Our cities are poised to be the incubators for new American factories.

By Richard M. Daley and Bruce Katz May 9, 2012

Perhaps the only silver lining to the Great Recession is that it triggered a new focus on manufacturing in the United States. After 25 years of being sold a shiny vision of a service-dominated post-industrial economy, the U.S. is rediscovering how important it is to actually make things in order to spur innovation, raise wages, drive exports and lower the trade deficit.

Corporate cost calculations undergird the newfound appreciation of U.S. manufacturing. The offshoring of manufacturing was rooted in harsh economic realities: rock-bottom wages in nations such as China and the aggressive attraction and infrastructure strategies of foreign governments. Yet labor costs are rising in China, and concerns persist about the protection of American intellectual property there. Energy can be cheaper here, and more reliable. The tsunami in Japan, supplier of many high-tech components, revealed the fragility of far-flung supply chains for many U.S. companies.

As corporations reevaluate their bottom lines, national leaders must reassess the critical role of manufacturing. Its jobs pay 20% more on average than non-manufacturing work and are more likely to provide benefits. It employs a disproportionately high number of less-educated workers and tends to spark job growth in service-based industries. And, in the words of Andrew Liveris, chairman and CEO ofDow Chemical Co.: “Where manufacturing goes, innovation inevitably follows.”

That reality has cost the U.S. dearly. In the electronics sector alone, 90% of R&D now occurs in Asia, in large part because of the steady offshoring of manufacturing by U.S. companies since the 1980s. That must not happen in other advanced industries.

And it doesn’t have to. The key to reviving manufacturing and exports in the U.S. can already be found in metropolitan areas like Los Angeles and Chicago.

The phrase “urban manufacturing” evokes images of a sooty skyline, cramped sweatshops or the massive automotive assembly lines of mid-20th century Detroit. But urban manufacturing today involves small, specialized firms that rely on advanced technology and workers with different skill sets than in the past.

In Torrance, for example, Pelican Products produces high-performance protective cases and portable lighting equipment used by law enforcement and the defense, aerospace and entertainment industries. In 2010, Pelican employed 600 people at its home-base Torrance facility. (It has four other plants — two more in the U.S. and two in Europe.) Pelican sells products to more than 100 countries. In the last two years, its export sales have grown 25%, driven by demand in Europe and Asia.

As other companies chased low-wage labor by offshoring manufacturing capacity, Pelican chose to remain primarily in the U.S. In Torrance, it could readily benefit from a skilled workforce and a strong and flexible supply chain. Pelican’s 12-year relationship with neighboring Victory Foam highlights the benefits of proximity to suppliers. Victory provides Pelican with next-day order fulfillment, which greatly reduces the time required for production. Daily interactions between the two companies allow for rapid adjustments to meet market demands while providing opportunities for collaboration on new products. Together, these firms are key components of a thriving regional innovation and manufacturing ecosystem.

These are the sorts of ripple effects and mutual benefits that only cities, with their density and diversity, can supply. As one industry feeds another, productivity improves, entrepreneurship is encouraged and employment and wages increase in the region.

What do firms like Pelican need to thrive? It’s not rocket science.

A functioning federal government matters. It can deliver the big stuff: enhancing access to foreign markets, enforcing trade agreements and protecting intellectual property. It can also provide expertise on emerging markets through U.S. consulates, help match firms with potential customers, provide export promotion support and commit resources to modernizing key logistics hubs like the ports of Los Angeles and Long Beach.

Local governments and institutions also have a role to play in recharging American manufacturing and creating a more prosperous economy.

Small and medium-sized manufacturing firms need a steady supply of skilled workers that can be supplied by local community colleges and even specialty high schools that reinvent vocational education for a new century.

Firms also need a safe, stable place to do business. Chicago met this demand by creating industrial districts. Supported by financing based on the tax increases that redevelopment would bring, the city secured industrial land from rezoning and invested in infrastructure to improve freight transport.

Finally, firms need business advice close to home and more connections abroad. In Los Angeles, the USC and UCLA business schools have given Pelican access to MBA students, who are designing a distribution system for the company’s booming trade with China and other Asian nations. This is a model partnership that needs to be replicated.

U.S. cities and metropolitan areas still possess significant manufacturing capability and, by extension, innovation capacity. A rich industrial heritage has endowed American cities and metros with the companies, skilled workers, educational and advanced research institutions, and production strength essential for moving toward a new economic vision.

The Great Recession was a wake-up call to the nation. Let’s heed it.

Richard M. Daley, the former mayor of Chicago, and Bruce Katz, a vice president of the Brookings Institution, head the Global Cities Initiative, a joint project of Brookings and JPMorgan Chase.

Copyright © 2012, Los Angeles Times

Category : Manufacturing

Here are six tips for successful negotiation. For more, check out What CEOs Need to Know About Hardball Negotiating.

  1. Don’t negotiate for a bigger share of the pie. Do work with the other party to make the pie bigger.
  2. Don’t use confrontational language that creates defend/attack spirals. Do develop a friendly, trusting relationship with your opposite number.
  3. Don’t make concessions without getting something in return. Do think of what the other party will value that won’t cost you much.
  4. Don’t agree to a deal that doesn’t meet your must-have needs. Do plan the negotiation with a clear understanding of your BANTA, or your Best Alternative to Negotiated Agreement.
  5. Don’t negotiate one issue at a time. Do put everything on the table at the start and encourage your partner to do it so there can be lots of trade-offs.
  6. Don’t just keep muddling through if the negotiation seems stuck. Do change the dynamics: Sleep on it, move to a new location, ask for “crazy” ideas that can unleash creativity, or change the negotiators.

How to Keep the Negotiation from Derailing

The longer a negotiation drags on, the less likely it is to get closed, Ann Lawrence, a partner in the law firm DLA Piper, says.

“All negotiations need to have a deadline or they may never finish,” according to Huthwaite’s John Golden. “This is not to say that the deadline can’t be extended with the agreement of both parties. If you are buying a fleet of jet fighters, for example, you want to make sure that the service contract meets all contingencies. That could take a while. It doesn’t need to preclude a deadline, however.”

Negotiations that seem endless can create frustration and cause the negotiators to act out. Call attention to the bad behavior, suggests Michelle Lederman of Executive Essentials, an employee training firm. “Not with a pointing of a finger, though,” she adds. Acknowledge that the circumstances are difficult. Schedule a break. Sleeping on it overnight might be helpful.

When anxiety and anger threaten a negotiation, Michael Bechara, managing director of Granite Consulting Group, suggests that the parties put their positions on the shelf and come up with three alternative solutions. This can open the door to a new approach that works.

A stubborn impasse can be resolved with a move to another location. Mark Jankowski, president of Shapiro Negotiations Institute, was involved in a bitter negotiation that pitted the Baltimore Police Chief against his top lieutenant, with each using the media to further his cause and increasing the tension. Mr. Jankowski moved the negotiation from the city to a farm. In the reopened talks he took the position of the lieutenant while his partner represented the police chief. A negotiation that had been deadlocked for months was resolved in an evening.

Creative approaches to making the pie bigger also can keep sales negotiations from reaching an impasse. The Haas School’s Prof. Moore says a buyer or seller who says “This is my final offer” might be stuck in that position because to change it would cause a loss of credibility. “The best approach might be to say I’ll pay the price but I want this and that and that,” he says.

Linda Richardson, the author and sales trainer, suggests that a customer who insists on a 10% discount can be given it — in return for a three-year contract, up-front payment, or changes in terms for delivery or service.

Though a ninth-inning zinger likely is a hardball negotiator’s tactic, don’t assume it is. Mike Schultz, president of the Rain Group sales consultancy, tells of a friend who was selling his midsize technology company to a larger business. The parties agreed in principle on the buyout but after thinking about it the seller realized he was under-pricing his company. He explained his position at the next meeting. The other company grumbled but said fine and the deal was done at the new number, Mr. Schultz reported. With openness and flexibility on each side both enjoyed a satisfying resolution.

ChiefExecutive.Net, by George Nicholas

Category : Business Tips

“CFOs’ outlook for the future has finally emerged from the depths of the recession.” – John Graham, Professor of Finance, Duke’s Fuqua School of Business

According to a quarterly Global Business Outlook survey conducted by Duke University and CFO Magazine, CFOs in the United States and Asia are more optimistic this quarter and expect to see an increase in hiring.

873 CFOs from global and public companies  participated in the survey which has been conducted for 64 consecutive quarters and result in the following findings:

  • 68% of U.S. CFOs are currently trying to fill vacant job positions
  • U.S. finance chiefs plan to expand their workforces by slightly more than 2 percent on average over the next 12 months, a staffing increase that would bring the unemployment rate below 8 percent.
  • U.S. CFOs rated their optimism in the nation’s economy at 53 this quarter (on a scale from 0 to 100).

Additionally, there is a stronger employment outlook. “The expected increase in employment is a welcome improvement over last quarter’s 1.5 percent forecast growth rate,” said Kate O’Sullivan, director of content development at CFO Magazine. “It indicates that national unemployment should fall below 8 percent in 2012.”

Click here to read full release.

Category : Case Studies

By JAY GOLTZ as published in The New York Times

Perhaps lack of growth is not considered failure by some business owners, but Jay Goltz has a different view. Partially based on his own personal business experience, he discusses how working harder and not realizing the benefits of growth can be the downfall of a company, “there is an uncomfortable place between big and very small, where the owner is still doing a lot of the work and still not making much of a living,” states Goltz. Read the full article “10 reason why some businesses can fail by failing to grow.”

Category : Business Tips | Cash Flow | Part Time CFO | Sales & Marketing | Strategic Planning

The CFO Connection is pleased to announce the expansion of service to the state of Florida – the following news release went out this week:

Expands Presence to Florida

Naples, Florida – March 5, 2012 – The CFO Connection has added David Schlottman to its growing team of part-time CFOs serving companies with extensive financial and business management expertise.

Based out of the Naples/Ft Myers area, Schlottman expands the presence of The CFO Connection to the state of Florida.

The CFO Connection is a national firm that provides part-time CFO services to small and mid-sized companies in North and South America. The addition of Schlottman to the firm’s team comes as The CFO Connection ramps up operations to meet increased demand for innovative CFO services that deliver value at reasonable cost. The CFO Connection meets this market need through the part-time CFO model. This model pairs smaller organizations that cannot justify the expense of a full-time CFO with the expertise of seasoned CFOs who provide services on a permanent, part-time basis.

“Dave’s experience steering numerous companies toward more profitable growth makes him the kind of CFO our customers are looking for,” said Bob Thompson, founder and CEO of The CFO Connection.

Schlottman brings more than 30 years of experience to his new role. Before joining The CFO Connection, he served as CFO for a national distributor and manufacturer of custom formwork and shoring equipment. There he helped the company increase its borrowing capacity, implement a cash forecasting system, and set new prices to optimize profitability – all as part of a campaign to facilitate growth and transition from distribution to manufacturing. The following year the company grew by 40%.

Schlottman has had similar success elsewhere. Working with the largest electrical subcontractor in Florida during a time of rapid growth, he put the company on a sound financial footing by introducing strict financial controls and reporting mechanisms. He also implemented a purchasing system that saved the company millions of dollars. And his analysis and ideas to overcome the impact of crushing increases in copper prices allowed the company to continue to grow.

As the CFO for one of the fastest growing burglar alarm companies in Florida, Schlottman also managed 30 acquisitions ranging from $100,000 to $12 million. This enabled the company to grow its account base from 10,000 to more than 72,000 – while increasing revenues by more than 600%.

“I’ve never met a company that doesn’t want to grow,” said Schlottman. “And my focus has always been on helping reach their highest possible potential. I look forward to helping my clients in Florida manage their finances to open up new opportunities and optimize long-term business performance.”

David Schlottman can be reached by email at ds@TheCFOConnection.com or by phone 239-682-9450

Category : Case Studies

Lancaster, Pa (PRWEB) January 26, 2012 – Written by Ira S. Wolfe Success Performance Solutions

Recent studies show that it takes 100 or more applicants to find one qualified candidate. Finding the time to sift through all of the paperwork and emails is one luxury (and skill) few small businesses have these days. An online applicant processing system helps small business cut through resume overload faster and smarter.

Today’s job market is tough, not just for prospective employees, but for employers as well. Recent studies show that it takes 100 or more applicants to find one qualified candidate. Finding the time to sift through all of the paperwork and emails is one luxury (and skill) few small businesses have these days.

Learn more about “resu-mess” and how to manage applicant resumes.


Category : Human Resources | Workforce | Workplace Productivity

Discover tips on how to adapt to the new delivery schedule by the U.S. Postal Service:

Published January 12, 2012 by David M. Katz, CFO.com

The U.S. Postal Service’s decision to end next-day delivery could tie up millions of dollars in working capital.

Delivery by letter carriers seems so old-fashioned that it’s been called “snail mail” for years. Yet, as it turns out, most of Corporate America’s invoices still get delivered that way. And the U.S. Postal Service’s December 5 decision to move first-class mail to a two-to-three-day standard seems sure to slow down bill collection for companies large and small.

Indeed, the move could cost a U.S. company with $10 billion in revenues up to $100 million in working capital as a result of its impact on accounts receivable, according to Veronica Heald, a practice leader at REL Consulting, a division of The Hackett Group that focuses on working capital. (CFO is developing a working capital benchmarking product in partnership with REL.)

The impact of the mail delay will be felt in at least two ways, says the consultant, who estimates that 60% of payments received in the United States are via checks in the mail. There will be lags in both the distribution of invoices and the receipt of payments, she adds. Click here to read full story.


Category : Cash Flow | Finance & Lending

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