May, 2015

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New and Renewing Companies

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

Alerus Financial
Ametek- Technical Serv for Elect
Boeckermann, Grafstrom & Mayer
Cannon Equipment
Control Assemblies
CSM Bakery Products 
Donatelle Plastics
Horton Inc.
Lake Air Metal
Len Busch Roses
Liquid Waste/Ellicott Dredge Tech.
Loes Enterprises
Lou-Rich Inc.
MTS Systems Corp.
OECS Inc.
Phillips & Temro
Polaris Industries
Precision Punch & Plastics
Priority Envelope Inc.
Schwing America
Silgan Containers
Soligie
Stellar Technologies
Tioga Air Heaters
Twin City Die Castings
Veracity Technologies
Western Graphics



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MN Business Magazine Manufacturing Awards

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Article Index

Leaders Alliance-Gerry Huber, DSI
Article by: Gerry Huber

Gerry Huber is Vice President of Operations at DSI in St. Paul. He has been with the company for 17 years.


New 2015 Employer IRS & Health Care Reform (ACA) Compliance Requirements
Article by: Cindy Sheffield

Like no other time in the past, managing an employee benefit health plan, employers face numerous new IRS and ACA compliance challenges.


HR Insights-Tia Bannwart, Reell Precision Manufacturing
Article by: Tia Bannwart

Tia Bannwart is Senior Human Resources Generalist at Reell Precision Manufacturing in St. Paul. She has been with the company for two years.


Is Exporting Right for Your Manufacturing Company? - Part 2
Article by: Don Keysser

In part 1 of this article, published in February, I noted that small-medium size businesses (SMBs) in the U.S. tend to export at a relatively low rate (as a percentage of total sales).


To Quote or Not to Quote? Part One-Common Consumables
Article by: Ryan Kleinjan

I have yet to meet someone who wants to pay more for something than the next person. 


Strategic Planning: To Do or Not to Do?
Article by: Lynn Moline

“Small businesses should scrap strategic planning.” Not my words, but those from the headline of a recent Fast Company blog, and it turns out the headline was intentionally provocative.


MN Economic Outlook
Article by: Dr. Ernest Goss

Last month, the Minnesota Business Conditions Index, fell to growth neutral.


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Leaders Alliance-Gerry Huber, DSI

Gerry Huber is Vice President of Operations at DSI in St. Paul. He has been with the company for 17 years.

DSI advances biomedical science to improve human and animal health by developing and manufacturing solutions for physiologic monitoring. They provide implantable and wired sensors, software, systems and services to their customers.

How long have you been a member of the Leaders Alliance? Of which group(s) are you currently a member?
I have been a member of the Leaders Alliance for about 10 years, the Operations and Medical Device Operations groups, and currently facilitate the Medical Device Operations group.

How, when, and why did you get introduced to the Leaders Alliance? What was your main reason for joining?
By attending the Manufactures Alliance training and educational events, I first learned of the Leaders Alliance groups. Peer-to-peer education, learning from others by seeing the operation and talking with others, was the main reason for joining.

When you last hosted a Leaders Alliance meeting, what value did you (and your co-workers) receive from hosting a peer group? Do you have a topic in mind for the next time you host a peer group?
The value derived from hosting is the chance to have an outsider’s perspective and a chance to have our assumptions and beliefs challenged, along with receiving a few good ideas that we can implement. I have, and will continue to use hosting the Leaders Alliance meeting as a way to further refine our strategy for continuous improvement.

Can you tell us about a meeting that exceeded your expectations of the benchmarking tour, or a time when you were able to apply what you learned from a host company or guest speaker?
There are a few tours that left a lasting impression and I use as examples. Wilson Tool, Honeywell and rms provide excellent examples that are inspiring to anyone on a lean journey.

Have you used the members of your group to help to help solve an issue?
I have turned to members of our group for connections and references, as well as possible suppliers that can provide a solution to an issue we are experiencing.

How would you describe peer-to-peer sharing best practices to your colleague?
The “peer-to-peer sharing best practices” in the Leaders Alliance groups provides the forum to learn and discuss while seeing the best practice in operation.

Gerry Huber is Vice President of Operations at DSI in St. Paul. He can be reached at ghuber@datasci.com.

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New 2015 Employer IRS & Health Care Reform (ACA) Compliance Requirements

Like no other time in the past, managing an employee benefit health plan, employers face numerous new IRS and ACA compliance challenges.

In addition to the “standard” government regulations (HIPPA, ERISA, COBRA, etc.) for health Plans, the Affordable Care Act (ACA) passed in 2010 has NOW added another level of reporting and taxation complexities to employers’ health plans starting in 2015.

To get an idea if you are ready for these challenges, please review and answer the questions below:

  • Did you know that, even though you OFFER a health plan that meets MINIMUM ESSENTIAL COVERAGE, you could still face a $3,000 fine for every employee who receives a subsidy through the State Exchange?
  • Did you know that you must complete and file 6055, 6065, 1094 & or 1095 for all of 2015 or face IRS & ACA fines? Regardless of size, every employer is required to do all or some of these.
  • Do you have your own system or are you outsourcing the added tracking and reporting requirements in force, such as above, starting 1-1-2015?
  • Does your company have over 50 Full Time Employees?
  • Did you know that if you have Unions, you, the Employer is still responsible for the new reporting?
  • Do you have Variable Hour Employees who go over and under 30 hours per week? If yes, how are you measuring and tracking the hours to know when you must offer the Health Plan to these employees? Failure to OFFER a qualified health plan to ALL eligible employees can result in at $2,000/per eligible employee fine (after tax).
  • Do you own more than one company? Owners must aggregate all their companies together to determine the level of IRS and ACA requirements.  Two smaller, under 50 employee, companies equal a large ACA Applicable Employer.
  • Are you Self-Insured or Fully Insured? There are different requirements and fees based on your financial model.

If you answered “no” or “I’m not sure” to any of the above, you may benefit from a more in depth review of your own situation. EBSO Inc. a Minnesota-based Benefits Administrator provides affordable Compliance Solutions to every type of company. For more information; www.ebsobenefits.com and contact Constance Zweber at czweber@ebsobenefits.com 651-695- 2559.

Cindy Sheffield is CEO, EBSO Inc. She can be reached at csheffield@ebsobenefits.com.

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HR Insights-Tia Bannwart, Reell Precision Manufacturing

Tia Bannwart is Senior Human Resources Generalist at Reell Precision Manufacturing in St. Paul. She has been with the company for two years.

Reell Precision Manufacturing provides high-quality innovative solutions to transmit torque, control angular position and protect delicate components from excessive force. 


Where did you receive your HR training/experience?
I received on-the-job training in my first two Human Resources positions where I worked as an Assistant Recruiter for a trucking company and a Human Resources Generalist at a large manufacturing company with both union and non-union employees. I’ve also received training through various HR conferences as well as employment law seminars.

How and when were you introduced to HR and what fuels your passion for the profession?
My first introduction to HR was when I was working in the Academic Affairs office at my college. I worked with a lot of confidential data, including compensation information. My passion for HR is fueled by working with people and building relationships and seeing people grow, develop, and succeed in their jobs.

What are your company’s current HR-oriented activities?
We are currently rolling out a new policy manual as well as a training catalog to all of our employees.

What was one major lesson learned in 2014 that you feel others could benefit from reading?
Partnering with managers is a key to success when rolling out key initiatives throughout the organization.

What are the next steps planned for improving your company HR processes?
We plan to implement the HR module within the payroll system we’re currently using which should save us time not having to enter items into two different systems and will also allow our managers to have more data at their fingertips for their direct reports.

How would you describe peer-to-peer education to a colleague in manufacturing? 
Peer-to-peer education gives you a chance to have a network of peers and share best practices, information, ideas, suggestions, and recommendations with them.

Tia Bannwart is Senior Human Resource Generalist with Reell Precision Manufacturing in St. Paul. She can be reached at tia.bannwart@reell.com.

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Is Exporting Right for Your Manufacturing Company? - Part 2

In part 1 of this article, published in February, I noted that small-medium size businesses (SMBs) in the U.S. tend to export at a relatively low rate (as a percentage of total sales).

Why is that?  My recent doctoral dissertation (with great cooperation from Manufacturers Alliance members), focused on some of the company characteristics of Minnesota SMBs that may have an effect on the decision by an SMB to export. The study defined "propensity to export" as an interest in exporting, and "intensity" as the actual level of exporting, considered the relationship between the two, and looked for company characteristics that may affect this relationship. Some of the findings of this research, based on the survey of MA members, included:

  •  Management Structure: 27% of the respondents are managed wholly or mostly by family members, 25% are managed by a blend of family and outside managers, and 48% are managed wholly or mostly by outside managers.
  •  "Intensity":  55% of the respondents reported international sales of less than 10% of total sales and 80% reported international sales of less than 20%; these are higher numbers than the national average.
  • "Propensity": around 40% of the respondents indicated a medium to high level of interest in exporting, a higher number than actually engaged in exporting, suggesting a pent-up interest in exporting that has not yet been actualized.
  • Use of Resources:  almost none of the respondents made any significant use of the public resources for export assistance, including federal and state agencies, chambers of commerce, and other non-profit sources; at the same time, a majority of the respondents made regular use of the private resources available, including banks, consultants and attorneys.
  • Availability of Resources:  a majority of the respondents felt that export assistance resources were not available or accessible, an interesting counterpoint to the earlier finding about Use of Resources - SMBs in Minnesota feel that export resources are not available or accessible, yet they also fail to use the public resources that are in fact available.

Several observations were made in the dissertation which may be of interest to you. First, there is a relationship between the management structure of an SMB and its intensity of exporting, with family-managed firms less likely to engage in exporting than outside-managed firms. The reasons suggested in the research literature are that (a) family-managed firms are more risk-averse, since it is their own capital at risk rather than that of outside investor/owners, and (b) the skill sets needed to engage in international trade may not be as prevalent when management is restricted to family members, as opposed to bringing in outside people with those skill sets.

Second, there appears to be very little use of the public export assistance resources available to SMBs; it is not clear whether this reflects a lack of awareness of these resources, or a sense that they are not accessible or easy to use.  But it is certainly evident that the resources out there are not being used to a meaningful degree.

Third, the level of interest in exporting is significantly higher than the level of actual exporting, suggesting that there is considerable room for growth in exporting activity, under the right management structure and with greater use of the public and private resources that are available to SMBs.

So what is next?  The decision to initiate, or expand, exporting (and other forms of international trade, including contract manufacturing, joint ventures, licensing, or foreign direct investment) is a major and complex one, at the same level as any other major strategic initiative. The likely advent of more Free Trade Agreements, and increased exporting possibilities through technological advances, should give Minnesota SMBs an opportunity to evaluate exporting as a major strategic direction, suggesting several actions: (a) consider carefully your management structure and your inventory of skill sets and expertise; going international may require that you bring in additional senior people, either in-house or under contract; (b) get up to speed on the array of export assistance resources available to you, including the Export-Import Bank, the Minnesota Trade Office, and the SBA; (c) start an in-house marketing review about what products you could realistically export, to where, and at what price; and (d) start discussions with your immediate stakeholders and partners, including your financial institution, your law firm, and your accountants, to determine whether you have sufficient resources at hand to initiate exporting (especially capital resources). 

Exporting, and other forms of international trade, offer both considerable opportunities for gain, and considerable risks and costs. But the potential is too interesting to ignore; even if you decide eventually not to engage in exporting, you should make that decision based on an intensive analysis of the costs and benefits of the opportunity.

Don Keysser is the Managing Principal of Hannover Ltd., a firm that provides business financing consulting services, M&A services, and capital raising. He works primarily with small-medium size manufacturing and technology companies, and can be reached at don@hannoverconsulting.com, and 612-710-0995.

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To Quote or Not to Quote? Part One-Common Consumables

I have yet to meet someone who wants to pay more for something than the next person. 

In personal consumer purchasing, the internet provides a significant amount of transparency in pricing of various items.  

Need a new car? Go on Auto Trader or Cars.com - compare prices.  

Need a new blender? Amazon, ShopSavvy.com, and PriceGrabber.com are a few options to compare prices from endless retailers.

What about your organization’s purchases?
Do you ever wonder if you are on the most competitive program available to you?

Aberdeen Research suggests that business can reduce consumable costs over 20% with a systematic purchasing process.

Some organizations find themselves constantly "shopping" these non-core purchases at the expense of valuable time. Would you shop your mortgage every month?  Probably not. This approach can be effective but at a significant cost of labor and focus. 

How often should an organization review its various indirect supplies and services?
There are no hard-and-fast rules to that question. Many purchasing categories should be reviewed on a cyclical plan, while others are reviewed based on the agreements and commitments related to those services. Another purchasing category review-cycle determination is driven by the supplier's ability to integrate properly, systematically, and culturally. Change can be difficult, and continuity is often important.

Let’s start with commodity based purchases.
Commodity-based purchases are services that generally have many potential providers. Often, pricing is influenced and negotiated with usage patterns and product selection. These purchases should likely be sourced every 12-24 months.

Examples of categories to be analyzed every 12-24 months
graphic

Why should these items be reviewed and/or quoted this often?
INTERNAL CHANGE

Your organization’s usage patterns may have changed in the past year. Do you have new leverage? Are you paying for services that you do not need?

  • Did you know that a firm changes the office supplies they purchase almost 50% every year? To avoid increased costs, a firm should work with their supplier to develop a ‘core list’ of discounted items that FIT the needs of the firm.

IMPACT OF TECHNOLOGY
Every day technology advances, making some things more efficient and other things obsolete. This often reduces a supplier’s cost to serve the client. This savings can be passed on to your company.

  • How much did you pay for your cell plan in 2001? What did you get for that money? Odds are that your cell provider now offers substantially more features in 2015 that you aren’t receiving. You may even be able to pay LESS per month.

MARKETPLACE CHANGES
It only takes one major supplier to influence how products are priced and what suppliers consider to be 'acceptable' margins. Always use these changes to your organization's advantage.

  • Remember when DHL entered the domestic parcel market in 2003? Suddenly US businesses had a third option in domestic parcel shipping. Competition encouraged service improvements from UPS and FedEx. Industry-wide discounts on services increased regardless of the shipper’s size/total volume.

Why don’t most organizations automatically quote these items on a regular schedule?
TIME

With a finite amount of time in the day, even a dedicated purchasing team must choose to focus their talents on the purchases that DIRECTLY impact the core value of their services.

LACK OF DATA/INDICATORS
How does anyone truly know if they are getting a great deal on business services? If you decide to purchase a car today, you can go online and see what the proper price range should be. That same comparison is much more difficult to find when researching a fair price on Payroll Services or Credit Card Processing fees.

FEAR OF POTENTIAL CHANGE
Nobody likes change.  It’s simply not in our nature. However, many times this focus on analysis does NOT require a change in suppliers yet can yield savings and program optimization. Why? The marketplace always wins. When we challenge suppliers with our objectives, specific requests, and data to support it, they tend to respond to maintain the relationship. Many providers offer ‘price/term’ match guarantees. These are great if you can afford to dedicate the time to find a better offer and take advantage of these programs (see point 1: TIME)

Looking to get control of your overhead? Start with some of the tips above. You may find thousands to hundreds-of-thousands of dollars that can be freed up without significantly impacting your everyday operations.

Ryan Kleinjan is the President of Catalyst Sourcing Solutions. Catalyst provides organizations with benchmark pricing data, sourcing services, and tools to help them reduce and control overhead expenses in over 50 categories. He can be reached at rkleinjan@catalystsourcing.com

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Strategic Planning: To Do or Not to Do?

“Small businesses should scrap strategic planning.” Not my words, but those from the headline of a recent Fast Company blog, and it turns out the headline was intentionally provocative.

The truth is that certain approaches to strategic planning don‘t work for anyone, let alone for smaller companies. And that was the point the blogger was making. As a real-time example of what doesn’t work, a small company executive just told me that her company was in its third month of strategic planning with no end in sight. In that length of time, while managers sat in planning sessions, their biggest customer could have defected and six of their best employees could have been lured away by a competitor. Rome burned while Nero fiddled.

But is strategic planning nothing more than fiddling for smaller companies? It certainly shouldn’t be, and when done in a smart way, it can provide invaluable focus and direction. But it must be scaled for the business and be done with a clear-eyed view of today’s fast-changing business environment.

Gone are the days of the ten-year or even five-year strategic plan. The more useful planning horizon today is two or three years, with quarterly reviews for fine-tuning and annual reviews for re-calibration.

At its heart, any good strategic planning routine answers six fundamental questions:

  1. Who are we--what do we do and for whom?
  2. What do we want to become?
  3. What do we stand for?
  4. What do we want to accomplish over the next 2 -3 years?
  5. What are the most important things we must focus on, in view of our market and our capabilities, to do what we want to accomplish? 
  6. What actions do we have to take now to get where we want to be?

The answers to the first three questions may well remain the same for many years. They speak to what are often called mission, vision, and values. When a company is clear about mission, vision, and values, they become guides for every decision. For example, after a company I work with defined its values, one of which was continuous learning, it began to screen job candidates for willingness to learn, something not done before.

The answer to question 4, what do we want to accomplish, speaks to clear, unanimously supported goals. And those goals then drive the answers to questions 5 and 6. For example, another company I work with wanted to grow, but during the planning session managers realized the two most critical goals for the next year were to 1.) recover from a regulatory noncompliance issue, and to  2.) maintain revenue—not increase it—while they focused on goal 1.

The entire leadership team bought in wholeheartedly and created strategic priorities (question 5) and action plans with timelines (question 6). Furthermore, the president committed to monthly accountability reviews with the managers to check progress. By the next annual strategic plan review, they had completed every action and achieved both goals. By the second annual plan review, they celebrated healthy top and bottom-line growth.

So is strategic planning for smaller companies? No, not if it’s an elaborate, drawn out, time-sucking affair. But if it’s practical, realistic, and fast-paced, it’s a focusing and direction-setting tool that moves the company forward.

Lynn Moline is a consultant, trainer, coach, and speaker who helps companies achieve through effective leadership, planning, and decision making. Contact her at Lynn@molineassociates.com.

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MN Economic Outlook

Last month, the Minnesota Business Conditions Index, fell to growth neutral.

The overall index for April increased slightly to 51.3 from March’s 50.0. Components of the index from the April survey of supply managers were new orders at 55.6, production or sales at 55.7, delivery lead time at 51.7, inventories at 47.5, and employment at 47.9. “Minnesota’s export sales reached a record high of over $21.3 billion in 2014. I expect the strong U.S. dollar and slow global growth to push Minnesota’s 2015 export growth into negative territory.  Even so, the state economy will continue to expand, but at a slower pace than for the same period in 2014,” 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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