Formula for Growth
A state-wide focus on business growth is underway; IRCs ready training programs and consulting services.
By Mary Louise Ray
The Industrial Resource Centers’ (IRC) state-wide initiative on business growth services for small- and medium-sized manufacturers is gathering momentum.
According to James Shillenn, Executive Director and CEO of the Industrial Modernization Center (IMC), the Williamsport-based IRC, and Chairman of Pennsylvania’s Industrial Resource Center Network, the Business Growth Services Initiative was created in response to a report published in 2004 by Deloitte consulting that assessed the current state of manufacturing in the Commonwealth. According to the report, Manufacturing Pennsylvania’s Future: Regional Strategies that Build from Current Strengths and Address Competitive Challenges, if Pennsylvania’s manufacturers are going to grow, they must build product and/or service innovation into all aspects of their business.
As a result of the report’s findings, the IRCs formed the Business Growth Services Task Force, which focuses on identifying “what is missing from the IRCs’ range of products and services” that support business growth, according to Shillenn.
Shillenn notes that the IRCs as a whole already provide valuable support to manufacturers that are trying to grow their business, but the type and amount of support varies amongst the various IRCs. The goal of the Business Growth Services Initiative is to both consolidate and share knowledge across the IRCs, so that all IRCs are able to offer the aggregate knowledge of the IRC network to their customers.
The Deloitte study identified 16 “driver” industries that account for approximately 50 percent of the state’s manufacturing output. These driver industries include: pharmaceuticals; electrical equipment; plastics; printing; food; paper; basic chemicals; metal-working machinery; architectural and structural metals; machine shops; other fabricated metals; wood products; furniture; resin, rubber and fibers; glass; and medical equipment.
As part of the Business Growth Services Initiative, the IRC network intends “to develop market analysis that can be shared across all IRCs, especially for the driver industries,” says Shillenn. This level of analysis can be difficult for an individual IRC to fund and undertake, but through the state-wide initiative, the IRCs will be able to leverage combined resources.
Bringing expertise to bear on business growth
The Business Growth Services Initiative is also adding expertise to its ranks by hiring market development consultants. These consultants will be available as a resource to all of the IRCs. Initially, one market development consultant will be located in eastern Pennsylvania and a second consultant will be based in western Pennsylvania, but in the future, Shillenn envisions market development consultants will be located throughout the state. These experts will not be organized geographically, however, they will be organized by areas of expertise. Therefore, one consultant may specialize in market analysis, while another may specialize in sales program development.
Connie Palucka, Senior Market Development Consultant at Catalyst Connection, the Pittsburgh-based IRC, is the first such market development consultant to be hired by the IRCs. While she works out of the Catalyst Connection offices, her expertise is available to the other IRCs. For example, she is currently working on a competitive analysis project and a sales program project for manufacturers that are clients of the IMC.
According to Barry Miller, President and Chief Operating Officer of the Delaware Valley IRC (DVIRC), the eastern Pennsylvania marketing development consultant will soon be in place, as well. That consultant will be based in the DVIRC’s Philadelphia office.
Building a product development infrastructure in your business
An important component of the Business Growth Services Initiative is education. One of the goals of the initiative is to train companies to put the building blocks of product development in place at their own site to support innovation.
To that end, the IRCs are organizing product development courses that will lead to “New Product Development Professional Certification,” which is offered through the Product Development and Management Association (PDMA).
The PDMA is a non-profit, professional organization that focuses on improving the effectiveness of people developing and managing new products and services.
The PDMA has developed a “Body of Knowledge Architecture” to capture and build knowledge in product development within a company. Much of the knowledge has been gleaned from successful product development programs at large corporations.
Product development courses based on the PDMA “Body of Knowledge” are slated to begin this summer, according to Tim Deis, Director of Product Development Services at Catalyst Connection.
Deis says the courses, which will be presented by third-party providers approved by the IRC network, will be available to manufacturers through their local IRC.
What is the best way to grow your business?
Innovation can occur in many areas of your business – product development, process improvements, customer service, marketing and distribution – just to name a few. There is no “best” way to go; what is best for your company depends on your company’s capabilities, market opportunities and a host of other factors. Below are two case studies that illustrate the different paths companies can take to business growth.
Growth through product innovation
Terre Hill Concrete Products, Inc., is banking on product innovation to be the key to business growth. After reviewing new Environmental Protection Agency (EPA) regulations that tighten the standards regarding pollution of storm water run-off, the Terre Hill-based company saw an opportunity.
Terre Hill Concrete Products, a privately held corporation with 200 employees, designed a new product that marries their existing capabilities and expertise (pre-cast concrete products), with a proven water-cleaning technology to design an innovative water quality control device called Terre Kleen.
The 86-year-old company has been working on the new product since 1998, when it initially conceived of Terre Kleen. According to Dale Groff, Terre Hill Concrete Products’ Project Manager for New Product Development, when the EPA established regulations for cleaning up storm water run off, the company channeled its in-house design capabilities to devise a new product using an inclined plate design.
Terre Kleen employs aluminum inclined plates that function as sedimentation basins within a pre-cast concrete structure. Inclined plate technology is a proven method of settling sediment from water, says Groff. Terre Kleen’s innovation was to adapt this technology so that it fits within a pre-cast concrete structure.
Groff notes that a high concentration of pollutants is found in storm-water discharge. These pollutants settle on surfaces such as streets, parking lots and driveways, where it remains until rain washes it into drainage systems.
The drainage, in turn, can discharge into nearby streams and pollute the environment. This pollution can include heavy metals, pesticides, fertilizers, oils, litter and sediment.
Terre Kleen separates litter and pollutants and settles sediment before storm water discharges into a stream or detention/retention ponds. The inclined plate stacks contain self-cleaning sedimentation cells that deliver a large amount of sedimentation area in a small space — 50 percent to 75 percent smaller than conventional devices, says Groff.
Terre Kleen meets the current EPA National Pollutant Discharge Elimination System (NPDES) Phase II, Storm Water Regulations for Best Management Practice (BMP), according to Groff. Terre Hill Concrete Products was awarded a U.S. patent last year on the Terre Kleen design.
The performance of the Terre Kleen device is being independently verified by Pennsylvania State University. Successful verification of the device is the last step before “we can present our product to the industry,” says Groff.
While their are many technologies that can effectively reduce pollution in storm water, Groff says that Terre Kleen will be positioned as the solution for small spaces, such as beneath parking garages and in small lots.
In fact, Terre Hill Concrete Products is currently under contract with Sheetz, Inc., to install Terre Kleen units in the company’s convenience store new construction.
Groff credits many federal, state and local governmental agencies and partnerships for assisting Terre Hill Concrete Products in their efforts to take the Terre Kleen product from design to production.
These entities include Ben Franklin Technology Partners, PENNTAP (Pennsylvania Technical Assistance Program) and MANTEC, the York-based industrial resource center. MANTEC, in particular, helped Terre Hill Concrete Products obtain crucial workforce training grants.
According to Groff, integrating Terre Kleen into the company’s production process requires worker training in a number of areas, including assembly, shipping and inventory management.
“It is a new process and it is something our workers are not familiar with,” says Groff, so assistance in providing worker training is important to the success of the product.
While it is too soon to quantify how Terre Kleen will affect Terre Hill’s bottom line, Groff is bullish.
He notes that Terre Hill’s current product distribution is confined to the mid-Atlantic region, but “Terre Kleen is a solution that is nationwide. Rain is the same nationwide. And [potential customers] all have dirt that they want to keep out of the groundwater.”
Growth through expanded production capabilities
In 2000, the management of Say Plastics, Inc., knew they had a problem. Despite a roster of high-profile, heavy manufacturing customers, such as Caterpillar Tractor Company and Black & Decker, business was starting to drop off. The McSherrystown-based manufacturer of customized thermoplastic material handling solutions was feeling the side effects of their clients’ decision to relocate their manufacturing facilities – some to southern states, others offshore.
According to Say Plastics Vice President and General Manager Ron Staub, the company had to diversify and find new markets. The decision was made: “If we are going to survive and prosper, we have to make some changes,” recalls Staub.
Since 1986, Say Plastics had provided expertise in solving material handling problems by designing trays used to move parts within or between manufacturing facilities. Their capabilities include thermoforming, machining and fabricating plastics. The jobs they tended to get from their customers were either small, customized jobs or high-volume, short-run jobs. “We were working from job-to-job,” says Staub.
In the judgment of Say Plastics management, the company needed to diversify (add customers outside of the heavy manufacturing sector), to find more local/regional customers, to move from the job-to-job mode to full-time production mode and to maximize plant capacity.
After looking at the industries in their area, the company management noted a heavy concentration of food manufacturers, a sector that could be a potential market for Say Plastics. Therefore, representatives of Say Plastics approached local food manufacturers and were able to secure a contract to provide food containers.
However, that was only after they had made a commitment to adding a new production process – blow molding – so that they could produce wide-mouth PET resin containers for their new customer’s food packaging requirements. That commitment would require Say Plastics to invest approximately $1.4 million in machinery and equipment upgrades, as well as worker training. Moreover, they had to convince all parties involved that Say Plastics could successfully live up to the commitment. “We had to persuade the lenders and the company that we could do it, “ recalls Staub.
While making such an investment always entails some level of risk, Staub reports that accepting that risk has paid off for Say Plastics. The company has tripled its number of employees (from six to 18), moved from the job-to-job mode to the more consistent production-based mode and is now working at full capacity. According to Staub, blow-molding production now operates 24 hours a day, seven days a week. In addition, “it has increased our sales significantly...this has taken us to another level.”
As in the case of Terre Hill Concrete Products, Say Plastics grew their business with the assistance of federal and state agencies and partnerships, such as PENNTAP and MANTEC. MANTEC, in particular, helped Say Plastics obtain a $70,000 state customized job-training grant for a three-year workforce training program to support its new production capabilities.
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