October, 2010

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Article Index

Musical Measurements
Article by: Justin Dorsey

ElectroForce manufactures machines to test materials. Nothing new there. Material testing has been done for generations. One of the original machines simply suspended and stretched material between two opposing screws and expanded the screws until the material failed.


Changes to Form 1099 Reporting
Article by: Brad Theisen

The Patient Protection and Affordable Care Act (aka “Health Care Reform Act”) amends the filing requirements of Form 1099 for businesses, effective for payments made after December 31, 2011.  The new requirements are expected to increase Form 1099 reporting by millions of newly-required filings, creating additional reporting requirements for all businesses. 


Planning to Performance: Putting People and Execution back into your Projects
Article by: Kelly Rietow, P.H.R., MBA

Well, it is that time of year again.  Time to budget, time to dust off last year’s annual plan, and time to wonder, what happened? 


MN Economic Business Condition
Article by: Dr. Ernest Goss

For the month of September 2010, reported October 1, 2010. For a third consecutive month Minnesota’s leading economic indicator, based on a survey of supply managers, declined thus pointing to somewhat slower but still positive growth in the months ahead. 


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Musical Measurements

ElectroForce manufactures machines to test materials. Nothing new there. Material testing has been done for generations. One of the original machines simply suspended and stretched material between two opposing screws and expanded the screws until the material failed.

Today, manufactures of implantable stents need something a little more refined.  Until ElectroForce entered the field, the state of the art was either hydraulics or pneumatics.  The mere word hydraulics may conjure up images of leaking valves and loud motors. Electromagnetics are a step up and use fixed magnets to interact with a moving coil to create motion. But traditional designs are susceptible to misalignment and frictional wear. Notwithstanding their limitations, plenty of materials are still tested with hydraulics, pneumatics and electromagnetics. 

So, what makes ElectroForce different?  Well, it’s an intriguing story that involves its parent company, BOSE Corporation. The BOSE. The one that makes speakers of all shapes and sizes.  Dr. Amar Bose founded the company in 1964 and is still Chairman & Technical Director.  Ultimately, Dr. Bose’s passion is research. In its own words, “Research fuels technology, and superior technology leads to superior performance.  At Bose, we support our research by reinvesting 100% of our profits back into the company’s growth and development.”  One research project in the early 1990’s looked into the use of a moveable magnet in speakers. The hoped-for musical results didn’t materialize, but Bose saw other potential applications.  And before exploring them, it’s worth taking a moment to more fully appreciate the mechanics behind what came to be known as a “moving magnet linear motor.”       

In the moving-magnet motor, the magnetic portion is comprised of three basic elements: the magnet, the coils and the core.  The magnet moves, while the coils and core remain stationary.  The core and coil combination may be viewed as an electromagnet producing a north and a south pole as a function of current. When the current is applied, the appropriate poles of the magnet are either attracted or repelled, producing the force.  To keep the performance of the motor optimal, the gap between the magnet and core must be very small compared to the thickness of the magnet. This suspension also allows the magnet to move along the required axial path with minimal resistance and keeps the magnet from crashing against the face of the core. The result is a near flawless combination of simplicity, precision, power, flexibility and durability.

Before turning to the Minnesota connection, it might be interesting to point out one of Dr. Bose’s visions for the application of this technology, because it helps understand that BOSE stands for a lot more than speakers.  In the early 80’s, Dr. Bose tackled the difficult question of whether his magnetic motor could be coupled with other BOSE technology (namely power amplifiers and control algorithms) to create an automobile suspension of unparalleled comfort and performance.  While the computational challenges are mind-boggling, the ability of magnetic motors attached to four suspensions to respond instantly, independently and within a limitless range of flexation seems fairly easy to envision. Today there is a prototype fleet of research cars being driven on a wide variety of roads, tracks and durability courses using the BOSE suspension system.  

Against that backdrop, BOSE entered the materials testing field in 1999 by supplying its linear motors and related components to EnduraTec Systems – a Minnesota corporation.  Five years later, BOSE acquired company assets related to the development, manufacture and sales of materials testing equipment and renamed the company: ElectroForce Systems Group.  Today its General Manger is Ed Moriarty and its Operations Manager is John Will. 

A tour of their facility reveals a bewildering array of applications.  Its motors are so precise that they can be tuned to one revolution per 24 hours or replicate 10 years of motion in 90 days.  They can exert pressures almost indiscernible to thousands of newtons.  Their strokes can range from infinitesimal to nearly two inches.  Compounding that, they can pump fluids - simultaneously - through materials at equally precise rates.  And, they can do all of that on multiple test samples at once.  While there is no limit to what they can test, the application that is perhaps most easy to visualize is medical stents.  Visualize them being twisted and turned in precise ranges while at the same time fluids replicating blood flow are pumped through them.  Then envision the machine itself – almost silent in its simplicity – in a clean room or any other environment. 

Not surprisingly, Ed Moriarty is excited about the future.  “This technology is almost limitless in the field of testing.  In fact, what probably holds us back the most is that we need to marshal our resources around targeted materials application”.  In other words, we don’t just sell our machines.  We help our clients maximize their value by understanding their materials application. 

Even with that glowing overview, ElectroForce has issues just like every other manufacturer.  As John Will says, “When we began our Lean journey five years ago, our bottleneck was materials supplies.  Because our machines are custom built for each client – a single screw can derail the process.  We’ve fixed that bottleneck.  Then, the bottleneck was our labor force and the lack of cross-training.  We’ve fixed that too.  Since our Lean initiative began, we’ve increased production and efficiency in our work force.  Today, we’re targeting new areas to continue our efforts to be more lean and responsive.” When asked what role the MA has played in the Lean Journey John says, “We’ve been active with them now for 4 years.  Among other things, I’m in the Operations Leaders Alliance peer group.  We’ve found the MA tours to be terrific, and we hosted one ourselves this summer.  Like so many other manufacturers, we really value the peer-to -peer sharing.”  Not bad for a company that makes speakers.

Justin Dorsey, Director of Sales & Marketing, Advanced Capital Group located at 50 South Sixth Street, #975 Minneapolis, MN 55402. call (612) 230-3009, email jdorsey@acgbiz.com, or visit www.acgbiz.com.

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Changes to Form 1099 Reporting

The Patient Protection and Affordable Care Act (aka “Health Care Reform Act”) amends the filing requirements of Form 1099 for businesses, effective for payments made after December 31, 2011.  The new requirements are expected to increase Form 1099 reporting by millions of newly-required filings, creating additional reporting requirements for all businesses. 

The Internal Revenue Service (IRS) has just closed the comment period for public input on how to most effectively carry out these new requirements; no date has been set for when a final determination will be made by the IRS. 

So, what are these changes and how will manufacturing companies be impacted?  The two significant changes to the Form 1099 reporting are as follows:

  • Expansion of items reported on Form 1099 to include “amounts in consideration for property” – starting in 2012, payments made to individuals and corporations for goods and services exceeding $600 will require a Form 1099 to be issued
  • Expansion of Form 1099 to be issued to corporations that are not tax-exempt – this change is the most significant one impacting companies

What does this mean to your company?  Based on the current requirements, beginning after December 31, 2011, payments for services, goods, materials, merchandise, supplies and other property totaling $600 or more to an individual or for-profit company (including corporations) will be required to file Form 1099.  So, if your company purchases a $500 computer and a $150 computer monitor from the same vendor in the same year, you will be required to file Form 1099. 

The new Act will require your company to file more Form 1099s and will increase your responsibility and burden to comply with these new reporting requirements.  Manufacturers will be responsible to obtain the taxpayer identification numbers (TINs) from vendors that were not previously subject to Form 1099 and many will need to change their current information gathering and reporting processes to ensure compliance with the new reporting requirements.  Failure to comply with these requirements will result in significant fines - $250 per vendor that is not correctly reported, with a $1.5 million maximum penalty per company.

Despite the uncertainty associated with this requirement, there are a number of steps we recommend manufacturers take now to ensure compliance in 2012:

  • Verify that your company is in compliance with the current regulations
  • Start developing processes now that will assist you with the changes, including processes that will assist in the collection of information needed (TINs, addresses and payment amounts made)
  • If a third-party assists with completion of Form 1099, begin discussion of the requirement with the third party   

Given the potential this requirement has for capturing unreported income, increasing cash collections for the IRS and providing funding for health care reform, it is unlikely to go away.  Therefore, we recommend that manufacturers work closely with their industry associations and tax provider to ensure they have the most accurate and timely information related to these changes. 

Going green is not only good for the environment it is also good for your bottom line! If you would like more information please contact Brad Theisen at 952.918.3539 or btheisen@eidebailly.com.

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Planning to Performance: Putting People and Execution back into your Projects

Well, it is that time of year again.  Time to budget, time to dust off last year’s annual plan, and time to wonder, what happened? 

How many “mission critical” or “#1 Priorities” projects stalled out, never got off the ground or were simply forgotten about?  Before committing to priorities and budgets for 2011, dedicate the time to set your organization and project teams up for success.  This requires realism, prioritization, adequate resourcing and most importantly, leadership commitment. 

To determine organizational priorities:

  • Differentiate between must do, important and pet projects.
  • Use a simple Difficulty / Impact analysis to prioritize corporate initiatives
  • Decide what you are not going to do. 

o        Organizations typically assign too many initiatives and projects with a finite amount of resources.  Focus on the critical few projects and figure out if there are things you, or your staff, can stop doing. 

o        If no one reads that report, stop creating it. 

o        If your pet project consumes 5% of your time but prevents you from participating in a key project, stop working on it or do it during off hours.

o        If that is the way “we’ve always done it”, ask why.  Update, change, or eliminate the process if it no longer makes sense.

  • Figure out how good is “good enough”. 

o        Define the outcomes and deliverables for different levels of performance

o        Some projects require “A” level performance and need to be resourced that way. 

o        If you do not have the financial or human resources to deliver an A performance, define what “B” or “C” level outcomes would look like.  Sometimes lesser outcomes are fine and you can work toward “A level”. 

o        If B or C level outcomes are not “good enough”, the organization needs to adjust for resources for the project to be successful.

To set up your project team for success:

  • Assign an Executive Sponsor.  He / she needs to help define project scope, remove obstacles and ensure progress.  This person needs to have the authority to make things “happen” at higher levels in the organization. 
  • Clearly define project scope:  what is in scope and most importantly, what is outside the scope of the project.  If the Executive Sponsor / Leadership Team cannot define the scope or intended outcomes at a high level, stop the project and figure it out.  Lather, rinse, repeat until the scope is clearly defined.  You are unlikely to succeed if the Leadership Team doesn’t know what success looks like.
  • Assign a Project Leader.  This is basically the Project Manager who herds the cats and keeps the project moving
  • Define the “Core Team” necessary for success and the “consulting members” whose expertise you only need on occasion.  Don’t tie people up in meetings unnecessarily.
  • Set expectations and ground rules for team member participation and contribution
  • Standardize agendas and minutes.  Assign someone (other than the project leader) to be responsible for taking and distributing minutes. Limit action item review to 5-10 minutes.  Focus on the working part of the meeting.
  • Celebrate milestones and successes.  Don’t save up all your pizza parties and company presentations for “the big one”.    Acknowledge the small victories along the way to keep the project top of mind and your team members engaged.  Encourage project updates during company meetings. 
  • Project closure.  Include a lessons learned, a short team member evaluation to share with the employee and her manager, and a timeline to ensure your project is sustained.

There is a wealth of reading material regarding strategic planning, yet only a few really good, practical books on execution.  Before committing to too many projects, too poorly resourced, consider reading a title or two:

To your project success in 2011.

Kelly Rietow specializes in creating practical systems and tools that fit the culture, engage the workforce and develop organizational capabilities. For details Contact Kelly at 763.228.8496 or roosolutions@comcast.net

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MN Economic Business Condition

For the month of September 2010, reported October 1, 2010. For a third consecutive month Minnesota’s leading economic indicator, based on a survey of supply managers, declined thus pointing to somewhat slower but still positive growth in the months ahead. 

The state’s Business Conditions Index slumped to a still healthy 58.9 from 63.7 in August and 64.4 in July.  September represented the 14th straight month that Minnesota's index was above growth neutral. Components of the overall index for September were new orders at 56.2 production, or sales at 61.5, delivery lead time at 54.0, inventories at 65.1, and employment at 57.6.   “During the official national recession, Minnesota lost almost 130,000 jobs.  Since the recession officially ended in June 2009, the state has recovered almost 20,000 of the lost jobs.   In terms of jobs, I expect the state to return to pre-recession levels of employment by the end of 2011,” said Goss.

Dr. Ernest Goss of Creighton University, used the same methodology as The National Association of Purchasing Management to compile this information. An index number greater than 50 percent indicates an expansionary economy, and an index under 50 percent forecast a sluggish economy, for the next three to six months.

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