culture

With strong CEO support, companies are finding countless benefits when employees— from the shop floor on up—are trained and encouraged to identify and address problems through a thoughtful, step-based process.

By Kate Peterson

Not long ago, Harmony Enter-

prises, a leading designer and manufacturer of solid waste and recycling equipment faced an infrequent but recurring problem in its production area. Occasionally, as its production team was working on a baler, the welders would find they were missing a part they needed to move the job along. When that happened, they found the part and finished the baler, but it gnawed at them that it kept happening.

“It wasn’t happening a lot,” says customer service manager Ramon Hernandez. “But more often than we wanted.”

Fast forward several months.

As part of Enterprise Minnesota’s Pathways Program, key managers, staff and employees at Harmony have been trained in the problem-solving process. Armed with the knowledge of the process, Hernandez says the

22 ENTERPRISE MINNESOTA NOVEMBER 2013

“

“A company-wide culture of problem solving makes you better at what you do. It helps you raise the bar. That can mean improving margins, operations, quality, and delivery. It can mean making more money, and it can help grow sales.”

”

Bill Martinson,

business development advisor, Enterprise Minnesota

team was able to get at the source of the problem with the baler.

“We used the problem solving process and looked backward, and kept moving back a step at a time until we figured out what the root cause was.

It turns out it went all the way back to the way the order is entered into the system, and since we have a new computer system, that was part of the problem,” Hernandez says.

As it implements a strategic plan that identified five areas of focus for the company, Harmony will rely heavily on the problem-solving process as a tool for improvement.

Hernandez says the system—which is based on the type of analysis that helps teams narrowly define a problem and identify its root causes— makes it much easier to tackle problems directly and quickly. That means it can be used to address immediate problems, such as the baler issue Harmony faced, or broader issues, such as Harmony’s document flow improvement effort.

For executives seeking to improve operations, enhance productivity, boost customer satisfaction, and reap the benefits of company-wide progress in myriad functional areas, there’s no better approach than cultivating a thorough problem-solving culture that touches all aspects of the organization. Creating that culture requires an understanding of the process, training for key individuals in the company, and a healthy dose of patience as the process takes root.

CEOs and companies that follow through and build that type of environment have seen tremendous benefits. For Harmony, it’s changed the entire company. “Problem solving isn’t just for a specific situation. It’s how we’re doing our work on a daily basis,” Hernandez says.

Why Problem Solving?

While many executives might balk at the notion that problem solving needs to be taught—everyone solves problems all day, every day, after all— years of experience show that typical assess-and-react methods don’t work so well for particularly persistent or complex problems. What’s more, once employees are trained to use more enhanced problem-solving methods, they tend to use those more effective methods for all problems, improving outcomes across the board.

At the core of this problem-solving process—developed first by Toyota Corporation—is an attempt to override the human instinct found across all organizations and in every culture: to assess and address a problem as soon as it is noticed.

“That actually works about 80 percent of the time,” says David Meier, a long-time veteran of Toyota and president of Lean Associates, which develops and delivers training programs to companies. Meier has worked closely with Enterprise Minnesota in recent years to offer training and coaching to client companies in a number of business improvement areas, including problem solving.

But for complex problems, or those that touch a number of areas within the company, or those that just keep surfacing despite repeated efforts to address them, a deeper process is essential, as Harmony’s experience with the baler issue shows. “I’m going to say that 100 percent of issues with multiple causes that affect different parts of an organization take more analysis,” says Meier.

That deeper analysis begins with carefully defining the problem. “A problem well-defined is a problem half-solved,” says Bill Martinson, ENTERPRISE MINNESOTA NOVEMBER 2013 23

an Enterprise Minnesota business development advisor. He adds that it is crucial in the process to define the problem narrowly, and develop a way to measure the situation—both before and after corrective steps have been taken.

Both these elements—defining a problem and determining a method to measure progress—run counter to the typical approach to tackling troublesome operational issues. “Let’s try this,” or “Why don’t we do this?” are almost universal responses to difficulties in business.

“I cannot stop my brain from jumping to a solution any more than anyone else can. The only thing I can do is stop myself from taking action or letting something come out of my mouth about a solution,” Meier says.

“After some years at Toyota, I realized that you literally have to train people in this,” he says.

It’s that training, combined with a lot of practice and coaching, that helps executives lead their organizations toward continuous improvement the problem-solving way.

24 ENTERPRISE MINNESOTA NOVEMBER 2013

“”

“Problem solving isn’t just for a specific situation. It’s how we’re doing our work on a daily basis.”

Ramon Hernandez,

customer service manager, Harmony Enterprises

Rethinking the problemsolving process

Enterprise Minnesota sessions provide detailed background and training in problem solving which are typically aimed at key leaders in a company, but do not always directly involve CEOs. Still, it is critical for CEOs to understand how the process works, so they can provide the best support to the teams implementing it in their companies.

The process must begin with defining the problem. Meier says he coaches that until the problem is clearly defined, companies shouldn’t even call it a problem. “You have to trace it back to its roots. Sometimes it isn’t clear; it appears to be something on the surface, but you have to be more thorough in your understanding of the situation. Once we understand and define it, then we call it a problem,” he says.

Martinson also emphasizes that a problem must be understood as the gap between what should be happening and what is actually happening.

Using that definition elevates the importance of being able to measure where the company is at the beginning of the process, and compare that objective measurement once countermeasures have been applied to the problem.

Meier cautions that the idea of taking the time to define the problem and trace its root causes doesn’t necessarily mean a company has to spend more time addressing it. Instead, he says, the process simply involves a different distribution of time spent on the process. “With a complex problem with multiple roots causes, you need to understand the significance of the causes and recognize that some should be addressed and some cannot be. That’s where we spend the major-

ity of our time,” he says, noting that amounts to about 70 percent of the problem-solving time.

There are two types of problems facing companies, Meier says.

“There are ‘caused’ problems, where something is already broken or not working as you need it to. There are also created problems, where you go into the company and see opportunities,” he explains. That distinction highlights the importance of defining exactly what a problem is, and goes back to that crucial ability to measure progress toward addressing it.

It is often easier to get people to embrace the problem solving method if the problem is “caused,” Meier says. If people are struggling or frustrated, particularly if the problem persists after various attempts to solve it, or if it cuts across departments or permeates the whole organization, they are more willing to go through the process.

Problem-solving can also be used effectively as a continuous improvement tool in those “opportunity” situations Meier describes. Mary Connor, a business growth consultant for Enterprise Minnesota, often works with company leaders to develop a strategic plan, and then, using the problem-solving process, implements the plan methodically throughout the company.

Working with companies on these actual “created” problems Connor is helping them seek opportunities to close gaps between expected performance and actual performance. Harmony Enterprises is using the system to address some strategic goals, such as document flow improvement, for example.

Next, it’s important to develop a method of assessing where the company is, so it can measure progress.

“Leaders are good at coming up with

what the ideal state is, where they want the company to be. But in the growth process, sometimes leaders—often the ones who started the company—become less connected with what is actually happening,” Connor says. “Let’s get the current status, which we didn’t know, as we are looking for the desired state.”

Once the problem is defined and current status determined, the problem solving team begins to analyze causes. Participants in the program are taught to use a standardized form, called an A3, which walks them through the steps of defining the problem and identifying root causes.

Once that analytical phase is complete, participants develop countermeasures, detail an implementation plan, and outline steps for follow up and verification.

Martinson emphasizes that using the A3 is a bit like using training wheels to learn to ride a bike. Once the habits have been internalized, the form is less necessary and teams can often operate without it.

Across every step of the process, problem-solving teams are encouraged to use hard data and a common lexicon of terms. “One of the ground rules is ‘nothing without data,’” says Connor. Adding that what she calls “junk terminology” —superlatives such as “too big,” “too difficult,” “disastrous” and “catastrophic”— is also banned.

Problem solving—particularly the analysis phase—can be very challenging, says Martinson. “When you get into the process, it’s often hard to figure out what’s causing the problem. It can be gritty,” he says.

That’s one reason that careful training, ongoing coaching and consistent practice are required to develop a culture conducive to ongoing problem solving in a company.

“We purposely designed the sessions with the idea that Enterprise Minnesota advisors can return to the company and provide ongoing coaching,” says Meier. “Once a person has developed a skill set, he can facilitate a team.”

Establishing a robust environment

Even with thorough training, consistent coaching and plenty of practice, teams can stumble in implementing problem solving if a company’s leader does not understand and support the process. While the top executives of medium- and small-sized companies often built their thriving enterprises because of their ability to quickly solve problems, a major growth spurt can mean they are dealing with much more complex and cross-functional issues than they have in the past.

Advancing their company by creating a rich and robust problemsolving culture demands a different approach than that quick-to-react system used in the past. Equally important, executives must be willing to let teams within their company use the problem-solving method as it was designed—emphasizing analysis of the problem and its root causes as the most critical element of attacking the problem.

Meier candidly explains the potential challenges for CEOs. “I work with a lot of guys in the Enterprise Minnesota client base from family and entrepreneurial situations, and there’s one particular challenge with that type of company,” he says.

“Many times these entrepreneurs are the types who are always on the go, always thinking of the next thing.

They are the ones who make things happen.”

The difficulty for that type of leader is remaining patient. “In terms of involvement, there’s no doubt in my mind that the organizations with the most success in problem solving are those where the organization’s top person is involved,” Meier says. “But if they don’t understand the process, they can derail it.”

Meier describes the scenario in which a team is meeting and analyzing a situation. “The CEO will come by and say, ‘What are you guys up to?

Oh, you just need to do this,’ and it deflates everything,” he says.

Instead, Meier says, the best leaders understand the team’s challenges and ask the best possible questions to help advance the process. “Good questions for the CEO to ask fall into three categories: clarifying questions, guiding questions and challenging questions,” he says.

Clarifying questions give the team an opportunity to outline their process to the CEO, and they include such questions as “Help me understand what you are thinking about this” and “Can you explain this situation?”

Guiding questions help the CEO guide the team without giving them an answer, and are particularly helpful when the team appears to be stuck.

In these situations, the CEO might

ENTERPRISE MINNESOTA NOVEMBER 2013 25

ask, “Have you considered this?” or “What don’t you understand?”

Finally, challenging questions push the team to think a little more deeply, or change the direction of its thinking. Asking “What other alternatives have you considered?” or “What is the potential risk involved?” might help the team.

Some CEOs might wonder if they should take part in the training sessions in which the problem-solving process is taught and practiced. Meier says it really depends on the leader.

Most of the time, it is successful if the leader is present, he says. There are cases, though, where a CEO can be more helpful as a supporter, rather than as an active participant.

“They might be frustrated with the approach and would rather have the team just go out and do something,” rather than pursue the analysis-driven process.

In those situations, Meier says, a company is more successful if it finds someone in the middle of the organization who buys into the program and takes the teams through it. The CEO can still play a role in supporting the teams. “He should be the source of direction for the organization, the one who hands down to people the basis of the problem and says, ‘Let’s figure out how we get there,’” Meier says.

To that point, Connor explains

26 ENTERPRISE MINNESOTA NOVEMBER 2013

that while CEOs are nearly always involved in the strategic planning sessions she conducts with companies, they do not stay involved in the implementation and problem-solving phases. “We’ve tried it both ways— with CEOs in the implementation sessions and not—but we don’t get the kind of communication we need when the CEO is in the room. Everyone tends to look to the CEO for answers,” she says.

Instead, Connor says, the team members present their recommendations to the CEO for approval after they have worked through the process in the absence of the CEO. When CEOs are present, their influence may unduly inhibit the process, she explains.

At Harmony Enterprises, where the problem-solving culture has really taken root, Hernandez says CEO Steve Cremer has been extremely supportive. “He’s open to new ideas and understands that to reach the goals we’re striving for, we’ve got to utilize our resources and work effectively. He believes that if this process is what will get us to solve problems quicker and more directly, we should use it,” Hernandez says.

Embracing the new culture

Establishing and maintaining an environment that welcomes ongoing problem solving requires a special

mindset, Meier says. “No matter how much problem solving we do, problems remain. Part of the culture is the fact that we may encounter or uncover issues along the way,” he says.

In other words, if companies are finding a lot of problems, that’s a good thing. Rather than getting discouraged, Meier urges leaders to recognize that often what is called a problem is really a symptom, or even a cause. Getting to the root of an issue is likely to attack many of the issues surrounding the problem itself.

In addition, the process is designed to help teams develop a plan that attacks enough of the problem to achieve a desired target. “If people get discouraged, it’s because they want to fix everything they see. So, we teach them how to identify problems where we’ll have the greatest impact, and in the areas people care most about,” Meier says.

That approach creates an ideal platform for operational improvement, Martinson says. “From a CEO standpoint, problem solving is a great approach to continuous improvement. A company-wide culture of problem solving makes you better at what you do. It helps you raise the bar,” he explains. “That can mean improving margins, operations, quality, and delivery. It can mean making more money, and it can help grow sales.”

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A Peerless Gathering photograph by patrick kelly

An exclusive event

More than 75 of Minnesota’s top small and mid-sized manufacturing CEOs recently attended the first statewide CEO Peer Council conference at the Crowne Plaza Minneapolis West.

The conference was Enterprise Minnesota’s first annual statewide day-long gathering designed exclusively for the members of its eight regional CEO Peer Councils.

Left to right – Lisa Crump, Scott Crump, Bob Kill, Dee DePass

photograph by patrick kelly

In between keynote addresses

From left to right – Rick Paulsen, President & CEO, Douglas Machine Inc. (Alexandria); Matthew Field, President, Goebel Fixture Company (Hutchinson); Craig Ryan, General Manager, Page 1 Printers (Slayton); Denny Rutledge, CEO, IRD Glass (Litchfield)

28 ENTERPRISE MINNESOTA NOVEMBER 2013

from nationally renowned lean expert David Meier and Stratasys chairman Scott Crump, and in-depth breakout sessions with Enterprise Minnesota consultants, attendees received ample opportunity to interact with each other.

“That’s the beauty of events like this,” said Enterprise Minnesota President Bob Kill.

“There are so very few opportunities for CEOs to casually connect with each other on their own terms.”

Kill emphasized that attendees valued that attendance was limited only to CEO Peer Council members – and

3D Vision Peer Council attendees hear Stratasys chair Crump tells his remarkable entrepreneurial journey.

Scott Crump, chairman of Eden Prairie-based Stratasys, told Peer Council members how 25 years ago he and his wife Lisa worked in their garage to hatch the technological revolution 3D printing that today dominates the market.

Stratasys manufactures 3D printing equipment and materials that create physical objects directly from digital data. Its systems range from affordable desktop 3D printers to large, advanced 3D production systems, making 3D printing more accessible than ever.

Manufacturers use Stratasys 3D Printers to create models and prototypes for new product design and testing, and to build finished goods in low volume. Educators use the technology to elevate research and learning in science, engineering, design and art.

Hobbyists and entrepreneurs use Stratasys 3D Printing to expand manufacturing into the home — creating gifts, novelties, customized devices and inventions.

Crump has served as the chairman of the board since Stratasys’

inception in 1988. He continues as full-time chairman and head of innovation for Stratasys Ltd. He has also held the position of company CEO and president from 1988 to 2012. He was chief financial officer from February 1990 to May 1997.

He told the assembled CEOs that today Stratasys sells 55 percent of all the commercial 3D printers globally. “We are still at the beginning,” he said. “We are sort of at the inflection point of growth for the industry as well as the company.”

Today, he said, Stratasys offers 24 different 3D printers, designed to fit different commercial applications, using more than 120 different materials. With more than 50,000 printers in the market today, he expects that number to surpass 60,000 by year-end.

The company employees 1,600 employees, about half in Minnesota, while also reporting revenues of $360 million.

All Stratasys 3D Printers build parts layer by layer. (Fused Deposition Modeling), known for its reliability and durable parts, extrudes fine lines of molten thermoplastic, which solidify as they are deposited. PolyJet Technology, known for its smooth, detailed surfaces

photograph by patrick kelly

Scott Crump

and ability to combine multiple materials in one part, employs an inkjet-style method to build parts from liquid photopolymers in fine droplets immediately cured with ultraviolet light. SCP Technology (Smooth Curvature Printing) produces finely detailed models for lost-wax casting and moldmaking.

“We’re seeing 3D printing everywhere,” Crump said. “Using 3D printing technology they are able to prototype parts and assemblies for their equipment. So this technology can be a big game changer for business -- for a lot of reasons, but the big one is that you don’t have to go into tooling to produce it.”

This was highlighted last month, when a Fortune 100 company placed a multi-million dollar order for our Fortis 3D production systems, Crump said. “These are going to be used in 17 manufacturing sites around the globe.

The systems can be used for the production of both prototypes and manufacturing tools, as well as for parts for in-use products.”

That purchase, he said, “underscores the growing momentum that 3D printing technology has within the manufacturing processes,” he said.

He said the company’s merger last quarter with MakerBot represents a significant opportunity for our combined product portfolios. MakerBot manufactures the company’s desktop 3D printers in Brooklyn, New York..

Stratasys also manufactures Solidscape 3D Printers and operates RedEye On Demand digital manufacturing service.

Crump said the high interest in the mainstream use of 3D printers and the accelerated adoption of the technology are also at the heart of their collaboration with UPS stores.

Customers in smaller markets can now print their parts at The UPS Store.

ENTERPRISE MINNESOTA NOVEMBER 2013 29

Strategy, not tactics Lean guru David Meier tells CEOs to suppress their inner entrepreneur

photograph by patrick kelly

When national lean authority David Meier first started his career as an engineer for Toyota, he says he would continually ask a lot of questions about how his supervisors wanted him to attack a problem.

Meier, president of Lean Associates in Lexington, Kentucky – and long-time consultant to Enterprise Minnesota –was one of two featured speakers at the statewide Enterprise Minnesota Peer Council gathering.

He related his experience to the assembled CEOs as a case study that illustrates his hard-won expertise in lean through personal experience.

“Like most people,” he said, “they would give me some instruction, and I would ask a lot of questions about how should I do it. And usually the answers were fairly vague, but eventually they would say, ‘just do it.’”

Then, he says, “the Japanese guys would shoo you away and suggest that you give it a try.”

Wanting to get the correct answer,

“so that I could get kudos and congratulations,” he says, he persisted: “Tell me what I’m supposed to do. In other words, give me the answer, I’ll do it – and we’ll be good!”

Trouble was, he said, “they never gave me the answer. The standard answer from a Toyota guy was, ‘It depends.’”

So he’d ask again, “What am I supposed to do?”

And they would answer, “It depends.”

And then, Meier says, he would present options. “Here is option A and here is option B, which is better?”

They’d answer, “It depends.”

So, Meier says, he’d go back and work on the project. “I would say, ‘here is option A. Is this OK?’” And they would say, “maybe OK.” It wasn’t until much later, that somebody told Meier that one of the underlying philosophies of Toyota is that it is disrespectful to take away people’s privilege of solving their own problems.

Along with that philosophy, he says, is the understanding that

Statewide CEO meeting attendees speak with State Representative, Tim Mahoney.

30 ENTERPRISE MINNESOTA NOVEMBER 2013

David Meier

people are capable of solving their own problems.

“That’s why they never gave me an answer, because they didn’t want to take away my privilege. My thrill and excitement of trying to figure out what we’re trying to do.”

Meier told the assembled CEOs that his experience at Toyota is

one guest each.

The regional councils were created more than ten years ago with a single group of CEOs. Today, more than 85 manufacturing CEOs belong to one of the eight councils throughout Minnesota. Each council convenes one full day each month for a combination of topical presentations and open-ended conversation. In this way, members function as an informal, off-the-record advisory board for each other.

Leaders at Enterprise Minnesota laud the success of Peer Councils for obvious reasons. Enterprise Minnesota has made it an unofficial mission to be the convener of manufacturing decision-makers in Minnesota for groups large and small, about all sorts of issues, they say. Being at the center

photograph by patrick kelly

sometimes a difficult managerial step for small and mid-sized manufacturing executives who typically have the word how programmed into to their entrepreneurial DNA. An important lesson of his experience, Meier says, is that people in the organization have capability.

“They might need some education,

Joe Paulsen, General Manager, TBEI (Mankato) and Rob Hold, President and CEO, Super Radiator Coils (Chaska)

instruction, tools, or training. But they have the capability,” he says.

Another lesson is to let them use it.

Their challenge as organization leaders, he says, should be to replace how with where, which he says constitutes the difference between strategy and tactics.

“Strategy happens above the

of these conversations helps them stay current with what manufacturers are thinking, about competitive burdens, market opportunities and the challenges of leaning up increasingly sophisticated production operations.

“When we’re part of those discussions, we learn,” says Lynn Shelton, director of marketing & communications at Enterprise Minnesota.”

And if we’re smart — we are — we tweak our consulting offerings to better serve our customers.”

Enterprise Minnesota does a lot of convening. On top of its monthly Peer Councils, it hosts monthly informational business events designed to showcase high-level best practice solutions to a variety of cutting edge manufacturing challenges.

shoulders,” he says. “Tactics happen below the shoulders.” It is thinking versus doing.

“I now have more success in lean implementation for organizations simply because I never talk to people about what their problem is and how they should fix it,” he says. “Now I say, why don’t you help me understand what you’re trying to do, what your challenges are -- and then I’ll teach you a process we call problem solving to help you understand how to work through that and find your own answers.”

Leaders provide the parameters that the answers need to abide, according to Meier, “but you don’t provide the specifics.”

“Entrepreneurs are tactical by nature,” he says. Most managers, unfortunately, skip over strategy and head straight to the “how.” As soon as strategic thinking suggests a direction for the company, we say, “yes, but… how am I going to do that?”

“And that’s what we want to avoid,” Meier says.

Its annual State of Manufacturing® survey research project includes 20-plus focus groups throughout the state, and 10 regional rollout events to promote the findings. And finally, Enterprise Minnesota annually organizes more than 20 company tours in which elected public officials and local thought leaders get an opportunity to see exactly what’s going on inside the manufacturing businesses in their own communities.

The Statewide CEO Peer Council event just might be the first among equals. The reason: “time.”

“We recognize that the number of minutes in a CEO’s workday probably comprises his or her most priceless resource,” Shelton says. “And when they give us a full, uninterrupted day, we know we’re on to something.”

ENTERPRISE MINNESOTA NOVEMBER 2013 31

final word

When Soft Skills Matter Effective team leadership can be taught

By John Connelly hard ROI – can be the end-product of soft skills leadership development.

Let me say that again: soft skills leadership development can lead to hard measure ROI. Effective leadership team meetings should reflect far more than project status or problem fixes. Teams should collaborate on how to affect and deliver their CEO’s vision for the company.

The critical component to managing a company’s future is realizing that it can’t be done when individuals or their departments don’t mix and collaborate across silos.

Developing the essential team proficiencies that lead to this behavior – admittedly soft skills – is a strategic activity that can be coached.

The first step is to methodically and objectively assess the competencies of each member of the team. The leadership training we do at Enterprise Minnesota starts by looking at 20 different competencies grouped roughly into three different dimensions: How do they handle strategic perspective?

How good are they at handling collaborative relationships? Where is their skill at leading employees? So, we look at Tom’s skills and Lynn’s skills and Bob’s skills and then we roll them all together into what we consider the group’s competencies.

The purpose of this is to build a gap analysis, to determine what’s missing.

What is the team good at today and what do we need to be good at tomorrow in order to implement the CEO’s strategic vision? And how do we go about filling those gaps?

The intentional development of forward-looking behaviors in management teams should be a strategic management goal of every organization.

To learn more, go to www.enterpriseminnesota.org.

32 ENTERPRISE MINNESOTA NOVEMBER 2013

Photograph by patrick kelly

It’s Monday morning, and the CEO convenes all of his or her direct reports for their regular weekly meeting.

Virtually all these meetings can be characterized by one of three behaviors. And if you are a senior manager at a manufacturing company, I guarantee you’ll recognize at least the first two of them.

The first meeting is dominated by the past. Its members spend their time fixing things. A vendor was late, a machine got built wrong, there were quality issues, or the plant will not be able to meet a delivery expectation.

Good processes will eliminate some of these issues (the topic of another column, another time), and management teams do invest some, not most, of their time each week managing the past.

In the next type of meeting, the managers devote their chief energies to managing the present -- the status meeting. They talk about what they’re doing now. Engineering is working on these designs, manufacturing has this machine up and running; HR is offering a new training session, and sales is about to close on a particular prospect.

Status meetings are important, too.

The third type of meeting, guided by the CEO’s strategic vision, focuses on the future. What markets we should we pursue? What products we should develop to get there? What processes should we improve? What skill sets do we need to add?

I probably don’t need to say that the forward-looking behavior of the third type of meeting likely represents an efficient and highly profitable company.

Less obvious is the fact that the path to the behaviors of that meeting third meeting – a process that indicates a

John Connelly

John Connelly is responsible for the consulting services of Enterprise Minnesota and manages Minnesota’s connection the NIST Manufacturing Extension Partnership [MEP] national system. He has more than 25 years of consulting, manufacturing, and management experience.

He has been a regional sales manager for a manufacturer of automotive wheel service equipment, a sales and marketing manager for a manufacturer of engineered motion controls, a director of program management for a gear systems manufacturer in the aerospace industry and general manager for a tooling and machining company before coming to Enterprise Minnesota.

John has a BA degree in Business Administration from Penn State University and a mini-MBA from the University of St. Thomas.

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ssociation, Member FDIC. 130135

Bloomington, MN 55425 Voice: 952-854-1415 From managing your cash flow to providing tailored business solutions, Fax: 952-854-1442 U.S. Bank can propel your business to new heights. Our local & experienced www.solutiondynamics.net

SAVE ThE DATE

612 624-4000 • fax 612 625-1511 CCEinfo@umn.edu www.cce.umn.edu

Business Banking sales managers and their team of Business Banking Officers are ready to take your business from where you are to where you want to be.

U.S. Bank

Tailored Business Solutions from U.S. Bank since 1863. From managing Call us today for a solution tailored to your business. your cash flow to providing tailored business solutions, U.S. Bank can propel your business to new heights. Our local & experienced Business Banking Sales Managers and their team of Business Banking Officers are Vice President Region Manager, ready to take Craig your Veurink, businessSr.from where you are to where952.927.1277 you want to be.

MarySr. Charbonneau, ExecutiveRegion Assistant,Manager 952.927.1275 Craig Veurink, Vice President 952.927.1277

With a strong regional focus, Wipfli LLP ranks among the top 25 accounting and business consulting firms in the nation. With 80+ will be presented in two sep • Six topics years of experience serving over 1,800 manufacturers and distributors throughout the Midwest, we provide solid strategic thinking from Lean Tools & Lean different perspectives: financial success, tax optimization, operational excellence, and engaged workforce. Put the power of our industry focus to work for you.

• Attend any of the sessions you like, an participant will get all of the presenta materials from all six sessions.

Jeff Thill, CPA 651.766.2862 jthill@wipfli.com www.wipfli.com

Mary Charbonneau Executive Assistant 952.927.1275 Member FDIC

Payments

Wipfli

Business Growth

Saint Paul College

Future

Customized Training and Continuing Education provides quality, applied training at our site, your business, or online. We assist businesses and organizations throughout the metro area in staying current and informed regarding best practices relevant to workplace and technical skills, leadership, organizational sustainability, and practical business solutions.

Our partners can expect: • Customized training solutions to meet your organization’s unique needs and culture • Real-world applications taught by industry experts • Flexible training to ensure you get exactly what you need, when you need it.

Contact us at: 651-846-1800 www.saintpaul.edu/CTCE

• This one day event is ideal for anyone learn more about Lean Enterprise, or from the Lean efforts at their own co

• Register online by CLiCking hERE.

• The cost is $90 per registrant. For ev

Business events attendees get 1 additional registrat

free. Please contact Tom Kammer, of S Sponsorship Opportunities Available Now!

Sponsoring Enterprise Minnesota® Business Events is aCollege, great or Greg Thomas of En Central way to increase sales, expand your visibility and reach Minnesota Minnesota to take advantage of this g manufacturers. Platinum, Gold, Silver and Bronze sponsorship levels are available.

Learn More:

Presented by

Main Sponsor

Jim Schottmuller Enterprise Minnesota Relationship Manager 612-455-4225 jim.schottmuller@enterpriseminnesota.org www.enterpriseminnesota.org

lunch Sponsor