Monthly Archives: May 2014

Factory Rebound’s Winner–Mobile, Alabama

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MAY 31, 2014

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Austral has increased the workforce at its Mobile shipyard to 4,100 from 900 in 2009

The U.S. has added about 650,000 factory jobs since their numbers rebounded after the recession, putting manufacturing workers at 12.1 million and reversing a long decline in such jobs, reports The Wall Street Journal (May 30, 2014). But uneven growth has created regional disparities in the nation’s overall economic recovery.

Mobile, Alabama is among the winners. Shipbuilder Austral Ltd.’s facility here is busy seven days a week as workers piece together enormous aluminum sheets in a space the size of 13 football fields. Airbus and BAE Systems, too, are adding factory jobs here. Mobile created more manufacturing jobs than all but 15 U.S. counties in the past 4 years. U.S. factory-job gains—driven by a range of factors from cheaper domestic energy to the auto-industry recovery—have concentrated in pockets since the recession, particularly in the Southeast and Midwest.

Mobile’s success illustrates some common patterns: Often, companies have added jobs in states with “right-to-work” laws—which allow workers in unionized workplaces to opt out of paying union dues—and where taxes are relatively low, in counties where governments provide large incentives and strong vocational education, and in places with access to ports or other transport hubs.

Austal chose Mobile because of location, waterfront property, cooperative local and state governments, low taxes and low union membership. Alabama’s government sponsored training for Austal workers and built it a $12 million training center.

Airbus Americas, hiring about 1,000 new employees for its first U.S. commercial assembly plant, didn’t consider any Northern states as finalists, as it was looking for a port to which it could ship airplane parts for assembly. Alabama’s right-to-work rules were a key attraction. Alabama gave Airbus tax credits and cash grants valued at $158 million to build in Mobile—including a $6 million training center. “Alabama had it all,” says the Airbus chairman. “I’m not sure the rust-belt states have the same attitude.”

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

Sustainability and the Sports Arena

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MAY 28, 2014
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Now The Wall Street Journal (May 19, 2014) reports that NFL teams are starting to see “green” as well.  The San Francisco 49er’s new $1.2 billion stadium will be the first in the league to feature a “living roof,” a canopy of green and flowering plants nestled across the top of an 8-story tower of luxury suites; this will reduce the building’s energy use and offer other environmental benefits by providing natural insulation. NFL clubs are also developing green programs to reduce energy emissions. They are using solar panels, wind turbines, electric charging stations and other low-carbon alternatives. The NFL is part of a general effort among U.S. sports leagues to embrace cleaner energy, led by a group launched in 2011 calling itself the Green Sports Alliance.

Alliance officials say sports teams that go green help boost public awareness of environmental goals while also benefiting their operations by lowering their energy costs. The $1.2 billion Atlanta Falcons Stadium, set to open in 2017, will include a rainwater-collection system to use for irrigation and cooling. The Philadelphia Eagles’ Lincoln Financial Field has installed features including energy-saving timers and sensors for lighting and cooling equipment. These and other energy-saving features have cut the team’s power consumption by half. The Houston Texans have created an interactive media guide, saving 2.6 million pages used in printing; the Redskins have installed solar panels at FedEx Field; the Rams have printed game tickets on recycled paper; the Vikings have put in reduced-flow plumbing at the players’ clubhouse and training areas; and the 49er’s stadium is net energy neutral, which means it is expected to generate all the energy it needs for the team’s 10 home games.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

Offshoring and Reshoring Reach a Balance for U.S.

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MAY 15, 2014

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In 2001, Generac Power Systems joined the wave of American companies shifting production to China. The move wiped out 400 jobs in Wisconsin, but few could argue with management’s logic: Chinese companies were offering to make a key component for $100 per unit less than the cost of producing it in the U.S. Now, however, Generac has brought manufacturing of that component back to its Whitewater plant. The move is part of a sea change in American manufacturing, reports the Los Angeles Times (May 13,2014): After three decades of an exodus of production to China and other low-wage countries, companies have sharply curtailed moves abroad. Some, like Generac, have begun to return manufacturing to U.S. shores. The tipping point came when Generac had enough sales to justify investing millions of dollars in new equipment for the Whitewater plant. The company can now produce an alternator with 1 worker in the time it took 4 workers in China.

Harry Moser, of Chicago’s Reshoring Institute, tracks the inflow of jobs and estimates that last year marked the first time since the offshoring trend began that factory jobs returning to the U.S. matched the number lost, at about 40,000 each. “Offshoring and ‘re-shoring’ were roughly in balance — I call that victory,” said Moser.

Several factors lie behind the change:  (1) Over the last decade, Chinese labor and transportation costs have jumped while U.S. wages have stagnated; (2) Manufacturing also has become more automated, further reducing labor’s weight in the cost equation; (3) The boom in natural gas production in the U.S., largely driven by fracking, has led to a 25% decrease in gas prices in the U.S., contrasted with a 138% increase in China; and (4) the rise of online commerce has made local control of supply chains more important, especially because many U.S. manufacturers report growing problems with quality control of goods made in China.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.