Enterprise Minnesota Magazine January 2013 by Enterprise Minnesota

He alt Int he hEa erv r l st’ iew e s Helping Manufacturing Pa an s CEO g e 2 ens an Enterprises Grow Profitably 8 ei d

January 2013

Great Places to be a Manufacturer in

Minnesota Also:

Industry experts revamp Carlson School degree 7 Super Radiator Coils’ red-hot growth 10 Delkor Systems’ brand-new facility and passion for new product innovation 12

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

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How communities collaborate to strengthen the job-creating power of manufacturing.

Helping Manufacturing Enterprises Grow Profitably Publisher Lynn K. Shelton

bob

Creating a Bob Kill Nexus Manufacturing Every time I meet someone who doesn’t

Editors Tom Mason tmason@mason-publicaffairs.com Andrea Lahouze andrea@mason-publicaffairs.com

Contributing Writer Mac McKeen 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 andrea@mason-publicaffairs.com

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2 ENTERPRISE MINNESOTA JANUARY 2013

associate Enterprise Minnesota®, the magazine, with Enterprise Minnesota, the consulting organization, I am reminded that it never hurts to share with your audience who you are and what you do – especially when you are uniquely situated in a marketplace as we are. So here goes. At our core, Enterprise Minnesota is a business consulting organization that helps medium and Bob Kill is president and CEO smaller sized Minnesota manufacturers implement of Enterprise Minnesota. business solutions to compete and grow profitably. We have a team of 21 consultants, who live and work in communities throughout the state. Through our operational and business growth expertise, our customers become well positioned to strengthen their businesses (increase revenue) and improve productivity (control costs) and other efficiencies. As a result, manufacturers grow and continue their commitment as employers of good, sustaining jobs that contribute to local economies and thriving communities. Enterprise Minnesota also collaborates with education, government, granting organizations and economic development professionals in support of the industry. Our old friends remember that Enterprise Minnesota began as a quasi-state agency – one getting its full (and robust) funding from the coffers of the state government. That funding gradually diminished over the years until a decade or so ago, when it was eliminated altogether. To their great credit, the then board and staff decided to transition into a fee-based organization that paid its way through the work they did. It forced us to lean up our operation and face the same open-market pressures that our manufacturers face. In all, it proved to be a valuable transition. At the same time, Enterprise Minnesota is privileged to be one of 59 centers throughout the country that represent the Manufacturing Extension Partnership (MEP), a program housed within the U.S. Department of Commerce that helps manufacturers achieve top-line and bottom-line growth. Our search to offer relevant, leading-edge business solutions for clients is enhanced by input from 12 executive Peer Councils. These daylong monthly meetings consist of 10 CEO Peer Councils and two additional Peer Councils devoted to operations managers. We also produce a dozen half-day business briefings each year in which manufacturing executives candidly share their experiences and expertise in diverse issues ranging from supply chain management to company valuations. For us, the byproduct of all this has been that we play a valuable role as the connector, the nexus, of all things related to manufacturing in Minnesota. Our efforts have helped manufacturers communicate with each other, with their communities, with educational institutions, and with elected officials who can have an impact on the marketplace. No place is this more evident than in our annual State of Manufacturing® survey research project, which is now about to enter its fifth year. It has become the go-to barometer gauging how manufacturers view their industry, their state, and their nation. We’ll begin our survey interviews and 20 focus groups across Minnesota in February. And, oh, yes. Enterprise Minnesota® magazine is published by Enterprise Minnesota to solidify these relationships by always telling the good news about Minnesota’s manufacturers.

contents JANUARY 2013

Features 12 Packaging Pros

A European-inspired facility and a passion for new product innovation build upon Delkor Systems’ engineering leadership in designing and manufacturing food packaging machines.

17 5 Great Places to Be a Manufacturer in Minnesota

How communities collaborate to strengthen the job-creating power of manufacturing.

28 The Interview Lean is Healthy

HealthEast’s innovative new CEO and her new Lean Sensei are preparing to use lean to flourish amid the demands of a competitive health care market and the regulatory uncertainties of ObamaCare.

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.

Delkor Systems President and CEO Dale Andersen inspects the company’s brand-new robotic case loader in action.

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:

Final Word:

In addition to providing consulting services, Enterprise Minnesota continues its work to connect manufacturers across Minnesota. Page 2

Just months into the certification process, ISO streamlines communication channels and transforms company culture at Innova Industries. Page 6

Super Radiator Coils grows from its cast iron radiator roots to a worldwide leader in heat transfer technology. Page 10

College of Continuing Education’s Manufacturing Operations Management degree program gives students the skills leading Minnesota companies seek. Page 32

ENTERPRISE MINNESOTA JANUARY 2013 3

INNOVATiONS

A Greener Clean

Clean Plus Inc.’s newest mess-absorbing product gives corn stalks new purpose and existing alternatives a run for their money. For Clean Plus Inc. in West Concord, Minn., five

years of research are about to pay off. The company’s Drip Trap Absorbent Granules, the newest product in a line of industrial cleaning solutions, are designed to absorb oil and other liquids from the floor. Though other companies offer similar solutions made from clay and chemical compounds, the star ingredient in CPI’s granule is a simple and surprising byproduct of many Minnesota farms: corn stalks. “We fully anticipate that this product has the potential to double our business,” says Matthew Coy, CPI president. A corn stalk’s unique cell structure allows moisture to pass both into and out of the cell. But it also contains lignin, a natural glue which attracts hydrocarbons (the main components of petroleum and natural gas) and then

traps them within the cell wall, making it ideal for cleaning up oily spills. In addition to being a green alternative, the CPI granules are also more effective. Pound for pound, they can absorb six times more than traditional clay and chemical absorbents at one-sixth the weight. The challenge in production was finding a way to turn corn stalks into a granular form while preserving their absorbent performance. To do so, CPI partnered with researchers at the University of Minnesota-Duluth’s Natural Resources Research Institute (NRRI). “Traditionally, if you want to make a pellet or a granule, you grind it down very, very fine and run it through a pellet mill, so that was the first thing we tried. It worked, but it didn’t perform any better than clay,” Coy says. “In working with the University, we learned that running that

photographs by patrick kelly

CPI President Matthew Coy with the company’s final Drip Trap product and its surprising raw material: corn stalks from local Minnesota farms.

4 ENTERPRISE MINNESOTA JANUARY 2013

photograph by patrick kelly

fibrous material through a high-compression pellet mill actually crushes the cell wall, so we completely lost all of the benefit of the unique cellular structure of the corn stalk. We had to look at other methods.” It took CPI and NRRI researchers five years of trial and error to design a mechanical alternation process that could turn corn stalks into an equally absorbent granular form. The winning method incorporates two topsecret ingredients and pan disc agglomeration, which introduces the raw corn stalk material and other ingredients to an angled, spinning disc. As the ingredients spin on the disc, they stick to each other to form small pellets before hopping off the disc into a collection bin. Corn stalks are also the main ingredient in three other absorbent products in CPI’s array of cleaning products for the automotive, agricultural and industrial markets. The company’s absorbent pillow can be placed on top of smaller spills. A tube-shaped variant is designed to keep spills from running down a hill, migrating across the floor or getting away from a piece of leaking equipment. And its original corn stalk product, a compressed corn stalk mat, is used to catch incidental drips and spills. These three products make up about 12 percent of CPI’s annual revenues, with treated hand cleaners, cleaning towels and automotive repair kits rounding out sales. But once it hits the market, Coy says the granule product alone could make up 60 percent of annual revenues. The challenge will be keeping pace with the growth. “The biggest opportunity is the prospect of serving the market need with our absorbents. The biggest challenge will be filling that need, whether it’s capacity, manufacturing, delivery or packaging,” Coy says. A good problem to have.

CEO George Coy and President Matthew Coy stand on corn stalk bales ready to be turned into CPI’s Drip Trap Absorbent Granules.

Preparing Leaders for Today’s Global Manufacturing Industry

Manufacturing Operations Management www.cce.umn.edu/mm 612-624-4000

For more information about Clean Plus Inc., visit www.cpidivisions.com. Offer code: 5515 The University of Minnesota is an equal opportunity educator and employer. © 2013 Regents of the University of Minnesota. All rights reserved.

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ENTERPRISE MINNESOTA JANUARY 2013 511:09 AM 12/19/12

INNOVATiONS

ISO-Inspired

Just months into the certification process, ISO streamlines communication channels and transforms company culture at Innova Industries.

Innova Industries is still months away from achieving ISO 9001

Photographs courtesy of Innova Industries

certification, but Innova ISO Facilitator Michele King says the company is already seeing benefits. “ISO is helping us decipher and eliminate tribal knowledge within the company so that all employees can be on the same page at any given moment, with established and standardized processes,” King says. Dick Young and his son Jeff Young founded Innova Industries as a custom laser cutting business in 1997. One employee, one customer and one capability at a time, the Fergus Fallsbased company has since grown to employ 60 people and has established itself as a “one-stop manufacturing center” with laser cutting, welding, fabrication, finishing, assembly and As a “one-stop” manufacturing center, Innova Industries manufactures thousands of different products, including this shipping services. Its customers span construction vehicle door assembly and ATV lift arm assembly (top right) being formed by ISO Facilitator Michele King. King says one of the company’s biggest challenges in pursuing ISO has been adapting ISO standards to its customized environment. a variety of industries, including wind generation, agriculture, mining, King says establishing standardized processes is a construction equipment and floor challenging but rewarding pursuit that has brought cleaning equipment. continuous improvement to the forefront of Innova activities. As the business expanded, its communication methods “ISO addresses a wide range of processes, from training remained relatively informal, with minimal process of both new and current employees through the end result: documentation and critical information often passing the products that we produce. Being able to look at what between departments through word of mouth. Like an we’re doing, how we’re doing it, and [potentially] step back ever-growing game of telephone, that person-to-person and say, ‘this isn’t working,’ is very valuable,” King says. “It’s communication left increasing room for error and process becoming a really big part of our company’s culture. It’s not variations as more employees came on board. just about getting the certificate. It’s a method for continuous Innova began pursuing ISO 9001 certification in improvement and running the business.” September 2012 when some of its key customers began President Dick Young agrees, adding that ISO’s considering it as a supplier requirement. The certification standardized process requirements will eliminate the is part of the ISO 9000 family of international quality “guesswork of company procedures,” keeping everyone on management standards, published by the International the same page in day-to-day operations, ultimately resulting Organization for Standardization in 1987. Today, they in greater efficiency. Upon certification, the company will be are recognized as the most widely known standards in the able to attract customers that require ISO-certified suppliers, world. including many in international markets. ISO asks that manufacturers examine each of their For other companies considering ISO, King has one word existing processes under a microscope, revise them to of advice: customize. meet ISO requirements and keep on hand an official, “You have to take ISO and use the parameters, but also documented procedure for every activity they believe make it your own so that it will directly improve upon your would benefit from one. The documents standardize company’s processes,” she says. each process and also help customers to understand the intricacies of a manufacturer’s production process, including how the manufacturer ensures product quality. For more about Innova Industries, visit www.innovaind.com.

6 ENTERPRISE MINNESOTA JANUARY 2013

Scholar Supply Chain

The Carlson School of Management’s Supply Chain and Operations Department taps Minnesota manufacturing leaders to keep curricula relevant and cultivate an exceptional talent pool.

When it comes to propelling

chain programs. Hill says board members’ efforts benefit everyone involved, from classroom to companies. “Every year, we have several students who go on to work for companies represented in our advisory board group, and many times, members of our advisory board are directly involved,” Hill says. Being a board member “allows them to help prepare our students so that when they need to hire somebody, we’re at the top of the list.” For more information about the Carlson School of Management’s Supply Chain and Operations program, go to www.csom.umn. edu/supply-chain-operations. As members of the school’s Supply Chain and Operations Board of Advisors, more than 30 senior executives from top Minnesota companies regularly weigh in on degree curricula, deliver talks and mentor students.

Photographs courtesy of Carlson School of Management

Minnesota’s manufacturing industry forward, the Carlson School of Management’s Supply Chain and Operations Department has its own supply chain. The department’s Board of Advisors draws on more than 30 senior executives from top Minnesota manufacturers such as 3M, Cargill, C.H. Robinson, General Mills, Kemps, Target and Toro to provide advice, insights and recommendations that shape its courses and, in turn, its graduates. The board director Professor Arthur Hill, who is also the associate dean for the Carlson School MBA programs, says board members are a vital link between academia and industry. “They really help us to define what we should teach, and help keep us focused on the really important issues,” Hill says. In 2008, the board worked with department professors to overhaul the school’s Supply Chain and Operations Management major. The group used the industry-developed Supply Chain Operations Reference (SCOR) model to shape courses around four key pillars: plan, source, make and deliver. It also increased required credit hours from 20 to 22, with additional elective offerings driven by current industry trends. To keep course content fresh, board members and faculty regularly work in small groups to review a course’s syllabus and then critique it, recommending items to cut, add or emphasize. Based on board feedback, the school’s sourcing course has recently added more quantitative techniques for choosing the right suppliers. Courses have increased focus on “soft skills” such as leadership and communication. The quality management course now teaches multiple methodologies, including lean, six sigma and theory of constraints, and encourages students to mix and match the tools within them to create customized quality management processes that fit a business’s unique needs. “We’re becoming much more eclectic in terms of bringing together different [quality management] tools and combining them, because the industry is doing that as well,” explains Associate Director Steven Huchendorf. Apart from course curricula, board members are also dedicated to helping the school’s students in other ways, from delivering classroom talks to mentoring students. Many board member companies have also sponsored the school’s annual case competition, which pits teams of top undergraduate students against each other to solve real business challenges and create a presentation of their findings, all within 24 hours. At competition’s end, expert judges critique each team’s work and award the winning team $4,000. In 2013, Carlson School will launch a national version of the competition to bring together students from the nation’s top supply

ENTERPRISE MINNESOTA JANUARY 2013 7

INNOVATiONS

Plastic Fantastic

When you recycle a plastic milk jug in

At Bedford Technology, recycled plastics are reborn as park benches, playgrounds, boardwalks and more.

8 ENTERPRISE MINNESOTA JANUARY 2013

photograph COURTESY OF BEDFORD TECHNOLOGY

Bedford Technology’s plastic wood products, including this boardwalk, are made from 100 percent recycled high-density polyethylene plastic.

Minnesota, chances are good that it will travel to the Southwest corner of the state, reaching its final destination at Bedford Technology in Worthington. To make its recycled plastic lumber products, the company takes in about 16 million pounds of recycled high-density polyethylene (HDPE) plastic every year. If you’re counting, that’s about 128 million milk jugs. Stacked end to end, they would reach across the continental U.S. approximately seven and a half times. Since 1998, Bedford Technology has been on a mission to breathe new life into old plastic. The company is an outgrowth of Bedford Industries, Inc., which began in 1966 as a wire twist tie manufacturer before expanding its offerings to product closures, fasteners, ties and other items. When Bedford Technology branched off from Bedford Industries, the plastic lumber side of the business was small—about 30 percent of sales. The remaining 70 percent were attributable to its food packaging machinery division, which makes custom automation for applying twist tie closures to food items. Though both sides have experienced growth, the plastic lumber division has ballooned to comprise more than 90 percent of sales, with revenues increasing 20-fold over the past 14 years. To date, the company has sold to customers in the U.S., Korea, Taiwan, Australia, and multiple countries in Europe and the Middle East. President Brian Larsen attributes much of the plastic lumber division’s fast-growing success to the wide spectrum of products it can supply, from boardwalks, pedestrian bridges, benches and picnic tables, to playgrounds, speed bumps and parking curbs. Though its main market is outdoor infrastructure projects like playgrounds and parks, the company also serves the marine market with dock and pier fendering systems, designed to absorb a boat’s kinetic energy as it heads into port. Transforming recycled plastic into brandnew products begins with a grinding process that breaks post-consumer material into smaller pieces. Pieces are then washed and ground into even finer particles, called “flakes.” The flakes then receive colorants and UV additives before being either extruded to the correct length of board, or injected into a mold to create a particular shape. For applications that require additional strength and stiffness, Bedford mixes chopped fiberglass into the plastic material. Its strongest product, called BarForce®, incorporates a fiber reinforced polymer rebar throughout the length of each board.

Apart from a varied menu of products, the “green” nature of Bedford’s plastic products has also bolstered its escalating popularity. Bedford’s plastic lumber is 100 percent recycled, sourced from local recycling centers. And products at the end of their life cycles can be recycled again, promoting a “cradle to cradle” approach to manufacturing that Larsen says is a “huge part” of Bedford’s company culture. The company’s plastic lumber is also a more durable alternative to chemically treated wood— enough to grant customers a 50-year warranty. “It has excellent longevity. It doesn’t rot, it doesn’t mold, bugs don’t eat it,” Larsen says. The UV additives also protect its color from fading over years of sunlight exposure. To expand further into the marine market, the company spent much of 2012 setting up a second shop in Winchester, Va. that specializes in longer plastic board lengths. Larsen anticipates the expansion will contribute to a 15 percent sales jump this year, with increases both in the U.S. and abroad. To learn more about Bedford Technology, visit www.bedfordtech.com.

photograph COURTESY OF BEDFORD TECHNOLOGY

Innovations

In addition to plastic boards, Bedford Technology also provides molded plastic products for a variety of markets, including outdoor amenities like playgrounds and park benches.

ENTERPRISE MINNESOTA JANUARY 2013 9

INNOVATiONS

Radiating Success

Super Radiator Coils grows from its cast iron radiator roots to a worldwide leader in heat transfer technology. From radiators to refrigerators, NASCAR to NASA, chances are you’ve seen products from Super Radiator Coils at work. The Chaska-based company’s array of coils, condensers, air coolers and other heat transfer products help heat and cool everything from walk-in refrigerators to NASA spacecraft. SRC got its start in Minneapolis in 1928, making cast iron radiators for schools and other large buildings before moving into steam coils for large-scale laundry operations and evaporator coils for commercial refrigeration units in the 1950s. Today, the company operates two additional facilities in Arizona and Virginia, and offers a diverse line of heat transfer products. President & CEO Rob Holt says the company’s penchant for tackling challenging projects has built and sustained its reputation through the decades. Rob Holt, president and CEO of Super Radiator Coils

photograph by PATRICK KELLY

10 ENTERPRISE MINNESOTA JANUARY 2013

“Our niche is the commercial, highly engineered, custom market. We don’t go after high volume, which can be extremely price sensitive and vulnerable to overseas competition. We go after difficult projects that no one else wants to do,” Holt says. Those projects take on many forms. Instead of cooling the whole room at IBM’s massive “server farms,” where thousands of computers congregate to store cloud data, an SRC technology cools just the computers, to significant energy savings. Six massive SRC cooling coils weighing 17,000 pounds each keep NASA’s Icing Research Tunnel (IRT) at temperatures as low as 40 degrees below zero. The company’s team of engineers can also reverse-engineer and replicate coils from many years ago, to replace original coils in older applications. “A lot of companies say, ‘We only make this. You have to figure out how to fit it in your unit or application.’ We say, ‘We’ll sell you exactly what you had before, and it will fit,’” Holt explains. That capability has spurred a string of recent contracts with many of the nation’s 104 operating nuclear power plants. SRC is one of only three companies in the world certified by the American Society of Mechanical Engineers to receive an “N” stamp, which allows the company to manufacture safety-related coils for nuclear power plants. Because most U.S. plants were built in the 1950s and 1960s, their operating licenses are set to expire. To maintain them, they must replace a variety of safety-related components, among them a coil product that SRC manufactures. Holt attributes about 15 percent of the company’s growth in 2012 to nuclear power plant projects. SRC’s testing capabilities are equally unusual. To determine how its products will function in a variety of climates, SRC tests all of them in its one-of-a-kind Wind Tunnel Test Lab in Virginia, built in 2011. The 50-foot closed loop wind tunnel can fluctuate temperature conditions from 35 to 140 degrees Fahrenheit, humidity from 40 to 95 percent, and airflow from 100 to 8,000 cubic feet per minute. The most unique feature is that it can vary steam and other fluids that circulate through the coil being tested in the wind tunnel. SRC also makes the wind tunnel available to other companies for product testing. With a record $78 million in 2011 sales, a 13,000-squarefoot expansion at its Chaska facility in 2012, and an $80 million revenue goal for 2013, Holt is optimistic about SRC’s future. The challenge, he says, is to grow at a manageable pace. “As a U.S. manufacturer that relies on its reputation to gain market share, our philosophy has always been to have 7-10 percent real growth, year over year. We don’t want to outstrip our infrastructure, make promises we can’t keep, or grow too fast,” he says. To learn more about Super Radiator Coils, visit www.srcoils.com.

Innovations

Photograph Courtesy of Consulate General of Canada

with Jamshed Merchant Position: Canada’s Consul General in Minneapolis

Questions

Role: Educating U.S. business leaders and facilitating business connections to promote bilateral trade between Canada and the U.S. states of Minnesota, Iowa, North Dakota, South Dakota and Nebraska.

What is your mission in this new role as Consul General?

When your four-year term is over, how will you measure your success?

Much of the work that we do is helping to educate Americans about the shared Canada-America interest, so in my travels to the different states, my job is all about making connections and interacting with people. Because of the size of the trading relationship, anything that impacts Canadian interests impacts American interests as well. Minnesota sells more goods to Canada than to any other country, and nearly 180,000 Minnesota jobs depend on trade and investment in Canada. We can help educate the American public that are part of the policy process here and help get outcomes that are good for Minnesotans and Americans.

We’ll be looking at the extent to which we have helped to create a better understanding of the Canada-U.S. relationship on both sides of the border. We’ll also consider whether we’ve increased the number of companies trading. To that end, we’ll frequently line Company X from Canada up with Company Y from the U.S. so they can talk and explore potential partnership opportunities that would work to their mutual benefit.

Of the five states that you oversee, Minnesota does more trade with Canada than the other four states combined. Why is that? One part of it is that when you think of Minnesota, it’s the 16th largest state in terms of area, and the largest out of the five states. It also has the most populated metro area and a large number of Fortune 500 companies. Another part is that according to a study I saw recently on innovation and entrepreneurship, you’ll find that Minnesota is among the top five states, beating out places like California and New York. There is a tremendous base here of hardworking and highly skilled people. In addition, the largest rail crossing between Canada and the U.S. is at the border of Ontario and Minnesota. Canada is also a major energy supplier to Minnesota. About 10 percent of Minnesota’s electricity comes from hydro in Manitoba, and most of the petroleum products used in Minnesota come from Canada, too.

Finally, we’ll consider ways in which we’ve helped to support the Canadian and U.S. governments’ Beyond the Border Action Plan to avoid or solve problems, at the border. For example, a company in Canada may have difficulty crossing the border for various reasons, and our initiatives aim to help them, facilitate trade, and track that success.

For Minnesota manufacturers who do not currently export to Canada but would like to start, what should they do first? About $2 billion of trade happens between Canada and the U.S. every day. That’s about a million dollars a minute. For the experienced companies, the border is almost invisible. The shared Canada-U.S. goal is to make the border as thin and as invisible as possible for commerce, while still keeping the security considerations in place. We believe it’s easier for a new U.S. exporter to export to Canada than anywhere else in the world. It’s a more favorable climate, with clearer regulations. But for first-timers, it’s important to learn the process. It’s also helpful to ask questions of people who have done business in Canada before, either as a partner or a distributor. Then you can proceed with more knowledge. For more information on Minnesota’s trade relationship with Canada, visit www.minneapolis.gc.ca. ENTERPRISE MINNESOTA JANUARY 2013 11

A European-inspired facility and a passion for new product innovation build upon Delkor Systems’ engineering leadership in designing and manufacturing food packaging machines.

By Andrea Lahouze

12 ENTERPRISE MINNESOTA JANUARY 2013

Step onto the production floor at packaging manufacturer Delkor Systems in Arden Hills and you may think you’ve stepped into a showroom. On polished floors and under high ceilings sit dozens of new food packaging machines, each forming, filling or closing cartons of food products at high speeds. Colored tape outlines the correct position for every object that touches the floor, from machines to easels. The entire operation is bright with both high-efficiency and natural lighting, and color-coordinated in Delkor’s signature red and black stripes, which run across each machine and along the walls throughout the

class manufacturers in Germany and other European countries, Andersen and other Delkor executives wanted to bring elements of those facilities back to Minnesota. “German manufacturers really are dedicated to high quality standards in terms of the production floor. …Everything has its place, everything is nice and orderly and well-coordinated. It’s an efficient way to manufacture,” Andersen says. Delkor’s new building is 114,000 square feet—approximately 60 percent larger than its previous two facilities combined. Andersen and his team designed it to promote efficiency in every department, from sales to shipping. “We really paid close attention to how the flow was going to develop, so we would make efficient use of the space,” Andersen says. With months of design and renovations completed, the logistics of moving a capital equipment manufacturing company required equal attention. Delkor moved one department at a time into the new space over a period of six weeks to prevent any dip in production. To minimize walking back and forth throughout the day, each department has a dedicated section of offices and cubicles, and each machine being tested has its own work cell, with all adjustment tools and parts kept right at hand. Andersen estimates that simply being in one location instead of two has increased efficiency by at least 10 percent, with layout revisions adding to that number. The entire move is an apt example of Delkor’s dedication to continuous improvement throughout the business. “Every year, we focus on trying to understand how we can do something better,” Andersen says. That dedication has continued to guide and grow its success in an everevolving marketplace.

facility, punctuated by the company’s red and black logo. For Delkor President and CEO Dale Andersen, the new space is a dream become reality. His food packaging equipment company, which manufactures machines that package food products in many parts of world, including 50 percent of North America’s cultured dairy products from Greek yogurt to cottage cheese, had added a second location in 2007 after outgrowing its primary location. But rapid growth in 2012, including 42 new hires, recordhigh exports and a 35 percent jump in overall sales, necessitated a larger location. After visiting a number of worldDelkor President and CEO Dale Andersen test-runs a new Delkor tray former, which quickly forms flat paperboard into threedimensional packaging.

Navigating a Changing Industry

photograph by PATRICK KELLY

For the food packaging industry, gone are the days of plain paperboard boxes. Grocers’ aisles are now awash in colorful, eye-catching graphics and an array of shapes and sizes. For Delkor, the ongoing challenge is accommodating both current and future designs. In years past, it was up to food companies to determine how each product would be shipped, packaged and presented for sale. Today, mass merchandisers regularly request new shapes, package counts, displays and materials, and it’s up to the food companies to deliver. As a result, Delkor customers are often unsure what packaging shapes, sizes or materials their machines will be required to handle in the future, so flexibility in machines they purchase is essential. “The game has changed,” Andersen says. “If a customer has a traditional machine that doesn’t have enough flexibility, their only choice is to put a completely new ENTERPRISE MINNESOTA JANUARY 2013 13

packaging line in to accommodate the necessary changes, or to come back to the customer and say, ‘I’m sorry, we can’t do that.’” To help its customers stay nimble, Delkor made new product innovation a cornerstone of its business, building flexibility for different packaging designs into the 34 machines it currently manufactures, and keeping it top of mind in design of future machines. The challenge in designing many of the machines is to accommodate the many different packaging formats while keeping pace with desired rates of production, which often range between 400 and 600 containers per minute. “To have a machine that can quickly change over in a matter of five minutes to running something very different, that was the engineering challenge,” Andersen says. Addressing that challenge has increased domestic sales and catapulted the company into new markets around the world, including Canada, Japan, Australia, New Zealand, and multiple countries in Central and South America. In 2011, international machinery shipments increased from 10 to 26 percent. In the first quarter of 2012, the company exported a record 50 percent of its sales to international customers, and was awarded the Governor’s International Trade Award by Minnesota Governor Mark Dayton and the Minnesota Trade Office.

Built on Innovation

Terry Cook, Delkor’s vice president of finance, attributes that growth to a companywide culture of “true innovation.” “True innovation is something that changes the process of how packaging is done, rather than simply a new bell and whistle on a piece of equipment,” Cook says. “Our people understand how important innovation is to our company, and they enjoy it because it’s fun.” Andersen agrees. True innovation, he says, is twofold: creating new products and securing new patents. “And Delkor has been very successful in doing both,” Andersen says. Each year, the company aims to develop a handful of completely new packaging machines. In 2012, the company unveiled a record seven new machines, including lidders, carton and case closers and tray formers. Its newest carton closer is also the first in the world to have “Intelligent Positioning” technology, which electronically analyzes the position of each individual carton flap entering the carton closer, and automatically adjusts the position if it’s out of alignment. Delkor holds patents on both machines and packages. Seeking to reduce the amount of corrugated packaging required for shipping, company engineers developed the Spot-Pak packaging system, which uses 50 percent less corrugated packaging by forgoing a corrugated box for flat corrugated pads. The pads receive a temporary bond adhesive before they are loaded with product, stacked 14 ENTERPRISE MINNESOTA JANUARY 2013

and shrink wrapped into packages. The environmentally sustainable solution cuts packaging materials costs by 40 to 60 percent, and is currently operating in approximately 200 locations in Canada, Mexico and the United States. Creative problem solving extends throughout the company’s workforce. When engineers were working to develop a machine that could package a new shaped product at speeds of more than 400 units per minute, it was a recent graduate from a local technical college who came up with the winning solution. The company will apply for a patent on the idea later this year. In 2013, the company expects to unveil six completely new machines, growing its product line to 40 machines. While there are always many new product possibilities, Andersen says the company chooses a small number of new machines to develop based on which have the most strategic importance. “We try really hard to listen to the marketplace,” he says. It appears the company listens well. Delkor currently sells machines to eight of the top 10 yogurt manufacturers in North America. When you buy a pack of yogurt in Delkor’s 114,000-square-foot Arden Hills facility incorporates the meticulous sense of order seen in many top European manufacturing firms.

Delkor President and CEO Dale Andersen watches the companyâ&#x20AC;&#x2122;s new robotic case loader in action.

photographs by PATRICK KELLY

ENTERPRISE MINNESOTA JANUARY 2013 15

North America, there’s a good chance it was packaged by a Delkor machine. In Ecuador, that chance increases to 80 percent.

Lasting Partnerships

Andersen says Delkor’s penchant for problem solving and innovation has made it not only a reliable vendor, but also a trusted partner among many of its customers. “We typically are in discussion with a number of food companies on how to design new machines to accomplish what they’re trying to accomplish. It’s very common. Right now, we have 10 different projects in which we’re trying to define how we would solve a problem by changing the design of the machine in one way or another,” Andersen says. The company also sits on multiple customers’ (highly confidential) new concept development teams to offer both design and manufacturing advice. Last summer, Delkor engineers helped Fontana, Calif.-based California Aseptic Beverages LLC roll out a tetrahedral container for a new juice product. Delkor engineered a robotic cartoning line to make it a reality—a challenge given the atypical shape of each juice container. Delkor’s carton former shapes the cartons, then its robotic loader automatically inserts each individual juice container at speeds of 250 per minute in a specific orientation to accommodate the tetrahedral shape. In the final step, the carton closer seals each carton with Delkor’s patented intelligent positioning technology to ensure “One of the competitive proper alignment of its graphics. For Califoradvantages of working in nia Aseptic Beverages President Jeff McClelMinnesota is the employees.” land, the most surprising Dale Andersen, feature is that the entire President and CEO, Delkor Systems packaging line can be run by just two people instead of the eight it would take to fill each carton by hand, leading him to dub Delkor’s robotic cartoning line “the future of packaging.” Although confidentiality agreements keep details under wraps, Delkor engineers are now helping Unilever Australia finalize a new package design set to hit the market later this year. Heading into the new year, Andersen admits that economic uncertainty is a main concern—“When then economy turns sour, big capital equipment projects get put on hold,” he says. But he quickly adds that continuing to pursue international sales will bolster the company’s growth. Probable projects in Columbia, Chile and Ecuador contribute to an anticipated 20 percent growth in overall sales. “I continue to push our business in terms of looking at the export opportunities, because we’ve seen great growth there, and we know that there’s much more growth to be had, but it’s a step-by-step approach,” he says. While its machines operate in more and more places around the globe, Andersen says Delkor will continue to operate in Minnesota because of its highly qualified talent pool. “One of the competitive advantages of working in Minnesota is the employees, the work ethic in Minnesota and the diverse economy,” Andersen says. “We have such great access to the schools that are here. We employ a lot of people after they come out of their degree programs. We have a very well-educated workforce, and I believe that is one of the reasons that Delkor is successful.”

“ ”

For more information about Delkor Systems, go to www.delkorsystems.com. 16 ENTERPRISE MINNESOTA JANUARY 2013

Great Places

to be a Manufacturer in

Minnesota How communities collaborate to strengthen the job-creating power of manufacturing. By Andrea Lahouze

W ith 7,400 manufacturing companies employing about 13 percent of the stateâ&#x20AC;&#x2122;s workforce, there is no question that Minnesota is a hotbed for manufacturing and innovation. While examples of the stateâ&#x20AC;&#x2122;s manufacturing success shine from Iowa to Canada and everywhere in between, five communities are taking additional measures to ensure the continued success of their local manufacturers, and in turn, their schools, families and economies. Read on to find out why Alexandria, Mankato, St. Cloud, St. Paul and the Iron Range made our list. ENTERPRISE MINNESOTA JANUARY 2013 17

Members of Alexandria’s new Packaging Machine Manufacturers’ Consortium, clockwise from bottom left: Jeff Bigger, Massman Automation Designs, LLC; Rick Paulsen, Douglas Machine; Jason Murray, Alexandria Area Economic Development Commission; Gary Christianson, ITW Heartland; Todd Zarbok, Alexandria Technical and Community College; Ray Frazee, Douglas Machine; Brian Baustian, ITW Heartland; Sharlo Meyer, Aagard. photograph by PATRICK KELLY

Alexandria:

Packing Progress

18 ENTERPRISE MINNESOTA JANUARY 2013

In Douglas County, manufactur-

ing makes up 16.6 percent of local employment opportunities. And with four automated packaging machinery manufacturers within Alexandria’s city limits (and a few more just down the road), it’s no wonder that Alexandria has been dubbed “the Silicon Valley” of the packaging equipment world. Those companies recently combined forces and launched their own packaging equipment company association, the Packaging Machine Manufacturers’ Consortium (PMMC). Member companies use the Consortium to pool resources for non-competitive activities such as recruiting, hiring, and retaining qualified employees. Member companies include Aagard, Douglas Machine, ITW Heartland, Massman Automation Designs, LLC and the Alexandria Area Economic Development Commission. “Even though all of our companies compete for orders, we also compete for employees,” explains Rick Paulsen, president and COO Douglas Machine. “We all have similar needs for certain skill sets for our industry, and if we can work together and promote our industry and the jobs that we have in our businesses, it will be beneficial for all.” With Alexandria Technical & Community College as their facilitator, the companies work closely with local schools to spark and sustain student interest in manufacturing careers— not least by helping to design a robust industrial program for the area’s new high school. When Alexandria Area High School opens in the fall of 2014, it will include a state-of-the-art industrial center and lab in a highly visible spot in the center of the building. PMMC has also provided funding, materials and mentorship to the Alexandria School District’s FIRST Robotics team, which requires students to combine, science, technology, engineering and math skills to build and program a robot to complete required tasks in competition with other FIRST Robotics teams. PMMC member companies offer internships and tours to local college

“ ”

“We feel that manufacturing is a vital link to the success of any local economy.”

and high school students as well, and regularly open their facilities to students in ATCC’s courses, including machine tool technology, welding, mechatronics, fluid power and mechanical drafting. They have even hosted junior high and high school teachers from the Alexandria School District for weeklong summer programs, “so they can understand better, as influencers of young people, what job opportunities exist in manufacturing,” Paulsen says. Paulsen believes the PMMC’s efforts are key to building the future pool of qualified talent to grow their companies and their community. “The more we can do to communicate the job opportunities to young people, the more we’ll be able to add jobs to the area, which brings families into our community, which helps the local economy and the school system,” Paulsen says. “We feel that manufacturing is a vital link to the success of any local economy.” Once hired, manufacturing employees in the Alexandria area also have access to world-class training in specialized skills, thanks to a long-standing program from community foundation West Central Initiative. WCI’s Workforce 2020 program began in 1992 to boost the ninecounty region’s manufacturing and industrial employee base. The grantmaking program offers financial support for manufacturing training that is not widely available in post-secondary schools. As such, the types of training eligible for funding change over time. Workforce 2020 originally focused on training workers how to operate computer-controlled manufacturing equipment and later moved on to lean and six sigma, and Training Within Industry (TWI). Its latest focus is on providing training in areas like Toyota Problem Solving and advanced geometric dimensioning and tolerancing, or GD&T, which involves creating engineering drawings and three-dimensional, solid models for products.

Rick Paulsen,

president and COO, Douglas Machine

Enterprise Minnesota has remained a steadfast partner in the program throughout its existence. As a part of the national Manufacturing Extension Partnership network, Enterprise Minnesota connects companies with world-class instructors who teach in a combination of both classroom and applied learning. WCI Program Director Wendy Merrick says the training benefits employers and employees alike. “Workforce training increases the competitiveness of manufacturers,” she says, adding that they are more profitable and better able to endure economic downturns. “And then that gets passed on to employees in the form of better workplace experiences and better pay. ” Sam Wagner, director of advanced manufacturing at Donnelly Custom Manufacturing, says his company’s employees were inspired and motivated by their recent training in TWI. “Training certainly helped our operations, but more than that, it helped change our mindset,” Wagner says. “When you realize you’re getting world-class training, you realize that you are working for a world-class organization.” Statistics bolster Donnelly’s support of the program. An Enterprise Minnesota study of 30 participating firms in 2007 and 2008 found that companies increased sales by a total of $15.1 million and reduced spending by $4.63 million. And a study conducted by Andrea Lubov, PhD, found that in 2005, participating firms enjoyed a turnover rate of 26.2 percent, while turnover rates for non-participating firms were 54.8 percent. Lubov is currently conducting a follow-up study to retrieve the latest numbers. Merrick says WCI plans to continue its Workforce 2020 program for at least the next five years. ENTERPRISE MINNESOTA JANUARY 2013 19

St. Paul Mayor Chris Coleman, fifth from right, Gov. Mark Dayton, third from right, and St. Paul Port Authority President Louis Jambois, far right, break ground on the site of Gerdauâ&#x20AC;&#x2122;s new steel mill last May.

St. Paul: Harboring the

Entrepreneurial Spirit

20 ENTERPRISE MINNESOTA JANUARY 2013

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hotograph ourt sy of t. au

“

“There are a lot of fabulous reasons for the manufacturing sector to want to be in St. Paul. Our job is to make sure that they have places that they can go and prosper here.”

”

Louis Jambois,

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long effort to determine where in North America to place a $50 million metal casting investment, Brazil-based steel manufacturing giant Gerdau settled on the City of St. Paul. And with good reason. Minnesota’s capital and second-most populated city sits at a unique nexus of transportation infrastructure, from air and rail to highway and water. Though it’s 1,300 miles from any coast, St. Paul is home to a major Mississippi River harbor, which sees between five and seven million tons of commodities shipped in any given year and provides direct transportation to 10 states. St. Paul manufacturers also have a unique advocate in the St. Paul Port Authority. Originally founded in the 1920s when U.S. Congress made the decision to dredge a nine-foot channel in the Mississippi River between Saint Paul and New Orleans, the Port Authority has been managing the city’s harbor since 1932. Its mission today is “to create quality job opportunities, expand the city’s tax base, and advance sustainable development”— all by helping industrial businesses to succeed. “There are a lot of fabulous reasons for the manufacturing sector to want to be in St. Paul. Our job is to make sure that they have places that they can go and prosper here,” says Port Authority President Louis Jambois. The Port Authority granted a $500,000 forgivable loan to Gerdau for its new metal casting facility, provided it continues to employ at least 330 workers through 2015. In addition to providing financial

support and managing the transfer of commodities passing into and out of the Saint Paul Harbor, the Port Authority plays an integral role in local redevelopment. It buys industrial land that is often contaminated or occupied with dilapidated buildings, tears down the buildings and decontaminates the land, installs new infrastructure and sells the land at a reduced rate for modern industrial development. Since 1962, it has helped redevelop more than 1,200 square acres of land—more than the land area of downtown St. Paul. The redeveloped acres now hold 22 business parks with about 500 industrial businesses, which employ more than 17,000 people. One new business is Matsuura Machinery, a machining equipment manufacturer in Japan. Looking to create a new sales and demonstration facility in North America, Matsuura decided on St. Paul’s River Bend Business Park after speaking with Port Authority representatives and learning about St. Paul’s unique location. Jambois hopes other Japan-based companies will soon follow. While some companies travel across the globe to set up shop on the Port Authority’s redeveloped land, others travel just down the road. Stewart, Minn.-based Form-A-Feed Inc. is constructing a new 60,000-squarefoot shipping facility in the harbor in order to use the river to ship its products. The livestock feed and agricultural chemical producer also provides topsoil and seed to golf courses, and has recently formed a partnership with the Port Authority to receive a

hotograph ourt sy of t. au

Last summer, following a months-

St. Paul Port Authority President Louis Jambois, far left, and other Port Authority staff members don hard hats to tour Gerdau’s new expansion in St. Paul.

portion of the dredge material that is removed from the St. Paul harbor, which it will repurpose as topsoil. “We spend a lot of time and money dredging the St. Paul harbor, and some of the dredge material that we pull out of the harbor is fabulous dirt for topsoil. If we can’t find a use for that topsoil, we actually have to landfill it, so Form-A-Feed is going to help us turn what could be a financial liability into a financial asset,” Jambois explains. According to Jambois, the proximity of like-minded manufacturers sparks many similar partnerships in St. Paul. It also makes the city an excellent place for local residents and policy makers to get a firsthand look at modern manufacturing and shed any “dark, dirty and dangerous” misconceptions. The Port Authority regularly arranges tours of local businesses to show locals what goes on inside, and how the community benefits from the companies that occupy them. For Jambois, the excitement of touring a new manufacturer in St. Paul never fades. “Getting into a new plant after the company has built on one of our redeveloped sites and seeing the production that’s going on there, the workforce, feeling the energy that exists in the facilities…that is what blows my hair back.”

president, St. Paul Port Authority

ENTERPRISE MINNESOTA JANUARY 2013 21

Machining students at South Central College’s North Mankato Campus learn CNC machining techniques on state-of-the-art equipment in the college’s Haas Machining Center of Excellence. Photograph courtesy of South Central College

Mankato:

Inspiring Talent

22 ENTERPRISE MINNESOTA JANUARY 2013

job seekers and curious locals got a chance to see what goes on inside 12 manufacturing companies in South Central Minnesota during the region’s Tour of Manufacturing. The annual event is a joint effort between manufacturers and local workforce and economic development organizations that make up the Economic Growth Collaborative of South Central Minnesota to showcase the region’s variety of manufacturing career opportunities, while casting off industry misperceptions. This year’s tour included a variety of manufacturing companies, from Dotson Iron Castings to medical device company Coloplast. Each company hosted between 70 and 350 visitors, including 150 students from the Mankato School District, and additional students from other area schools like Madelia and Maple River. “A busload” of job seekers sponsored by Mankato WorkForce Center also toured four of the companies. Barb Embacher, vice president of Greater Mankato Growth, says the tour is changing industry perceptions one person at a time, particularly when it comes to local students. “I like seeing students’ reactions, because a lot of students today just don’t know what’s available to them in their home communities,” Embacher says. “They may just think about getting that big job in the MinneapolisSt. Paul metro area, and until they take the tour, may not realize there are really good-paying jobs right here in their backyard.” Area students who choose to pursue manufacturing careers can get the right training in their backyard, too. The region’s Minnesota State University-Mankato and South Central College each work closely with local manufacturers to be sure to be sure they are teaching the skills those companies seek in new employees. Tom Kammer, a manufacturing consultant at South Central College’s Center for Business and Industry, says regular outreach to local businesses is the big-

lle

gest part of his job at the college. “Being a community college, we take a lot of pride in making sure that these companies get what they need,” Kammer says. “Everybody who works at the Center for Business and Industry has a list of companies assigned to them, and we meet with those companies on a regular basis to find out both their current and their anticipated future needs.” Those open communication lines have kick-started several new offerings at the college for both future and incumbent manufacturing workers. When local companies were struggling with either time or finances to provide basic lean training to all of their employees, the college created an online lean training program that allows employees to complete the training on their own schedule and at their own pace. The program teaches basic lean terminology and concepts in a matter of hours and in a more economical and convenient format than in-person training. Kammer is currently developing an Industrial Maintenance Certificate program for machine maintenance. The six-month program will provide instruction in electrical schematics, programmable logic controllers, hydraulics and pneumatics—“all of the basic tools that they need for maintenance in an industrial location,” Kammer explains, adding that it will benefit both job seekers and incumbent workers looking to update their skills. South Central College also caters to manufacturers looking to attract new CNC machine operators with the Right Skills Now program. Established by the Obama Administration, Right Skills Now is an accelerated program that trains talent for manufacturers that need qualified workers. South Central College and Dunwoody College of Technology in Minneapolis are the first two colleges in the nation to be selected to deliver the training. Right Skills Now teaches basic CNC machine operation over 16 weeks of intensive instruction, using

On October 24, hundreds of students, parents, teachers,

hotographs ourt sy of outh C ntra Co

Students in South Central College’s Right Skills Now program receive 16 weeks of on-the-job training at local manufacturing companies.

a curriculum based on competencies from the National Institute for Metalworking Skills. It includes measurement, materials and safety, job planning, bench work and layout, turning operations and milling operations. At South Central College, students learn on state-of-the-art CNC machining equipment from machine tool manufacturing giant Haas Automation in the college’s new Haas Machining Center of Excellence. Students follow classroom study with another 16 weeks of on-the-job training at local companies. Each participating company agrees to take in a predetermined number of students and hire them if all goes well. “The beauty of the program is that students know they have a place to go when they complete it,” Kammer says. Right Skills Now graduates earn 20 college credits, if they choose to return to college. In its first year, 42 students graduated from the program. The program is now in its second year. “The Mankato region is very fortunate to have a really diverse manufacturing base and we want to keep that,” he says. “We help our local manufacturers get their employees the skills they need to keep up.” ENTERPRISE MINNESOTA JANUARY 2013 23

Students and parents attending the annual Statewide Tour of Manufacturing get a firsthand look at manufacturing career opportunities. Now an annual affair, the Statewide Tour was inspired by the regional Tour of Manufacturing CMMA established in 2009.

St. Cloud:

A Common Voice

24 ENTERPRISE MINNESOTA JANUARY 2013

All

hotographs ourt sy of C ntra M nn sota Manufa tur rsâ&#x20AC;&#x2122; sso at on

In January 2008, a dozen St. Cloud area manufacturers gathered at the American Legion. They were there to host what they hoped would be the very first meeting of the new Central Minnesota Manufacturers’ Association—a 7 a.m. breakfast meeting—and it was 24 degrees below zero. “We thought we’d be lucky if 25 people showed up,” remembers Les Engel, CMMA president and founder of Engel Metallurgical, a manufacturing product inspection, testing and failure analysis firm in Sauk Rapids. When 105 fellow manufacturers walked through the doors, they were astounded. “We looked around at each other and thought, we must be onto something,” Engel says. Central Minnesota at last count had nearly 37,000 jobs at about 1,200 manufacturing firms—many being firms of one. Engel says the idea for CMMA sprung from a desire to unite those companies for their mutual benefit. Since its founding, CMMA has grown into an alliance of 110 regional manufacturers and institutions that want to create a common voice for manufacturers, to facilitate networking opportunities, and to develop the local workforce. Members gather monthly to hear a speaker, tour a company and enjoy a breakfast, with plenty of networking in between. Meetings draw an average of 60 people, and are also open to non-members for a small fee. State and federal legislators, for example, have discovered them as surefire ways to gauge the industry’s concerns. Staff members from Rep. Michele Bachmann’s and Sen. Al Franken’s offices are regulars, and Bachmann attended a meeting last fall. CMMA also coordinates a number of programs to help build the skilled workforce in future years. Last spring, CMMA sponsored multiple class field trips to “How People Make Things,” an exhibit at the Minnesota Children’s Museum. The exhibit gave young

students a hands-on introduction to manufacturing with molding, diecutting and assembly activities. For junior high and high school students, CMMA sponsors $1,000 kits for local students to participate in the VEX Robotics Program. The afterschool program enables student teams to build a robot from a kit – often with one-on-one help from member companies -- then send it into competition with other robots to complete designated tasks. Regional winners compete in U.S. and world championships. “We want to let kids know that this is a very viable career path,” says Randy Pelletier, CMMA board member and president of Pellco Machine, a custom CNC turning and milling operation in St. Michael. “It doesn’t take four years of college to be in manufacturing, typically. It’s a good career choice for anybody, girls and boys, and so we’re trying to spread the word.” They appear to be succeeding. In 2009, CMMA board members originated what has since become the annual Statewide Tour of Manufacturing, modeled after Minnesota’s annual Parade of Homes tour. Its goal was to take a “seeing is believing” approach to changing public perception of modern manufacturing by opening up local manufacturers’ facilities for public tours. “The idea was to get the whole family to go, because workforce development is not a matter of just selling the kids. You have to sell the parents, too, because the parents do not know about these jobs, either,” Engel says. The inaugural tour of 12 businesses drew more than 5,000 people, with many students, parents and teachers in the mix. It also drew the attention of Minnesota’s Department of Employment and Economic Development, which launched the annual Statewide Tour of Manufacturing in October 2011 to coincide with Minnesota Manufacturers Week.

Students from elementary school through college learn about manufacturing career opportunities in their backyard at the CMMA-originated Statewide Tour of Manufacturing. The tour is now held each October in conjunction with Minnesota Manufacturers Week, drawing thousands of visitors to manufacturing companies across Minnesota.

ENTERPRISE MINNESOTA JANUARY 2013 25

Premier Plastics specializes in plastic tables, bucket seating, couches and other components for the marine industry. Moving from Wyoming, Minn. to Hoyt Lakes and partnering with the Iron Range Resources and Rehabilitation Board has helped the business add a new facility and establish a second company, bringing more jobs to the region. r

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hotograph ourt sy of r

The Iron Range: Work Hard, Play Hard

26 ENTERPRISE MINNESOTA JANUARY 2013

Like many Minnesotans, Bob

Menne enjoys spending weekends at his lake cabin “up north.” But for Menne, the trip from home to cabin doesn’t require hours of driving time. He is president of Premier Plastics, a rotational molding and thermoforming plastics manufacturer specializing in plastic products for the marine and recreational industries. Ten years ago, Menne relocated Premier Plastics from Wyoming, Minn. on the northern outskirts of the metropolitan area to Hoyt Lakes, in the heart of Minnesota’s Iron Range. Menne says the move resulted from a love of two things: Northern Minnesota and its famously dedicated— and low-turnover—workforce. About one-third of the employees he hired 10 years ago remain with the company today, and have helped it to grow exponentially. Last month, Premier Plastics expanded into a second facility in Eveleth, where Menne hopes to add about five employees to his staff of 38 over the next few months. In the last six months, the growth of Premier Plastics has also allowed Menne to establish a new business in Pine City. An outgrowth of Premier Plastics, Leisure Designs’ 25 employees now upholster all of Premier Plastics’ marine furniture. For the Iron Range Resources and Rehabilitation Board (IRRRB), a state agency long-focused on economic development in Northeastern Minnesota, Premier Plastics is a poster child of manufacturing success on the Range. “The Iron Range is a unique place where we work hard and play hard, says IRRRB Commissioner Tony Sertich, a fourth-generation Iron Ranger. “We love living minutes away from our cabins and being in the outdoors hunting, fishing and recreating in all four seasons. There’s just a certain breed of people who like to live up north, and making more opportunities for them to work here is a key part of our job here at the IRRRB.” And IRRRB has been a key part of Premier Plastics’ ongoing growth, providing low-interest financing

packages for both its Hoyt Lakes and Eveleth facilities, and helping to secure lower-interest financing when Premier Plastics purchased a $450,000 rotational molding machine last year. Menne says the new machine, which builds much of the company’s marine furniture, is “one-quarter to one-third more productive” than its predecessor, and also uses less gas and electricity. “The IRRRB has been really good to work with,” Menne says. “They’re in tune with our needs.” The agency is attentive to the needs of many other Iron Range manufacturers as well. Instead of trying to attract more manufacturers to the Iron Range, Sertich says the IRRRB focuses on developing those businesses that have already made it their home. “So often, economic development agencies take a bag of money and travel all around the world trying to entice people into their region,” Sertich says. “We believe more in “economic gardening” here, where we look at existing businesses and ask them, ‘How can we help you grow?’” IRRRB has nourished an ongoing partnership between local manufacturers and high education institutions to ensure skills taught align with industry needs. Many local manufacturers sit on the advisory boards of the local colleges to voice their wants and needs in the skill sets of current and future employees. IRRRB finances a portion of the customized training programs that are developed as a result. One of those programs is Mesabi Range Community and Technical College’s new Iron Range Engineering degree. Established in January 2010, the four-year degree provides two-year technical college graduates with advanced engineering instruction in the context of industry engineering projects, rather than typical classroom study. Upon graduation, students receive a B.S. in Engineering with emphases in mechanical and electrical engineering. The program celebrated its first graduates this year. Though it is currently accredited through partnerships with both Minnesota State

University-Mankato and University of Minnesota-Duluth, Sertich anticipates Mesabi Range will receive its own accreditation later this year. Over the past year, IRRRB also has provided $50,000 in grant funding to help manufacturers in Northeastern Minnesota gain access to business improvement services from Enterprise Minnesota. Specifically, they can take advantage of its Growth Acceleration Program (GAP), which provides small manufacturing and manufacturing-related companies with matching grants that help them boost efficiency and eliminate waste. GAP funding targeted to the Range is structured on a reimbursement basis. Companies receiving Enterprise Minnesota consulting services are required to match IRRRB funds on a dollar for dollar basis and to apply for any other available funding to offset the cost. The partnership between IRRRB and Enterprise Minnesota is modeled after the highly successful Growth Acceleration Program (GAP) for manufacturers. Established in 2007 by the Minnesota State Legislature to encourage manufacturing job creation, GAP provides small manufacturing and manufacturing-related companies with a matching grant for projects to eliminate waste and boost efficiency. The statewide program has helped nearly 200 Minnesota manufacturers realize an average $30 return for every $1 spent by GAP, and some companies have realized as much as a 40-to-1 return on investment. Sertich says the grants, along with other IRRRB services, are helping Iron Range manufacturers find customers beyond their immediate surroundings. In 2012, financial support from IRRRB helped nearly two-dozen manufacturers to enter new markets in the U.S. and abroad. “So often, these manufacturers started as vendors to the taconite industry, or other local industries,” he says. “But in this global marketplace, it’s really about seeing how we can help them expand beyond the Iron Range and beyond Minnesota.”

ENTERPRISE MINNESOTA JANUARY 2013 27

The Interview

photograph by PATRICK KELLY

Lean is Healthy

Kathryn Correia, President and CEO, and Didier Rabino, Lean Sensei, HealthEast Care System

HealthEast’s innovative new CEO and her new Lean Sensei are preparing to use lean to flourish amid the demands of a competitive health care market and the regulatory uncertainties of ObamaCare. One day last Spring, Kathryn Correia, the recently

named president and CEO of St. Paul’s HealthEast Care System, showed up at 6:30 a.m. at the Andersen Windows manufacturing facility in Menomonie. She and 15 colleagues donned safety glasses and earplugs, hopeful that a survey of the leaned-up manufacturing efficiencies at Andersen might reveal some lessons that would apply to the world of health care. Didier Rabino, a lean expert with 20 years’ experience supporting lean transformations throughout Europe in the United States, led the visitors through a comprehensive half-day tour of the Andersen facility. Rabino had directed Andersen’s effort to develop and deploy the Andersen Manufacturing System. He would soon realize that Correia was no novice to lean in her own right. Her previous experience included eight years at ThedaCare in Appleton, Wisc., a national pioneer in bringing lean processes to health care, where she had been a senior vice president. Her experience at ThedaCare had been similarly inspired by a manufacturer, that time by Ariens, a manufacturer of snow blowers. A worker struggled with a particular angle on a specialty window, due to a design changed. It slowed his process, which would have slowed completion time, which would have slowed delivery time, which would have impacted 28 ENTERPRISE MINNESOTA JANUARY 2013

a key metric for on-time deliveries. She watched, as the Andersen team addressed and fixed the problem through a series of 30-second conversations up through the process. “Without lean, they would have known about it sometime in the future, when a report came out,” she says. “Didier knew it as it was happening, when his team had the best chance of remedying the problem. “It was clear to them what this would do to their performance metrics,” she says. “It was amazing.” On the ride back to St. Paul, she mused to a colleague, “Wouldn’t it be wonderful to have someone like Didier work with us?” The reply: “Why not Didier?” A few months later, Didier was named Lean Sensei at HealthEast. We met up with Correia and Rabino in January, to discuss how HealthEast’s experience underscores the emerging importance of lean processes in health care. We convened in the modest 6th floor executive suite of Bethesda Hospital, a smallish St. Paul campus tucked a few blocks behind the intersection of Rice Street and University Avenue. From an office that boasts a dramatic panorama of the State Capitol, Correia oversees a $1 billion integrated health care system that includes clinics, rehabilitation facilities, hospice, home care, and outpatient surgery centers. Its 7,300 employees

photograph\ by PATRICK KELLY

Rabino created a myriad of collaborative teams throughout the HealthEast System that convene daily to look for efficiencies. Nurses at Woodwinds Hospital, from left to right: Sara Roslansky, Melody Boll, Mandy Gebel, Liz Raverty, Donna Buchman, Abby Rohlik and Lesley Borgschatz.

photograph by PATRICK KELLY

and 1,400 physicians serve St. Paul and its east-side suburbs through St. John’s Hospital, St. Joseph’s Hospital and the sprawling 30-acre Woodwinds campus in Woodbury. Rabino works close by in HealthEast’s executive complex in the old Midway Hospital building. To understand Correia’s passion for lean, it might be useful to appreciate the industry’s increasing urgency to identify and eliminate waste. In 2011, Americans spent approximately $2.6 trillion on health care. This total is larded with an enormous amount of waste, as much as $690 billion (not including fraud), according to a September 2012 report published by the Institute of Medicine. This waste and inefficiency is spread across a wide spectrum of functions and processes, including care delivery, care coordination, overtreatment, administrative complexity, and pricing. It is clear the impending implementation of ObamaCare as well as market forces will constrict health care expenditures – and that identifying and eliminating waste is part of the solution. Despite that environment of uncertainty, Correia admits to great enthusiasm about the prospects at HealthEast. From her early interviews with the board of directors, Correia emphasized the important role that lean processes would play in her vision for the company. When one said, “we want you to bring Kathryn Correia lean, but we don’t want you to change the culture,” she responded,” I’m sorry, I’m not coming. Because if we don’t change the culture, we won’t be doing lean.” Her experience at ThedaCare backed her up. “It is not just about doing lean, it is about doing lean for results,” she says. “I had experience (at ThedaCare) of reducing expenses by 25 percent per in-patient

stay, and increasing staff satisfaction, and reducing medical errors, and getting better quality results. Those ‘ands’ are really important.” “Waste is inherently disrespectful, it inherently causes errors,” she says. “Lean is the only thing I’ve seen that allows the improvement to be sustained over time. …People in manufacturing know that the currency of lean is time: if you reduce time, you reduce waste.”

Employee Buy-In

Any lean manufacturer will attest that lean processes are only as effective as the psychic buy-in from employees will allow. Lean processes in health care are no different. While doctors might be notoriously independent within a health system, Rabino says manufacturing has its corollary. “Engineers also have their ways of doing things,” he says. “The similarity between an engineer and a physician is that they love the scientific method. They learn the scientific methods about how to do their work, but not how to improve the process.” Plus, he adds, not everybody is a doctor in healthcare. “We are dealing with people with multiple backgrounds and perspectives on process,” he says. The level of support for his early initiatives surprised Rabino, who savored the new challenge in his career. “ Lean represents “our I didn’t think we would accomplish so much in ability to cope,” four months,” he says. He attributes part of it to Correia says. “If we having an activist CEO create a community and upper management “who really want to do it, of problem solvers understand what it takes.” But Correia thinks the that work every day early success might be to create more value embedded in HealthEast’s culture. for patients, we will “Our faith-based heritage is woven into not only survive, but the fabric of HealthEast we will thrive.” more than we know. The ENTERPRISE MINNESOTA JANUARY 2013 29

“

people here are more dedicated – this isn’t just a job. That’s maybe part of the reason there wasn’t more pushback,” she says. For his part, Rabino concentrates on building grassroots support within an organization by finding early collaborators. “I’m always looking for baby birds with open beaks,” he says. “As long as I have enough baby birds to feed, that will keep me busy for a while. By the time they are fed, other baby birds will be born. I’m looking for the ones who really strive to be on board. I’m not going to work on the people who are resisting.” Additional commitments will develop, he says, as people understand the process. Correia agrees: “Because lean is so respectful of people, the culture will change -- we don’t lose our compassion, we’re just more accountable, she says. “That you change a culture doesn’t mean that you go from nice and caring to slash and burn.”

The Project

Rabino’s early efforts established small groups that now convene daily throughout HealthEast to discuss opportunities for improvement. Among his initial successes appear to be inefficiencies found in transferring patients who are discharged from the hospital and entering home care. “We looked at the process and identified where we were working in silos, Rabino says. “The process took many, many

“The similarity between an engineer and a physician is that … they learn the scientific methods about how to do their work, but not how to improve their process.”

”

Didier Rabino,

Lean Sensei, HealthEast

days – end to end, when it should take only a few days.” Rabino created a team consisting of people from multiple departments that spent a week collaboratively identifying the steps involved in this process. Together, they analyzed what steps might be eliminated, combined, moved or simplified. Over a week, they established new processes that Rabino says eliminate silos in favor of collaborative work cells. “This is the first pass,” says Rabino. “Because they did that, they learned the process. They had an idea of what they are doing, but nobody had a really good idea of the whole process.” Adds Correia: “What is so cool about this is that what the organization doesn’t understand in a widespread way is that once we go back over that value stream again, we will have more success.”

Power comes from being understood.SM McGladrey understands the manufacturing industry, proudly serving more than 8,000 manufacturers nationwide. 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. Call 800.274.3978 or visit www.mcgladrey.com/manufacturing. © 2013 McGladrey LLP. All Rights Reserved.

30 ENTERPRISE MINNESOTA JANUARY 2013

Lean Legacy

When she looks back on her first two years at HealthEast, Correia is peruaded that Rabino’s efforts to lean up her organization will have contributed mightily to her company’s ability to navigate through its competitive and regulatory challenges. The key to its success, she predicts, will be how quickly HealthEast can adapt the tools. “Health care reform is coming at a rate that we don’t control,” Correia says. “The question is, can we learn the tools fast enough to be responsive and eliminate enough waste to take the hits that we’re going to take on reimbursement?” Lean represents “our ability to cope,” she says. “I’m not overstating it. This is how I can sleep at night. If we create a community of problem solvers that work every day to create more value for patients, we will not only survive, but we will thrive. We need to take the waste out, remove cost and improve value for the whole community.” Her vision for this process includes creating a heath care delivery system that emphasizes the “front end:” more primary care, more prevention, and a more dedicated effort to engage the patient in preventive self-care. Lean is not a magic pill, she says, but “you feel better because you know you have an approach that can work.” In one year, she’d like to organization to “hit the wall,” to understand that there are places where lean hasn’t been sustained, “where we have to go deeper, where we have to

push through with more resolve. If we can do that in two years, then that means that we’ve pushed forward. …We’ll have started to get our hands dirty, really dirty.” And in this case, even in health care, dirty is a good thing. Kathryn Correia received her undergraduate degree from Denison University in Granville, Ohio, and her Masters degree in Health Administration from the Ohio State University. She previously served as president of Appleton Medical Center and Theda Clark Medical Center, and senior vice president of ThedaCare. She was also vice president for ambulatory care centers and administrative director for clinic operations at Geisinger Health System in Danville, Pennsylvania, and vice president of Central Ohio Medical Group in Columbus, Ohio. Didier Rabino is Lean Sensei at HealthEast in Saint Paul, Minnesota. Prior to holding this position, he was plant manager at Andersen Corporation in Menomonie, Wisconsin. He also led Andersen’s Lean Office to develop and deploy the Andersen Manufacturing System (AMS). He worked in Europe and in the United States for 20 years leading and supporting lean transformations and new process implementations. He holds a Wood Mechanical Engineering degree from the University of Nancy, France, a Business and Administration degree from the University of Perpignan, France and a Masters degree in Industrial Sciences from Louis Pasteur University in Strasbourg, France.

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ENTERPRISE MINNESOTA JANUARY 2013 31 15

final word

Real-World Degree Expert manufacturers redesign and teach the College of Continuing Education’s Manufacturing Operations Management degree program to give students the skills leading Minnesota companies seek. By Mac McKeen

To learn more about University of Minnesota’s College of Continuing Education Manufacturing Operations Management degree, go to cce.umn.edu/mm.

32 ENTERPRISE MINNESOTA JANUARY 2013

Mac McKeen

Photograph courtesy of University of Minnesota

If you’re seeking new manufacturing talent, you are not alone. The industry’s qualified worker shortage has arrived, leaving many good-paying jobs unfilled despite a myriad of recruitment efforts. In response, many companies are taking a different approach to hiring: sending their employees back to school. In 2000, a group of Southern Minnesota manufacturers came to the University of Minnesota’s College of Continuing Education with a problem. They had manufacturing technicians who had significant talent and potential to move up in the business, but who needed more communication, business, leadership and additional technical skills. From this concern, the Manufacturing Operations Management degree was born. It teaches students the management strategies, tactics and soft skills they’ll need to step into manufacturing management and leadership roles. I like to call it the “make stuff” degree, because graduates are the people who can work cross-functionally within an organization to manufacture high-quality products and grow the business. They make stuff, and they make stuff happen. From my perspective as both a faculty member and manufacturer, I believe this degree is uniquely suited to Minnesota manufacturers for several reasons. Core subjects are based on four key areas of ISO 9001, including leadership, supply chain and resource management, manufacturing concepts and techniques, and quality management and sustainability. Classes are offered at night or online to accommodate working adults. The curriculum is frequently updated to meet companies’ evolving needs. Two years ago, the college assembled an advisory board of manufacturing leaders to learn what skills and qualities they looked for in employees. Multiple courses have since been added to the program based on their responses, including lean manufacturing, outsourcing, and engineering for manufacturing. Perhaps the program’s greatest advantage is that its faculty members are manufacturing practitioners. Because we are able to teach from experience, we impart knowledge that is both practical and applicable. We also become mentors for many of the students, knowing that many of them will secure internships and, later, jobs, at our companies. It’s truly a win-win-win for the students, the manufacturers and Minnesota’s economy. Before you post another job listing in the paper, first consider your current employees. Who has a great work ethic? Who could take on more responsibilities with more education? Who has the motivation and dedication to be a leader? If someone comes to mind, you may find that Manufacturing Operations Management is a great fit for both your employee and your business.

Mac McKeen, MBA, RAC has more than 20 years of experience in the medical device industry in regulatory and quality roles focused on the development, manufacture, and regulatory approvals of medical devices. He is currently a Principal at Boston Scientific, with previous leadership roles at Medtronic, St. Jude Medical and Guidant. McKeen also serves as Faculty Director for the Manufacturing Operations Management degree program at the University of Minnesota and instructs an advanced course on medical device development. He is actively involved in advocacy and collaboration with the FDA through industry associations, including AdvaMed and LifeScience Alley.

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January 23

Growing Your Business Internationally – Exporting Strategies in 2013

February 13

GreenLean® – Eliminating Time & Energy Wastes to Cut Costs & Grow Business

March 13

Proactive Marketing for Manufacturers – A Business Growth Strategy

May 15

Lean Office – Leaning Your Entire Enterprise

June 12

Quality Management – ISO Processes Power Your Business Management System

September 18

The Value of Your Business – What Expert Buyers Are Looking For

October 17

Developing Leaders at All Levels of Your Company (TWI)

November 13

Creating a Business Strategy to Implement Your Company Vision

December 11

Solving Business Problems – A Practical “Failsafe” Approach Enterprise Minnesota’s Business Events offer outstanding professional expertise and practical business solutions to improve competitiveness and growth opportunities for Minnesota’s manufacturers and related industries.

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