November, 2013

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Wage Survey

The 2013 Manufacturers Alliance Compensation and Benefits Survey is now available to purchase. This survey was designed with input from local manufacturing companies to provide comprehensive total cash compensation data for making important pay decisions in this ever changing economy. Learn More



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Leaders Alliance

If you want to look beyond your four walls for best practices and leverage the experience of your peers as your own, consider joining a Leaders Alliance peer group.



UCBC Presents: Don’t Let Import & Export Compliance Issues Slow Down Your Supply Chain

Guest speaker Mr. SenGupta will discuss best practices and pitfalls to US-China trade. For exporters, he will discuss US export controls and how to be vigilant in complying with US export controls when shipping to China.  For importers, he will discuss common errors to avoid to ensure a smooth import process, and reduce the likelihood of penalties due to non-compliance with customs regulations.  

Members of the Manufacturers Alliance may attend this event at no cost! Learn more and register here http://www.ucbcgroup.org



2014 Community Impact Awards

Whether a company employs four people or 4,000, it has the ability to make a positive impact. Many Minnesota companies make giving back a part of their culture in a variety of ways. With these awards, MN Business Magazine gives a nod to the best of their efforts. The awards will be announced at a February 2014 event in the Twin Cities. Click Here to learn more.



New and Renewing Companies

Thank you to the following members who joined or renewed your membership in the past 30 days!

ActivStyle
Adecco Solutions
ADO Products
Advanced Web
Analog Technologies Corp
Bilfinger Water Technologies
Bill Welscher
Bowman Tool & Machining
Buhler Inc
Caribou Technologies
Cenveo
Cretex Companies Inc
D S Manufacturing Inc
Data Sciences Intl
Fishbowl Solutions Inc
FMS Corporation
Force America
Fred Schmidt
Global Finishing Solutions
Gopher Resource Corp
Graebel Relocation
Great River Energy
Hammel Green and Abrahamson
HID Global
Hockenberg Search
Hydra-Flex Inc
INCERTEC
InPursuit Executive Search
Ironwood Electronics
Japs-Olson Company
Jonathan Kingsbury
Malark Logistics
Mate Precision Tooling
MGK
Mid-Continent Eng
Minco
Mitchell Unlimited
MPD Consulting
Nevers Industries Inc.
NEXEN Group Inc
Nystrom Inc
Olsen Thielen Company
Orange Tree Employment
Plymouth Industries
Precision Gasket Company
Quali Tech, Inc.
Richard Brunkow
RMS Co
RW Elias & Associates
Saint Paul Stamp Works
Schreifels & Associates
Shellie Wilson-Tryon
Spectralytics
Spectrum Plastics Group
SPX Corporation
Talon Innovations
Tenere Inc
The Bergquist Company
The Toro Company
Thermo King Corp.
Trusted Employees
Uponor
Upsher-Smith Labs
Vatne & Associates
Visions
Whirltronics Inc
WSI
Zero Zone Refrigeration



Job Opening- Administrative Coordinator/ Logistics and Communications

Schedule/set-up/coord. workshops, programs, & advertising for manufacturing association. Corresponds w/instructors, members, vendors. Updates flyers & web page. The position updates and prints training and promotional literature for distribution at events. Develops and produces email marketing material for distribution, including soliciting sponsorship and partner relationships.  Improves own processes and creates performance reports.  Skilled communicator, innovative thinker. PC/Microsoft, strong power point use.

Minimum 2-year post secondary education; marketing related education &/or manufacturing education a plus.

Golden Valley office. Email  resume: a.sneen@mfrall.com No phone calls



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Article Index

ASK THE HIRING EXPERT
Article by: Marni Hockenberg

We know that finding, hiring and retaining top employees are real challenges in today’s competitive candidate market!  In response, we are pleased to announce a new monthly column, Ask The Hiring Expert, in the MA Insider.  Our columnist is Marni Hockenberg, Principal of Hockenberg Search - a Twin Cities Executive Search firm specializing in Managerial and Executive recruitment for Manufacturing and aligned industries.


Do you have a market survey compensation strategy?
Article by: Randy Hunt

For many companies, this time of year is when market pay survey data arrives from various external sources. The challenge companies face is how best to utilize this new information, how to understand and interpret it, organize it, prepare it for communication to the business and how to ensure that decisions made based on the new data are consistent with company pay policies and in alignment with organization goals.To help with these challenges, some organizations find that developing a market survey strategy helps provide direction and focus.


You Can Do It: Making Improvements in the Front Office
Article by: Mike Kenfield

Congratulations! Your improvement efforts on the shop floor are being talked about and recognized throughout the company. That's the good news. The bad news is the voicemail you received this morning from the Director of Accounting and Finance (or Sales and Marketing, or Human Resources). She wants to talk with you about how you can help improve her non-manufacturing function. You've never worked outside of production before. Is the risk of not knowing what you don't know holding you back from returning the call?


Brazil: A Vibrant Market, Not a Low Cost Country!
Article by: Jennifer Kocs

Brazil is entering a dynamic and exciting time for the country, as the country heads into hosting the World Cup in 2014 and the Olympics in 2016.  With more than 195 million consumers, many now with disposable income and eager to purchase US and European goods, companies from around the world are trying to determine the best way to capitalize on this growth opportunity.


MN Economic Outlook
Article by: Dr. Ernest Goss

For an 11th straight month, Minnesota’s Business Conditions Index remained above growth neutral. The index from a monthly survey of supply managers in the state slipped to a still solid 55.2 from 57.0 in September.


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ASK THE HIRING EXPERT

We know that finding, hiring and retaining top employees are real challenges in today’s competitive candidate market!  In response, we are pleased to announce a new monthly column, Ask The Hiring Expert, in the MA Insider.  Our columnist is Marni Hockenberg, Principal of Hockenberg Search - a Twin Cities Executive Search firm specializing in Managerial and Executive recruitment for Manufacturing and aligned industries.


As an experienced and trusted business advisor to manufacturing companies, Marni is uniquely qualified to provide practical advice on navigating these complex issues.  Her keen insights are based on daily interactions with parties on both sides of the interview desk.


Dear Marni: We hired a number of employees this year and it was a very frustrating experience.  Many candidates wanted higher compensation than what we were prepared to offer and we lost some of them to our competitors. We were unable to fill some key positions because of this. We’re in the midst of strategic planning and budgeting for 2014 and don’t want to go through this again. What can we do differently next year?

Signed, President, Contract Manufacturing Company

Marni says:

Talent acquisition in 2013 was a primary challenge for the manufacturing industry. You are not alone in feeling burned and frustrated. It’s no secret that the market has shifted in favor of top performing talent. Companies are vying for the same people which can result in a ‘bidding war’. No company likes to feel like they are negotiating against themselves during the offer stage of the recruitment process. There are internal pay equity issues to consider with your loyal and tenured employees. Some candidates are testing the waters and shopping for better offers now that the employment market has picked up.
As an ‘on-the-ground’ manufacturing search firm, our team experiences the frustrations from both sides of the interview desk. Our job is to facilitate a ‘win/win’ solution for both parties by taking a look at the realities of the fluctuating employment market and offering practical advice during the search process. Let’s look at your situation:

1. There’s a gap between your compensation and candidate’s expectations. Is your pay too low or are candidates asking too much? It depends on a number of factors. First of all, are you armed with up-to-date compensation data for the positions that you need to fill? Or are you basing your compensation budget on data from previous years with a ‘set-in-stone’ percentage increase for all positions?  Manufacturing is an industry that runs on data.  Yet it’s surprising how many manufacturing hiring managers guess at the compensation range for certain jobs or use data that is outdated. The Manufacturers Alliance and Precision Manufacturing Association sponsor an excellent yearly Manufacturing Compensation & Benefits Survey that enables you to assess your company’s compensation, benefits, and HR programs so that you can compete in the talent war. Based on what the survey says, you may need to adjust your compensation upwards for some positions to reflect the realities of the current market and to land your prime candidates.

2. You may need to pay more for specialized skills that are not readily available in the Twin Cities market. The current candidate market is akin to the housing market – certain houses have increased in value due to demand. It’s the same house as it was in 2010, but the inventory is lower now so the prices have risen and sellers entertain multiple offers. Talent that is ‘in-demand’ may cost more in 2014 than in 2009.

3. What are the costs associated with leaving the position unfilled? Does it make financial sense for you to increase the compensation, make the hire, and get on with business? Or can you wait it out and hope the right person comes along at the right price? Many companies increased the compensation for ‘mission critical’ positions this year. Others decided to parcel out components of the job to existing staff.

4. Does your business need an ‘even-up’ or an ‘upgrade’ candidate? ‘Even-up’ candidates generally come from your industry and a similar size company. They are more likely to be in your pay range. But your company may require ‘upgraded’ talent - someone from a larger or more progressive company who has the extra experience to take your company to the next level. Be prepared to pay more for the ‘upgrade’.


Can’t raise your compensation? Here are a few things that you can implement:

•  You can adjust your expectations of the skills and experience that you ‘must have’ in a new hire. Do you really need a 4 year degree? Must you have 10+ years of experience? Does the candidate have to come from YOUR industry? In other words, how flexible can you be with your hiring criteria?
•  Are you willing to train a person with less experience, or mentor an ‘up-and-comer’ on leadership skills? Would you hire a returning Veteran who can apply his/her military skills to a job in your manufacturing company?
• Your benefit package might be the offset to lower compensation. An extra week of vacation, higher performance bonus opportunity, sign-on bonus, or other perks might attract top talent. Candidates can sometimes be open to a trade-off between pay and great benefits.

Marni Hockenberg is Principal of Hockenberg Search, a Twin Cities search firm that specializes in managerial recruitment for Midwest manufacturing companies. Contact Marni at marni@hockenbergsearch.com; 952-500-9542; www.hockenbergsearch.com.

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Do you have a market survey compensation strategy?

For many companies, this time of year is when market pay survey data arrives from various external sources. The challenge companies face is how best to utilize this new information, how to understand and interpret it, organize it, prepare it for communication to the business and how to ensure that decisions made based on the new data are consistent with company pay policies and in alignment with organization goals.To help with these challenges, some organizations find that developing a market survey strategy helps provide direction and focus.


What is a market survey strategy? A survey strategy is nothing more than a set of guiding principles, which define how you use market surveys in your company.

Here are some examples of guiding principle statements that might be a part of the survey strategy:

•Overall, the company pays "at market" which means we target the 50th percentile for base pay found in industries and locations in which we compete for talent.

•When matching a benchmark job, we strive to use two to three survey sources, when available.

•We use a mid-cycle approach to salary structure adjustment and therefor use appropriate data aging.

•We use surveys that are no more than two years old.


Let’s look more closely at the implications of these sample statements.

What does “at market” mean for your organization?

Paying “at market” is really a compensation philosophy, but defining what that means for your organization, and consistently selecting the correct data points from your surveys, is critical to ensuring that you are adhering to the stated philosophy. Many companies use the median (the middle rate in a range of rates) or 50th percentile of the data as their measure for “at market”. Others find that the mean (the average rate for a range of rates) or average is a more meaningful figure. Given certain surveys, it may even be desirable to target specific percentiles within the data as the appropriate target market rate. Spending some time understanding the survey methodology, the distribution of the data and the participating companies will help you select the appropriate metric for your company.

How many surveys are enough?

What is the right number of survey sources for a good market estimate? There are differing opinions on this. Some say if you have a survey that contains most of your jobs and you are comfortable that it is sampling the right kinds of companies in your industry, geographic area and/or includes companies with whom you compete for talent, then one is enough. It is however, very hard to find that one perfect survey for any given business. Therefore, I recommend that at least three surveys be used to help establish a market reference point for your jobs. Each may provide a slightly different perspective of “the market” and will give you a more robust picture of pay for your benchmark jobs. Benchmarks are jobs that have good market data. They serve as touch points through the full array of your jobs and allow you to slot (establishing pay rates for) jobs that do not have survey matches.

How do you know if a survey source is more valid or should be given more weight than others?

To help with that decision it is useful to review the number of participating organizations and number of incumbents reported for each job. Typically the greater the participation, the more valid the results will be for your organization. The geographic location, industry and size of participating organizations can also help you decide the weight of a particular survey.

When is the best time to incorporate this market data into the organization? 

The timing of when companies adjust their pay rates can be different for each company. Knowing the effective dates on each of your surveys will allow you to adjust the data correctly so you are comparing them on an equal basis, and applying the survey results in a way that best supports your business.

If you have multiple surveys, with different effective dates (i.e. the data collection dates), it is important that you adjust the earlier surveys forward to correct for this date difference. This is called aging the data.
 
Using this same concept, you can affect how competitive your pay rates are by determining when during the year, and by how much relative to the market rate of change, you set your new rates. Organizations will often chose one of the following three approaches: to lead the market for the full year by projecting future market growth and adjusting rates accordingly; to lead for part of the year and lag behind for part of the year by using a more conservative growth projection; or adjusting the rates to market at the beginning of the cycle and as a result, lag the market the rest of the year as pay rates in aggregate continue to grow.

How old can a survey be and still be useful?

Depending on the rate of industry change, the growth of jobs in the organization requiring new market matches and one’s budget for surveys, you may find that you need to purchase your surveys annually. Companies will often purchase a survey every other year, and use a reasonable estimate of the market growth rate to age their surveys in the off cycle years. In most cases however, it is best not to rely on this technique beyond one year. I would suggest refreshing surveys at least every other year.

Summary
Establishing a market survey strategy allows you to align your market data with your company’s pay strategy, use data consistently from survey year to survey year, create a valuable historical record, and provide a solid foundation for communicating how pay is determined in your organization.

Randy Hunt is a Principal Consultant for Total Rewards Group LLC. He may be reached at randy@totalrewardsgroup.com or 651-439-3964.

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You Can Do It: Making Improvements in the Front Office

Congratulations! Your improvement efforts on the shop floor are being talked about and recognized throughout the company. That's the good news. The bad news is the voicemail you received this morning from the Director of Accounting and Finance (or Sales and Marketing, or Human Resources). She wants to talk with you about how you can help improve her non-manufacturing function. You've never worked outside of production before. Is the risk of not knowing what you don't know holding you back from returning the call?

Like manufacturing, all office and service functions have customers, customer requirements, measurements, and processes to do the work. But there are some important differences you need to be aware of to help ensure your success at improving office functions. Let’s look at them.

Customers: The customer is the person or process that receives what you produce. Meeting customers’ needs is the reason the function exits. In manufacturing the customer is thought of as “out there,” outside of the organization. In office functions the customer is usually “in here,” inside the organization. If the idea of internal customers is not understood in your organization, it is something you will need to develop.

Identifying who the customer is—or customers are—is not always clear. Office functions often supply an intermediate internal customer who is working on behalf of someone else. It is much easier to follow where a physical product is being used than it is to follow the use—or uses--of a piece of information. When working with office processes it is important to identify all the customers, not only the immediate one.

In office and service functions the customer is usually a co-producer. That is, customers do not wait at the end of the process for the product to be delivered to them. Instead they are part of the process, contributing inputs and actions along the way.  Imagine you allowed your customers to join you on the shop floor to assist in building their products. Not a pretty picture! But this is common for office and service processes, and must be taken into account when analyzing current performance and making improvements.

Customer Requirements: Have you heard the phrase, “I’ll know it when I see it”? This wouldn’t work on a product requirements document! On the shop floor requirements are clearly spelled out in measures of size, weight, concentration levels, and so on. In office functions the task of defining quality is usually not so straightforward. You can’t evaluate a “good report” based on its size, weight, or percentage of three-syllable words. Typically the initial requirements and evaluation are subjective, in the mind of the customer, not objective.

Think of common problems in office functions: “The report is late, incomplete, incorrect.” “The sales rep is not helpful, friendly, knowledgeable.”  “The HR offerings are confusing, the staff is unavailable, the training didn’t work.” Because of this, much more time will usually need to be spent in office and service improvement projects defining requirements and developing useful measures.

Measurements: To understand the significance of this difference between shop floor and office improvements, we need to get a bit technical about data types. If you are unfamiliar with what follows, it is important that you work with someone who understands these differences. This is an area where analysis tools are often misused in office improvement projects.

On the shop floor, most measurements are of physical objects aimed at a target value with “misses” falling both above and below that target. In addition, the type of data gathered is variable data (its precision is a function of the measurement process, not what is being measured). This type of data lends itself to a powerful set of analytical tools that assume normal distributions, small sample sizes, and means (averages) as summary statistics.

Data in office processes are usually not of this type. Performance is counted, not measured. That is, the questions asked are how many, not how much length, weight, etc. (The common exception to this is time, which is a variable measure.) This type of data is called attribute or discrete data. The practical importance of this is that it takes a large set of attribute data to achieve the same level of precision as a small set of variable data. In shop floor improvement projects you may be using samples of 30 or less (much less if you’re collecting subgroups for statistical process control). Similar precision with attribute data can require a sample size in the hundreds. This can come as a surprise to people working with office data for the first time.

Other differences (which space doesn’t allow us to go into here) that lead to the misapplication of analysis tools commonly used in shop floor projects include 1) targets set at 100%--such as “correct report 100% of time—rather than a target value, and 2) using averages to summarize survey results. In these and other cases, you’ll need analysis methods and tools different from those used with shop floor data.

Processes: While measurements can get you in deep water quickly (remember: don’t swim alone) this final area is for everyone. Just remember this: “All work is a process.” Find the process and you will understand how the work is being done. Here are a few things to keep in mind as you look for the office process.

SIPOC (Supplier, Inputs, Process, Outputs, Customers) is a good place to begin. Find the customers, define the outputs (which may be information or an experience rather than a physical thing;), summarize the process (the value-added work transformation that takes place), list the inputs needed, and identify the suppliers of those inputs. This high-level “snapshot” is as useful for an office improvement project as it is for a shop floor project.

In manufacturing processes the work tends to flow in a linear manner, so linear flowcharts are often used. In office processes, handoffs between the many different people and processes—including the customer as co-producer—are the norm. Swim lane charts (sometimes called integrated flowcharts) are the right tool to use to describe these processes. It may be only a bit of an overstatement to say that if you can do only one thing to improve an office process, flowchart it using a swim lane flowchart. Once the complexity of the process is made visible, improvement ideas quickly follow.

There you have it. There is still more to be learned about the differences between shop floor and office improvement projects. But you now know enough to make the call to your office function leaders, to let them know that they can improve the performance of their functions, and you can help them do it.

Mike Kenfield is Principal of Aletheia Group LLC. Mike is a certified lean six sigma master black belt and organization development/change management consultant with over 25 years experience leading organization improvements and building organizational improvement capabilities. For more information at mike@aletheiagroup.com, phone 952-239-1159. He can also be reached via LinkedIn at http://www.linkedin.com/in/mrkenfield

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Brazil: A Vibrant Market, Not a Low Cost Country!

Brazil is entering a dynamic and exciting time for the country, as the country heads into hosting the World Cup in 2014 and the Olympics in 2016.  With more than 195 million consumers, many now with disposable income and eager to purchase US and European goods, companies from around the world are trying to determine the best way to capitalize on this growth opportunity.


As with all emerging economies, this development phase is not without challenges. Brazilians from all socio-economic walks of life are increasingly aggravated with corruption and wasteful spending in the government and are making their voices heard in peaceful and sometimes not-so-peaceful demonstrations. While the current government of Dilma Rousseff has made strides in enacting legislation to curb some of these abuses, they have a long way to go, and the upcoming election in the fall of 2014, just after the World Cup concludes, will be a telling event. 

So What Makes Brazil An Attractive Place To Do Business?

Consumers – With spending power, big events like the World Cup and Olympics, a booming housing and construction market, and ease of access and comfort for North American businesses, Brazil is a vibrant market.

7th Largest Automotive Market – Fiat, VW, Ford, GM and Mercedes are all adding production facilities to meet the growing demand and to deliver localized vehicles without the high cost of import duties and related taxes.

Abundant Oil And Natural Resources – With recent oil discoveries, albeit out in the ocean, Brazil will move into the ranks of one of the Top 10 oil producers in the world. While Brazil is one of the 10 largest consumers of energy, much of this consumption is in renewable energies including ethanol and hydroelectricity.


So What Is The Catch To What Sounds Like A Great New Market?

Quality Of Life Is More Important Than Quantity Of Life – In Brazil, living spaces are smaller and more European in design; and the Brazilians relate much more with European sense of style and values than that of the US. Their lack of affinity for the US has not been helped by the fact that we were recently accused of monitoring President Rousseff’s phone calls!

Protectionism Is Alive And Well – Trade rules and legislation dating back many years significantly favor domestic companies.  Today, businesses in Brazil are focused on trying to improve profitability, efficiency and quality standards to succeed domestically and internationally against their competitors.

This Inward Focus Drives A Complex And Expensive Tax Structure – This protectionism results in a very complex multilayer tax structure with high import duties on most products (unless the category of product is not manufactured in Brazil).  Large value-added type taxes are then added on top of import duties, significantly increasing total cost of the delivered product. To make it more interesting, import duties and tax laws change daily! While this keeps the customs brokers, lawyers and accountants busy, it is expensive to manage and complicated to understand.

As A Result, You Need To Select Your Products To Export To Brazil Carefully – Imported products are often 2 times the FOB US cost once you pay the import duties and related taxes to land them in Brazil in a warehouse, or at your customer. This means you should select products that can absorb the associated import duties and taxes, or add value to the products in country to reduce import duties. If you need to pursue the local value-add method, you need to implement a strategy to protect your IP, either by importing the key components; or entering the market with a previous generation of technology.

If You Operate On The Ground, You Need To Manage A Challenging Labor Environment- If you decide to localize assembly or perform some activities to add value in-country to be competitive in the domestic market, you will need to navigate a complex and challenging labor environment. Employees are used to companies “looking after them”, even young professionals. And, the government subsidizes spending and social programs by charging very high payroll taxes and insisting on mandatory benefits, and penalties for releasing employees. If you have done business in France, this is not so different! An unskilled worker, with limited education, can cost up to $9 to $12USD per hour when you consider all the required benefits and taxes in a major city like Sao Paulo.

Ok – So Remind Me Again Why This Sounds Like A Good Market?
Remember the 195 million potential consumers! The key to being successful in Brazil, is to not scrimp on getting good (which often equals expensive) advice. Know before you go- what you need to do to succeed and what you need to do to avoid government problems. Talented and responsive lawyers and accountants may cost more than the US, but they are essential to getting it right in Brazil.

If you do your “competitive market analysis” homework, plan exactly what you want to achieve, take an informed, yet cautious approach to entering this market, and stay engaged – you can be very successful in Brazil. and if you plan your trips well, you can take advantage of the beaches during our winter!

Jennifer Kocs is Vice President of Sales for PRA Global. She may be reached at jkocs@pra-global.com or (612)803-4741.

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MN Economic Outlook

For an 11th straight month, Minnesota’s Business Conditions Index remained above growth neutral. The index from a monthly survey of supply managers in the state slipped to a still solid 55.2 from 57.0 in September.

Components of the index from the October survey were new orders at 59.7, production or sales at 58.9, delivery lead time at 54.5, inventories at 50.0, and employment at 53.0. “Manufacturing growth in Minnesota is slowing but remains positive.  Firms are increasing hours worked rather than adding to their payrolls,” 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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